Environmental Economics

"Accounting for heterogeneity in behavioural responses to health-risk information treatments"

Abstract from O. Ashton Morgan, John C. Whitehead & William L. Huth, Journal of Environmental Economics and Policy, Vol 5, No 3, Pages: 283-297:

Traditional revealed and stated preference models consider a typical individual's behavioural responses to various policy-based information treatments. For some cost–benefit applications in which resource managers are concerned with responses from a representative individual, this is sufficient. However, as behavioural responses to information treatments can vary across respondents, we develop a latent class analysis with covariates to examine unobserved heterogeneity responses to health-risk information treatments. Results from a probabilistic model indicate that classes of consumers respond differently to the health-risk information treatments. Principally, we find that the media form of the information treatment is important, with raw consumer groups typically more responsive to a brochure information treatment, while cooked oyster consumers are more responsive to the same information in a video format. We also find that a proposed US Food and Drug Administration policy on processing all raw oysters before market has a greater effect on reducing demand for consumers of cooked oysters. However, with an associated price premium, all consumer classes reduce demand. Overall, the results suggest that future policy-based research could benefit from examining potential heterogeneity in individuals’ responses to risk information treatments in order to fully understand the efficacy of treatments on behaviour.

via www.tandfonline.com

Have I told this story before? If so, stop now.

These data were collected before the Deepwater Horizon Oil Spill. We estimated a latent class oyster demand model to account for preference heterogeneity with variables that modeled the class structure. We sent the paper out and a referee said the latent class model was nonsense, just split the sample based on those variables and estimate separate demand models. We did as told and the paper was published [Morgan et al. (EARE 2013)]. We decided the latent class model wasn't total nonsense and shipped a paper out with a model that, for some reason, did not model the class structure. The referee said why don't you model the class structure? We thought back and remembered, oh, we did. 

And if you are wondering ... Morgan et al. (Land Econ 2016) uses data from a post-spill survey and compares how consumption changes.

 

 

Why we might need more catch shares in fisheries management

Beeliner:

The daily trip limit for the commercial harvest of vermilion snapper in federal waters of the South Atlantic is reduced from 1,000 pounds gutted weight to 500 pounds gutted weight, effective 12:01 a.m. (local time) August 28, 2016.  NOAA Fisheries has determined 75 percent of the July-December quota of 431,460 pounds whole weight will be landed by August 28, 2016. 

Reduction of the commercial vermilion snapper trip limit when 75 percent of the July-December quota is reached in federal waters of the South Atlantic complies with regulations implemented under the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region.  The 500-pound gutted weight trip limit applies to vessels with a South Atlantic Unlimited Snapper-Grouper Permit fishing for vermilion snapper in or from the federal waters in the South Atlantic region.  The 500-pound gutted weight trip limit will remain in effect until the end of the current July – December 2016 fishing season or until the quota is reached and vermilion snapper closes, whichever occurs first.

via sero.nmfs.noaa.gov

Imagine that food at the grocery store is an unpriced good and when you go grocery open-access shopping, in order to limit the amount of free food that you could grab, they only allowed you to fill up a small cart. Isn't that stupid? And when they started running out of food they only allowed you to fill up half your small cart so that others could get some food before it ran out. But, you could make multiple trips to the store. Now that is really stupid. All it does is raise the cost of getting food when the real problem is that the food is an unpriced good. 

This is from a 2011 post mourning the day that catch shares died in the South Atlantic:

From the SAFMC's South Atlantic Update:

In March, the Council approved a motion to “terminate all work relative to catch share development in Amendment 21” (catch share development would continue for the golden crab fishery and wreckfish). The amendment, known as the Comprehensive Catch Share Amendment, addressed the possible use of catch share programs for snapper grouper species currently under management through quotas with the exception of snowy grouper. The amendment also included options for effort and participation reduction and endorsement actions. ...

The South Atlantic Council has explored the use of catch shares over the past few years, using work groups and soliciting public input. During discussion of the motion, Council members noted that catch share programs are considered one of many management tools and that the removal of their consideration in Amendment 21 does not preclude their future consideration. The Council will review the remaining actions in Amendment 21 during its June meeting.

Catch shares are individual (transferable) quotos, more or less. The Socioeconomic Panel of the Statisical and Scientific Committee of the SAFMC (got all that straight) reviewed the catch shares provision of Amendment 21 and made some recommendations for the potential development of such a program. None of these recommendations included "terminate all work relative to catch share development in Amendment 21." Here is what we said about golden crab catch shares:

We recommend adoption of Alternative 2 under Action 1; Implement a catch share program for the golden crab fishery.  With the understanding that current permit holders favor the formation of a catch-share program, the SEP agrees that such a program will facilitate the management goals to “create incentives for conservation and regulatory compliance” and provide participants with the opportunity to earn “long-run benefits from efforts to conserve and manage the golden crab resource.”  Exclusive rights to shares of the allowable catch will allow permit holders the security to take least-cost methods to harvest the catch and may encourage harvest methods that maximize quality and ex-vessel revenues.  The net benefits of the program will likely be increased by increased transferability of the catch shares.

The snapper-grouper fishery is more complicated than golden crab but I think the same sentiments would apply.

 

A mighty wind: economies of scale

Mickey Crabbe: "This might make good dessert talk":

By global standards, the Block Island Wind Farm is a tiny project, just five turbines capable of powering about 17,000 homes. Yet many people are hoping its completion, with the final blade bolted into place at the end of last week, will mark the start of a new American industry, one that could eventually make a huge contribution to reducing the nation’s climate-changing pollution. ...

The technology has been proved in Europe, where offshore wind farms as large as 300 turbines are being developed, with each turbine costing up to $30 million to build, install and connect to the power grid.

But the first major proposal in the United States, an immense project off Cape Cod that was to be called Cape Wind, was too big — 130 turbines — and too close to shore, many experts now believe. It drew ferocious opposition from oceanfront homeowners, gradually lost political support in Massachusetts and appears unlikely to go forward. ...

The companies now trying to start an offshore wind industry are determined not to repeat the mistakes that plagued Cape Wind. That is one reason Deepwater Wind decided to start with a small project.

The focus is still on the Northeast. That region has dense cities with strong electrical demand, high power prices, opposition to new power plants on land and some of the world’s stiffest ocean breezes off the coast. And the water remains relatively shallow many miles from shore, so wind farms could be installed far enough away that most of them would not be visible from the beaches.

... Yet if states go forward with their plans, experts say the costs are likely to fall sharply as domestic industry scales up to meet the demand.

via www.nytimes.com

Amber Cole said it best: "Thank God for the model trains, you know? If they didn't have the model trains they wouldn't have gotten the idea for the big trains."

Some more costs of climate change adaptation

More evidence that adaptation is no panacea: 

Residents of a small Alaskan village voted this week to relocate their entire community from a barrier island that has been steadily disappearing because of erosion and flooding attributed to climate change.

In the unofficial results of an election on Tuesday in the village, Shishmaref, residents voted 89 to 78 to leave. The plan would move the village, which is 120 miles north of Nome, to one of two sites on the mainland about five miles away, officials said. But the village needs an estimated $180 million from a patchwork of sources to complete the move, according to a 2004 estimate. ...

Shishmaref is not alone in facing a move because of the effects of climate change. In January, the federal government allocated $48 million to relocate Isle de Jean Charles, La., an island that is sinking into the sea. The effort earned the residents the title of the United States’ first “climate refugees.” As many as 200 million people could be displaced by 2050 because of climate change, according to a study for the British government. In Alaska, 31 villages face “imminent threat of destruction” from erosion and flooding, according to the Arctic Institute, a nonprofit group in Washington that studies issues affecting the Arctic.

via www.nytimes.com

There are about 400 residents of Isle de Jean Charles, LA. The cost of relocation is about $120,000 per resident. There are about 600 residents of Shishmaref and the cost of relocation is about $300,000 per resident (if, gulp, the 2004 estimate is still correct). Taking the midpoint and applying it to 200 million people, the relocation cost of climate change would be about $42 trillion by 2050. More optimistically, that is only $3.5 billion per day between now and then. 

Here is something I said on May 3:

Climate change adaptation proponents (i.e., "serious economists") suggest that "the market" will reduce these costs. My thinking is that these potential costs should be part of the conversation instead of assumed to be mitigated to a large extent as a result of market forces. 

Here is another post from May 4. ... oh bloody hell, here is a Google search of climate-adaptation-skeptic posts. 

Maybe I need a "you won't believe #7" in the subject line

As I mentioned the other day I'm conducting a post-road bike race survey. I've conducted a number of these and the response rate is usually in the 35% - 50% range (the stated preference data is are good enough for journals and I'm presenting another one of these papers at the SEA meetings). I get an email list of participants and send out a request to complete the survey via SurveyMonkey. For the first time I've sent the email out as HTML and that allows me to track who opened the email and who ignored it. After almost a week I'm surprised to find that almost one-third of the participants in the Blue Ridge Brutal have not opened an email with "Blue Ridge Brutal participant survey" in the subject line. I probably am an idiot for being surprised.  

I hit the trifecta

From the inbox:

August 21: On 19/Jul/2016 you kindly agreed to review the above-referenced manuscript. This is a friendly reminder that your review of this manuscript is due by 26/Nov/2016.

August 19: You agreed to review Manuscript Number [redacted] on 07-15-2016 and your completed review was due by 08-14-2016. Your review is now 5 days late. ...

August 14: I appreciate the time and effort required to prepare a good review, and understand that delays are inevitable. The manuscript review you committed to complete for [journal] is now due. Will you please submit it, or let me know when I might receive it?

So now you know what I'm doing this week (although 26/Nov/2016 is still a ways off!). 

 

Quote of the day

From the Chronicle of Higher Education:

Louis Agnese Jr., president of the University of the Incarnate Word, has been placed on a 90-day medical leave because of “sporadic uncharacteristic behavior and comments,” The San Antonio Express-News reported on Thursday. ...

Mr. Agnese denied that his behavior has changed. “I will have the board send out a retraction to that [expletive] they sent out today,” Mr. Agnese told the Express-News.

via chronicle.com

Not from the Onion.

And economics gets the bronze!

Profs most likely to be "boring" | via @conradhackett pic.twitter.com/xIGk9bSQye

— Shit Academics Say (@AcademicsSay) August 20, 2016

Is NPR making a case for the Hunger Games to reduce our carbon footprint?

NPR asks the tricky question:  Should we think about not having kids to reduce carbon emissions?  Here are some of the lifetime (80 year) carbon savings they report: 

Increase car's fuel economy from 20 to 30 mpg: 148

Reduce miles driven from 231 to 155 per week: 147

Replace single-glazed windows with energy-efficient windows: 121

Replace ten 75-watt incandescent bulbs with 25-watt energy-efficient lights: 36

Replace old refrigerator with energy-efficient model: 19

Recycle newspapers, magazines, glass, plastic, aluminum and steel cans: 17

Reduce number of children by one (with emissions fixed at 2005 per-capita values): 9,441

May the odds be ever in your favor.

 

"Hosting The Olympics Is A Terrible Investment"

Chris Dillow:

When Rio de Janeiro won its bid to host the 2016 Summer Olympics back in 2009, the Brazilian government estimated that costs directly related to hosting the games would run just shy of $3 billion. But by the time the Vanderlei de Lima lit the Olympic torch at last week’s opening ceremonies, the country had already spent some $4.6 billion on venues, administration, transportation and the like, putting the games roughly 50 percent over budget. By the time the games close on Aug. 21, the tally for the games will likely be higher still. ...

The numbers above come from a new study led by Bent Flyvbjerg at the University of Oxford’s Saïd Business School, who looked at six decades of Olympic budgets. ...

For its part, Rio is on track to come away from the 2016 Games more or less in line with what’s become the normal amount of additional expense on its books. But the implication of Flyvbjerg’s research is that Rio still may have been better off building $3 billion in roads and bridges (which likely would have ended up costing $3.6 billion to $4 billion because of their own overruns) than hosting the Olympics (which will end up costing at least $4.6 billion, and likely quite a bit more).

At the very least, the return on investment would have likely been greater. While most major infrastructure projects go over budget, megaprojects such as bridges, dams and railway lines tend to yield economic benefits for longer than the few weeks that many Olympic facilities are used. Host cities almost invariably fail to cover Olympics costs with associated revenues (for instance, in 2012 London took in $3.5 billion in revenues and shelled out something like $18 billion to host the games), leaving them with piles of debt and various useless venues. Research has repeatedly shown that in most cases the Olympics are a money loser for cities, particularly those in developing nations where the cost-benefit proposition tends to skew even worse.

via fivethirtyeight.com