Environmental Economics

The good old days

I'm fielding a post-ride survey for the Blue Ridge Brutal and this was in the comments section:

No concerns, but I was your student at ECU in the 90's for Environmental Econ and I played intramural sports for the Econ Society. If you ride, hope to see you on the road. Cheers

Wow:

• Small world. Q: Would the IRB have a cow if I associated the comment with an email? A: yes
• I have two bikes and neither see enough action.
• I was the captain of the ECU Econ Society IM teams (football, basketball, softball). The highlight was when we won the second summer session co-ed softball tournament. In the finals we upset a team that had beaten us twice. 
• I'll have NABE Student Chapter students do a short economic impact report. In return, I get to ask some goofy questions. With this survey I'm comparing results from a payment card-style willingness to travel question with those from a double-bounded dichotomous choice. Here are some preliminary results:
  
  
  

Graphic of the Day: Is it hot in here or is it just me?*

In the true Olympic spirit, July was another world record breaking month.  From Slate:

October. November. December. January. February. March. April. May. June. And now July.  For the sixthseventheighthninth 10^th month in a row, we’ve had a month that has broken the global high temperature record.

And for those who like pictures:

*Funny story (in a sad way): My second oldest moved in to college last week (University of Dayton--Go Flyers?).  Before she left, she and a couple of friends decided to look up their professors on Rate My Professors.  While looking around, one of my daughter's friend suggested, 'Let's look up your Dad.'  Here's my daughter's synopsis "You have better rating than any of our professors [she seemed surprised by this], but you don't have a chili-pepper [she didn't seem surprised by this]." 

The [email protected] sessions have been posted!

Here is the link: https://www.southerneconomic.org/current-year-program/?conferenceId=2&organizationId=2. We have a record number of sessions (25) this year including a bunch of student sessions organized by Elaine Frey. 

More angst about California's cap-and-trade program

Severin Borenstein:

So, can California’s cap-and-trade program be saved? Yes. But it will require moderating the view that there is one single emissions target that the state must hit. Instead, the program should be revised to have a price floor that is substantially higher than the current level, which is so low that it does not significantly change the behavior of emitters. And the program should have a credible price ceiling at a level that won’t trigger a political crisis. The current program has a small buffer of allowances that can be released at high prices, but would have still risked skyrocketing prices if California’s economy had experienced more robust growth. ...

 

But should California’s cap-and-trade program be saved? I think so. My first choice would be to replace it with a tax on GHG emissions, setting a reliable price that would make it easier for businesses to plan and invest. But cap-and-trade is already the law in California and with a credible price floor and ceiling it can still be an effective part of the state’s climate plan.

Source: Energy Institute at Haas blog

Quote of the Day: On climate change and Martians

From the NY Times:

"If you want to talk climate change, you need to go up to New York and Boston to do that.  You don't talk that down here [South Carolina]," [Dave Woodward, a Clemson University political science professor and GOP consultant] says. "Conservatives just don't believe.  They think it's like Martians."

Friday beer post: nonmarket and market field research #seriousacademic

You may have noticed that we took a week off last week (if so, get a life!). I was in the field researching coastal erosion (it required a hike from this access point but Mason Inlet is still where they hoped it would be):

 

I was in charge of the protein on Tuesday night so I went to the market (I bought the big dolphinfish filet on the right and a black drum. I grilled it in tin foil with garlic, lemon juice and olive oil):

Here is what I did after all the hard work:

Short pants

Jim Roumasset comments on my Adam Smith picture:

Looks cold. Valentina Zharkova suggests that the cold summer in Great Britain may be a harbinger of her forecasted return of the (1645-1715) Maunder Minimum (low solar activity), a Granger cause of the Little Ice Age. Since Granger causation is not actual causation, we are left with solar physicist Phil Goode’s summary: "There are large poorly understood contributors to the Earth's temperature changes independent of greenhouse gasses."

I don't know if climate change is real or not. But if 90%+ scientists believe it is real then I feel like it is my job to do the appropriate sort of environmental economics (i.e., discuss incentive-based policy and suggest it should be implemented).

Plus, it was warmer later in the week. Here I am hiking up Salisbury Crags:

 

"Does Drought Explain the Kansas Collapse?"

Menzie Chen at Econbrowser, who spends a lot of time looking at the Kansas economic experiment in state tax cuts, disagrees with Ironman about the effects of drought on the Kansas economy:

Ironman at Political Calculations asserts it does. Unfortunately, he makes a mistake in calculating Kansas GDP ex.-agriculture by simply subtracting chained agriculture from chained state GDP (discussed in the addendum to this post). Here in Figure 1 is properly calculated GDP ex.-agriculture plotted against a drought index (lower values is a more severe drought). ...

Note that the slowdown is apparent in GDP excluding agriculture, post-Brownback. Drought is not the explanation. ...

via econbrowser.com

I'm a carbon neutral commuter!

From the inbox:

Thank you for your contribution of $8 on 8/11/2016 to the Carbon Neutral Commuter program.
100% of your contribution will be used to purchase carbon offsets.
For complete information about the program and how contributions are being spent, please visit Carbon Neutral Commuter!

Yes, I think I'm better than you. 

"Tax carbon, California — the rest of the nation will thank you"

Michael Wara, Adele Morris and Jerry Taylor:

California’s cap-and-trade program to restrict greenhouse gas emissions has hit a major political roadblock. Extending the current program beyond its 2020 expiration most likely requires new action on the part of the Legislature, and majority support looks dubious. And even a majority might not be enough. Many legal and policy analysts believe the state's cap-and-trade regime is functionally a tax, and that reauthorizing and extending it requires a two-thirds majority vote of legislators or voters. ...

That uncertainty depressed the emissions allowance market that defines the cap-and-trade program. Emissions are capped, and emitters need to purchase enough permits from a state-run auction or on the secondary market to cover their emissions. In the most recent auction of these permits, California sold only 11% of the available supply. The lack of demand to some degree showed that emissions were being successfully capped, but it also called into question the whole scheme and raised much less money for “green” projects than expected. On Aug. 16, the state will hold another allowance auction whose results are unlikely to be much better.

Cap and trade, as even this simplified description demonstrates, is a complex program. If California must pass new legislation with a two-thirds majority to extend its climate efforts anyway, policymakers should consider replacing it with a simple straight-up carbon tax. It would provide even more powerful market signals to encourage emissions reductions, serve broader fiscal purposes and thereby make for a better model for federal legislation.

A tax is simpler than cap and trade because it doesn’t involve allowance auctions, registries to keep track of who can sell and who must buy, market monitoring or carbon offsets. Emitters just pay a predictable (and gradually rising) fee for each ton of carbon dioxide they emit, not unlike the tax on a pack of cigarettes. Even a modest tax is likely to be more environmentally effective than the current approach because it is a direct and predictable incentive to lower emissions and use cleaner technology. Under cap and trade, California’s other clean energy regulations do much of the work to prod emitters to meet the cap; the trading system just picks up the slack. ...

Cap and trade has lowered emissions in California and it’s still a popular policy for many, but in Congress, it's increasingly viewed as complex, subject to manipulation and giveaways, and as an engine for the expansion of government. By contrast, a tax strategy is gaining traction.

Although carbon tax bills introduced by Democrats haven’t yet attracted Republican support, a number of Republicans express off-the-record openness to a deal that taxes carbon and also supplants EPA regulations, reduces other taxes and offsets impacts on low-income citizens, for example via expansions in the earned income tax credit or targeted rebates. But those Republicans also fear the political consequences of stepping forward before the right political moment. California’s leadership could help foster that moment.

via www.latimes.com

Ah, the "right political moment."