Environmental Economics

Who else is looking forward to watching the Las Vegas Raiders?

History tells us that the public will pay for the stadium:

Las Vegas ABC station KTNV polled Clark County residents about whether or not they would want to pay $500 million in order to help build the Raiders an NFL stadium. Of the 750 people polled, 55 percent said they opposed spending half a billion dollars on a new stadium, while only 35 percent were in favor. ...

Additionally, $500 million is the floor of how much the public would be required to pay. That price tag could increase by 50 percent and balloon up to $750 million, easily the most voters would ever have to pay for a new stadium. The 11-person committee meets tomorrow to work on hammering out a final figure and sending a proposal to Nevada governor Brian Sandoval. Billionaire Sheldon Adelson and his Las Vegas Sands Corporation would theoretically be on the hook for any construction overages.

Once the Southern Nevada Tourism Infrastructure Committee makes their recommendation to Gov. Sandoval, the State Legislature would have to approve any tax increases. They are currently scheduled to meet in February 2017. It doesn’t appear that voters will get a chance to directly approve the use of public funds, but the politicians who can approve the deal do have the threat of getting voted out of office for betraying their constituents. It happened to Cobb County’s Tim Lee last night after he helped the Atlanta Braves secretly secure $400 million in taxpayer money.

via deadspin.com

And Billionaires will become richer. 

Political Calculations: The Economic Impact of Climate Change

I recommend you follow the link below but here is an excerpt with only the analysis cut out:

How much can climate change impact the economy?

No matter who you are or what your thoughts are about the topic of climate change, whether very well reasoned or not, this is a real question that real people need to be able to answer because the economy is where it will have a real impact on their lives.

But how can you measure the economic impact of climate change?

It occurred to us that one way we might do it is to consider the impact that a climate change event actually had on the modern economy, and more specifically, on the part of the economy that is most sensitive to climate change: agriculture.

That changes in the climate have an effect on agriculture is something that has been well established by real world observations over the last several thousand years and was even recently reaffirmed for the modern era by academic research.

For our purposes, we wanted to consider the economic impact of a climate changing event that had a prolonged effect - something more than a singular meteorological disaster that lasted for much longer than a single season or year, but also something that overwhelmed the abilities of modern farmers using the most advance agricultural technology available today to compensate.

The climate changing event we chose to consider is the 2010-2016 drought in the state of Kansas, which only just officially ended in all of the state's counties last month. At its peak in 2012, the severity of the drought has been described as the second driest on record since 1895, and was the longest sustained drought in the state since the 1950s.

... as the drought in Kansas intensified, it became a dominant factor affecting agricultural output beginning in 2011, especially as its severity soon strained the ability of the state's farmers to compensate for it with the technology and systems they had in place.

At its worst in 2012, the extreme drought conditions deprived the state of at least $1.94 billion in its GDP for that year, in the real terms of constant 2009 U.S. dollars as measured from the peak of Kansas' agricultural contribution to the state's GDP. In reality, it was far worse than that, as the U.S. Department of Agriculture (USDA) estimates the drought's damage to crops grown within the state to total $3 billion, or about $2.8 billion in constant 2009 U.S. dollars.

For 2012, that would have meant an economic contribution to the state's GDP that would have been double what was actually recorded at its trough.

Extending nearly three and half years, the most severe portion of the state's drought from October 2010 through June 2014 ensured that the state's large agricultural sector would not see any sustained growth above its March 2011 contribution to GDP until after June 2014, when significant rainfall finally began to return to the state. Update 16 June 2016: Newly revised GDP data for the state indicates that there was a much longer lasting impact that resulted from the climate change shock of prolonged severe-to-exceptional drought. We'll revisit this analysis soon!

If you think about it though, while the worse of Kansas' 2010-2016 drought had a large and clear impact on the state's agricultural output, and by obvious extension, its economy, the thing that really caused farmers the most problems in the years since the fourth quarter of 2010 when the drought arrived in force was that they didn't expect it. They didn't expect it to either become as severe as it became or to last for as long as it lasted.

That's really where the real economic impact from climate change is to be found. If people expect it, they can plan for it, and are therefore better able to cope with the consequences.

In real life, it is the stuff you didn't expect or prepare for that hurts the most.

via politicalcalculations.blogspot.com

Yet, how can you prepare for it if you deny that there is a high probability that it exists? Note: uncertainty about future climate change is not much different than uncertainty other bad future events. They might happen, they might not. It is typically poor planning to deny that something bad could happen and proceed as if it won't. 

54.5 mpg: oh, we're halfway there, oh-oh livin' on a prayer

The learning curve for policy makers is steep (ignore market forces at your own risk):

Automakers are unlikely to hit the 54.5 mile per gallon average fuel efficiency level that President Obama trumpeted for years, federal officials said Monday.

Blaming it on higher-than-expected sales of large vehicles like SUVs, the Environmental Protection Agency (EPA) and Department of Transportation (DOT) said automakers will probably miss the mark that the Obama administration touted in its historic 2012 regulation regarding vehicle fuel economy and greenhouse gas emissions.

The forecast was part of a 1,000 page draft technical report from the two agencies, the first step in evaluating whether to strengthen the efficiency rules for the 2022 to 2025 model-year period.

The report itself does not constitute a decision to tighten the rules or even a proposal to do so, but the finalized version of it is likely to weigh heavily on the evaluation.

Speaking with reporters about the projections, Obama administration officials stressed that despite the high profile of the 54.5 figure, it was never a standard in and of itself.

“54.5 isn’t a standard, never was a standard and isn’t a standard now. 54.5 is what we predicted, in 2012, the fleet-wide average could get to, based on assumptions that were live back then about the mix of the fleet,” a senior administration official said.

“That depended a lot on a variety of factors, including gasoline prices,” the official said. “We’re recognizing the fact that gasoline prices are lower now.”

via thehill.com

I haven't read the 1000 page draft technical report so I wonder how it dealt with the uncertainty about gas prices? It is very difficult to foresee the technological shock of fracking but, still, a 54.5 miles per gallon goal is dependent on the market for gasoline and any such target should have a very wide confidence interval. Needless to say, it would be much more straightforward to increase miles per gallon with a higher gas tax. 

Urban Dictionary: flat earther

flat earther

a person who does not accept or is out of touch with the realities/ beliefs of modern times;

one who blatantly dismisses/ disagrees with common knowledge or scientific findings.

Joe doesn't even believe the planet is round, or that we landed on the moon... he's a flat earther.

via www.urbandictionary.com

I think I am mostly a type 1 journal reviewer

Bitter and twisted:

After two decades of submitting papers to journals, and more than 10 years of serving on an editorial board or editing journals, geography researcher Kevin Ward knows a thing or two about peer review. ...

In all, Ward — from the University of Manchester in the UK — says he’s encountered six types of referees.

1.The “bitter and twisted” reviewer

Think of the unpopular kid at school, who used to sulk in the corner. Ward describes this type of reviewer as:

…this review reveals a reviewer’s sense of being out of place in their field, a situation with which they are not happy and that comes through in the review.

2. The “enthusiastic and supportive” reviewer

This type of reviewer is a cheerleader — of the best kind. It’s the type of reviewer you want. Ward says

…this review takes the paper at face value. It avoids ending up arguing for the writing of a different paper. Rather it works with what has been written, detailing how given these parameters the paper can be improved. 

3. The experienced reviewer (whom Ward calls “In my day…”)

Every school has at least one teacher who talks about how great things used to be back in the day, when life was simpler, students showed more respect, etc. Science has those too, says Ward: 

…the paper under review is used to speak on behalf of wider trends in a particular field. There was once a time, according to this reviewer, when the field was better, fitter, stronger and so on. Now the field is worse and this paper is an example of this decline.

4. The “it’s all about me” reviewer

Watch out — you don’t want to get the next type of reviewer:

…for some reviewers, the review is a chance to showboat, to use it as means of generating citations for their own work. As Spiegel (2012, p. 1334) notes “Referees not only want authors to cite their work, but they also want the text to laud it as well. Whatever the motivation—and we can all easily think of several— referees cannot directly demand others affirm their publication record.” He is right, of course. However, this type of review can come close to demanding that author/s cite the work of the reviewer!

5. The annoying reviewer

This type of referee would be banned from the soccer team (pun intended); Ward says this reviewer likes to engage in “goalpost moving:”

Presented with a revised paper and a covering letter detailing how the author/s responded to the original set of reviews, this review writes “yes … but”. It asks for a second set of revisions based not on the original paper but on the revised paper. The review has moved the goalposts, potentially resetting the review process.

6. The brief reviewer

Think of this reviewer as the student who stops writing a paper the moment he reaches the minimum word length. It’s someone who leaves you with “not much to work with,” writes Ward:

These reviews are short and very to the point. Whether they are negative or positive, the content is so minimal that there is relatively little with which to work as an editor. Often no more than a few lines, there is little explanation or justification for the decision. 

Jokes aside, Ward finishes on a serious note:

…the next time you write a review think about how it will be read by an editor as well as by an author, not just on its own but also along the reviews of others.

These are Ward’s picks — what are yours? 

via retractionwatch.com

Here is my pick:

7. The reviewer who thinks s/he is the editor

This type of referee is an expert in the field and knows it. As such, s/he must act as gatekeeper to the literature. While your paper may be well done and a significant contribution to the literature it is not quite good enough for journal [insert journal name here]. 

The full article is short and worth a read. 

"Estimating Time"

Source: http://xkcd.com/1658/

We're going to need to build a wall on our northern border

Because all of Canada is going to implement a national carbon price:

Canada will implement a national policy to charge polluters for emitting carbon dioxide by the end of the year, a top government official said.

Catherine McKenna, Canada’s environment minister, told Bloomberg TV Canada that the goal of the policy is a uniform national carbon price, along with new requirements for companies to disclose emissions. ...

Four provinces representing about 80 percent of Canada’s population currently have some kind of carbon pricing policies, which usually consist of either a carbon tax or cap-and-trade system.

Asked whether her pledge means that provinces and territories without a tax currently would be forced to implement one, McKenna told Bloomberg, “I don’t like the word forced. I think this is really an opportunity.”

via thehill.com

Causing billions in job losses and a massive southerly migration of workers. 

Er, maybe not. Brian Murray and Nicholas Rivers [PDF]:

Empirical and simulation models suggest that the [British Columbia carbon] tax has reduced emissions in the province by 5–15%. At the same time, models show that the tax has had negligible effects on aggregate economic performance, though certain emissions-intensive sectors have faced challenges. Studies differ on the effects of the policy on income distribution but agree that they are relatively small. Finally, polling data show that the public initially opposed the tax but now generally supports it.

 

"How Markets Can Help Us Adapt to Climate Change"

Michael Greenstone:

We are on course to set another record for the hottest year, the third year in a row, and 2016 may well have the most billion dollar weather disasters. Adaptation to a changing climate looks both necessary and inevitable.

Adaptation is most successful when we let markets identify the best opportunities to protect us. Markets have helped society conquer countless challenges, including the discovery of drugs to protect against new diseases, innovations to solve communications problems, and more. But we’re probably forestalling adaptation if we don’t allow markets to accurately and freely price the risks caused by climate change.

Climate change is projected to bring more frequent damaging storms, with high winds and flooding. Successful adaptation probably requires the construction of sea walls and the building of sturdier homes — perhaps even less coastal development. But these changes are unlikely to occur without clear incentives.

Insurance markets provide such incentives by communicating where adaptation is needed. But in too many states, well-intentioned regulations aren’t letting the market properly price climate risk. There’s less motive to act, leaving households and society exposed to unnecessary risk. A good example is Florida’s insurance market, where regulations cap premiums — forcing inland areas to pay more for wind insurance, while the coastal residents don’t pay premiums reflecting their higher risks. ...

via www.nytimes.com

My guess is that if subsidized insurance went away for those living on the coast from North Carolina to Florida then hardly anyone could afford to live there. The good news is they could all move to Montana, creating great wealth.

"Trump and Coal Jobs"

Alan Krupnick:

Mr. Trump’s acceptance speech last night contained few references to energy, but one had to do with bringing coal jobs back. His two themes for why jobs have been lost are costly environmental regulations and bad trade deals leading to foreign competition. Regulations do raise the cost to electric utilities of using coal and therefore have the utilities looking for substitutes more than they otherwise would. However, by far the dominant reason for shrinkage in the coal industry is the availability of cheap natural gas. And this gas is cheap even though heavily regulated by the states and federal government. As for bad trade deals and foreign competition, in this case, the competition is homegrown, good old American natural gas. Would he still offer protection for coal jobs in this case? By far the better response to what has been a secular decline in coal jobs is better job retraining and other programs, which admittedly need improvement.

via www.rff.org

More Pigou Club news?

I skimmed the Republican Party Platform [PDF] to find out if it says anything about climate change. It kind of doesn't except for this line:

We oppose any carbon tax.

I'm reminded of Mankiw's essay on "the key role of conservatives in taxing carbon." It seems like it is going to take a long time before the Republican Party will be included in a More Pigou Club news post.