Environmental Economics

I always wanted to be in one of those fancy moving pictures

From the inbox:

My name is David Knoller, and I am the Executive Producer of a new drama series entitled THE ONE PERCENT from the MRC (Media Rights Capital) the studio who produces HOUSE OF CARDS.  The creators of our series are Alejandro Iñárritu, the director and writer of Birdman & The Revenant, and also from the writing team of Birdman.  The series will stat Hillary Swank and Ed Helms.

It is about a patriarchal Ohio farming family who is struggling to keep their farm amid a sea of their neighbors’ GMO leased land, and which due to the loss of their son, has moved them to change to organic farming.  There are a lot of other factors to the story, that if this piques interest in someone from your department to advise us, we will more than happy to provide the scripts and storylines.

We will be creating a 40 acre organic farm AND orchard, requiring transplanting of fruit trees, seeding, sowing, etc., along with building the farmhouse and creating a pond.  We are doing a scout next week in the Cleveland/Northeast Ohio, and we are hoping we could persuade a very knowledgeable expert from your faculty to meet with us at a couple of farms, and enlighten us and our Production Designer Jack Fisk (Designer of The Revenant and There Will Be Blood) on things we will need to do.

We realize we are in a bit of a time crunch, seasonally speaking, if we want to commence filming in the middle of March. Assuming we will have to get to work immediately before a winter freeze.

Hillary Swank and Ed Helms?  

I'm picturing a cross between Million Dollar Baby and The Hangover. 

Million Dollar Hangover?

The Hungover Baby?

In Northeast Ohio.

In March?

Here's the synopsis:  Set against the world of organic farming, a dysfunctional family is struggling to keep their family farm from financial ruin, until a bizarre twist of fate changes their lives forever.

 

 

I'm in a field experiment!

Thanks for the heads up but this brings back unhappy memories

From the inbox:

Dear Colleague,

I am writing to let you know that one or more of your papers was cited in issue 3 of volume 3 of the J. of the Association of Environmental and Resource Economists (JAERE). I have attached a PDF of the paper; the authors and title are:

Laura A. Bakkensen and Robert O. Mendelsohn, “Risk and Adaptation: Evidence from Global Hurricane Damages and Fatalities”

This reminds me of that one time when I submitted a hurricane evacuation paper to JEEM and got a desk rejection. The editor told me it wasn't environmental enough but I should send it to the Journal of Risk and Uncertainty. So, I sent it to the Journal of Risk and Uncertainty. I got a desk rejection. The editor told me that hurricane evacuations weren't risky or uncertain enough but I should send it to JEEM. [1]

This also reminds me of that time when the exact same thing happened ... again with a hurricane evacuation paper. [2]

And then there was this third paper. Oyster consumption safety isn't risky or uncertain enough for the Journal of Risk and Uncertainty. But, at least, this one got a review. My favorite line was something like this: "Readers of JRU won't be interested in this paper until page 26." That's when we began computing a measure of the value of lives saved from an oyster safety policy. Funnier still, this paper was also rejected at JEEM after two rounds of reviews. The editor suggested I send it to JRU. Which I did. [3][4]

Notes:

[1] Finally published at Ocean and Coastal Management.

[2] Finally published at Environmental and Resource Economics. It was environmental enough for the Europeans.

[3] Under review somewhere.

[4] I don't plan on sending any more papers to JRU ... unless I start estimating hedonic wage models with a risk variable and turning the results into a VSL.

Hey, I'm a private landowner in Watauga County

Sign me up ANC!

Audubon North Carolina said it will soon reach out to private landowners across Watauga County to encourage them to protect and restore priority bird habitats, while simultaneously helping landowners enhance their property in cost-effective and sustainable ways.

 

ANC staff will work with private landowners to maintain or enhance their land to benefit golden-winged warbler populations in Western North Carolina.

Watauga County, because of its elevational range and forested landscape, is an important destination for golden-winged warblers to nest each year, according to ANC. The warbler has been petitioned for listing as an endangered species due to its rapid range-wide decline, making the nesting areas in North Carolina crucial for protection and ongoing maintenance.

Audubon has mapped privately owned land in Western North Carolina that contains preferred habitats for the species in hopes of working directly with landowners to preserve the area for long-term sustainability. Landowners who meet certain criteria to participate in the program will be notified with a letter from an ANC representative in the next few weeks.

via m.wataugademocrat.com

I'm just sitting around and waiting on me letter. 

Greg Mankiw's Blog: A Trailer for the Pigou Club

via gregmankiw.blogspot.com

From YouTube:

From Academy Award®-winning filmmaker Fisher Stevens and Academy Award-winning actor, and environmental activist Leonardo DiCaprio, BEFORE THE FLOOD presents a riveting account of the dramatic changes now occurring around the world due to climate change. BEFORE THE FLOOD will be in theaters in NYC and LA starting October 21, and air globally on the National Geographic Channel starting October 30.

The only economics in the trailer is a sign that says "Carbon Tax Now" and Professor Mankiw at 1:45. 

"Trump denies calling climate change a hoax"

In case you missed the debate Monday night (I wish I had), I think this was the only environmental economics:

Donald Trump on Monday sparred with Hillary Clinton over whether he has called climate change a hoax as they debated the nation's energy policy.

Clinton said the United States should invest in clean energy, build up to half a billion solar panels and work toward powering every American home with clean energy.

She predicted that “some country is going to be the clean energy superpower of the 20th century,” adding that, “Donald Trump thinks that climate change is a hoax perpetrated by the Chinese.” 

Trump, interjected to say, “I did not. I do not say that.” 

In 2012, Trump sent a tweet: “The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive.” He has tweeted variations on that claim often, and he has spoken of his skepticism about climate change science during this year’s presidential campaign. 

Clinton responded, saying, “The science is real, and I think it’s important that we grip this and deal with this, both at home and abroad.” Her plan, she said, would create “a lot of jobs. That's a lot of new economic activity.”

Trump said the United States has too much debt to invest in clean energy and called American energy policies “a disaster.”

“Our country is losing so much in terms of energy, in terms of paying off our debt,” he said. “We can’t do what you’re looking to do with $20 trillion in debt.” 

via thehill.com

"AppalCART seeks solutions to overcrowded buses, stagnant funding"

I can't really tell if they are seriously wondering how to make money from this thing:

In 2005, the town of Boone committed funding so that AppalCART could provide free service for in-town routes. At that time, annual recorded trips were at 652,000, Hughes said.

Fare-free service was wonderful, he said, because it “keeps things simple and keeps things moving.” But in the 11 years since then, ridership has increased to 1.8 million trips annually, and the town’s contribution has remained the same. ...

Although the transportation authority counts its growing ridership numbers as a success in helping decrease the number of vehicles on Boone’s streets and highways, its resources and equipment are experiencing growing pains, said Hughes.

Currently, routes Red, Teal, Blue, Gold, Pop 105, Orange and Purple are routinely full at peak times, according to AppalCART. ...

AppalCART is currently “maximizing state and federal funding” along with grants to continue and expand or replace aging buses, the letter stated. AppalCART is scheduled to replace nine buses over the next two years.

But capital grants do not fund additional bus drivers or operational expenses, and some state and federal transportation grants will remain at current levels or expire, said Hughes.

Hughes said the transportation authority is exploring alternative funding options and would like to work with ASU, the town and the county to develop a combined mobility plan to ensure routes and assets are being utilized fully and efficiently. N.C. State has a similar plan, he noted.

He added that analysis, ridership surveys and route improvements have not been completed in several years and that hiring a transportation planning consultant is a priority for AppalCART.

via m.wataugademocrat.com

Let me make a suggestion: one way to raise additional money is to charge a fee for the service. A quarter a ride would generate $450,000 (assuming the demand curve is vertical). Is pricing off the table for some reason?

 

Comment on Desvousges, Mathews and Train (2015) continued: WTP Estimates

Desvousges, Mathews and Train (2015) [DMT] find that their contingent valuation method (CVM) survey does not pass the adding up test. In a previous post (Whitehead, Sept. 20, 2016) I examined the data used by Desvousges, Mathews and Train (2015) and find that "it is ... not clear if [the data] passes the most basic validity test in contingent valuation over 89% of the range of bids."

There are other things wrong with the paper. DMT find that “WTP for the whole is statistically different from the WTP for the second and third increments and is not statistically different from the WTP for the first and fourth increments” and “The sum of the four increments … is about three times as large as the value of the whole” (p. 566).

A nonparametric estimator is needed since the DMT data exhibits relatively low internal consistency over the bid range and fat tails (Desvousges, Mathews and Train 2015, Parsons and Myers 2016, Appendix A). Given these limitations, following Chapman (2009), DMT choose the ABERS nonparametric estimator for willingness to pay (Ayer et al. 1955). The ABERS estimates in DMT are similar to the more familiar Turnbull nonparametric WTP estimates, which is a lower bound (Haab and McConnell 2003). [1] The Turnbull nonparametric WTP estimate is the area under the step function formed by the unconditional probability of a yes response at each bid amount.

In contrast, the Kriström (1990) nonparametric WTP estimate is the area under the demand function formed by assuming a probability of a yes response of one at a zero bid, using linear interpolation to determine an estimate of the bid amount that leads to a probability of zero (i.e., the choke price) and using linear interpolation for the slope of the survival function between bid amounts. 

In both the Turnbull and Kriström estimators when the unconditional probability of a yes response is not monotonically decreasing, as in the DMT data, the probability of a yes response is pooled back to the lowest bid amount over the range of non-monotonically increasing bid amounts. These probabilities are presented in Table 1. The upper bid amounts that drive the probability of a yes response to zero (i.e., the choke prices) are 2096, 560, 677, 608 and 561 for the whole and first, second, third and fourth increments. These are estimated by linear interpolation in R following Kriström (1990) (Aizaki, Nakatani and Sato, 2014).

Using these survival functions I estimate the Kriström WTP estimates (Table 2). The 95% confidence intervals are computed using the formulas for the variance developed by Bowman, Bostedt and Kriström (1999). The variance for the sum of the four parts is the square root of the sum of the variances of the four parts. In contrast to DMT I find that WTP for the whole is statistically different from WTP for each of the incremental parts. The sum of the WTP for the four increments, $760 (standard error = 103), is not statistically different than the value of the whole, $576 (standard error = 84) (Figure 1).

The DMT data passes the scope and adding up tests with an alternative estimate of WTP than that used by DMT. This result is driven by the flatness of the survival function for the whole scenario over the higher end of the bid range ($125-$405). Given the fat tails problem this estimate of the choke price is arbitrary but no less arbitrary than truncation at the highest bid amount as in DMT. The ABERS/Turnbull WTP estimate used by DMT is appropriate for natural resource damage assessment where a lower bound estimate is desired (Chapman 2009). The ABERS/Turnbull WTP is less appropriate for validity testing of the CVM.

Figure 1. The sum of the parts is equal to the whole

Note:

[1] I find differences between 0% and 13% between the WTP estimates presented by DMT and the Turnbull estimates computed in R (Aizaki, Nakatani, and Sato, 2014).

References

Aizaki, Hideo, Tomoaki Nakatani, and Kazuo Sato. Stated Preference Methods Using R. CRC Press, 2014.

Ayer, Miriam, H. D. Brunk, G. M. Ewing, W. T. Reid, and Edward Silverman. 1955. “An Empirical Distribution Function for Sampling with Incomplete Information.” Annals of Mathematical Statistics 26 (4): 641–47.

Boman, Mattias, Göran Bostedt, and Bengt Kriström. "Obtaining welfare bounds in discrete-response valuation studies: A non-parametric approach." Land Economics (1999): 284-294.

Chapman, David, Richard Bishop, Michael Hanemann, Barbara Kanninen, Jon Krosnick, Edward Morey and Roger Tourangeau. 2009. Natural Resource Damages Associated with Aesthetic and Ecosystem Injuries to Oklahoma’s Illinois River System and Tenkiller Lake.

Desvousges, William, Kristy Mathews, and Kenneth Train. “An Adding Up Test on Contingent Valuations of River and Lake Quality.” Land Economics 91(2015): 556-571.

Haab, Timothy C., and Kenneth E. McConnell. Valuing Environmental and Natural Resources: The Econometrics of Non-market Valuation. Edward Elgar Publishing, 2002.

Kriström, Bengt. "A non-parametric approach to the estimation of welfare measures in discrete response valuation studies." Land economics 66, no. 2 (1990): 135-139.

Parsons, George R., and Kelley Myers. "Fat tails and truncated bids in contingent valuation: An application to an endangered shorebird species." Ecological Economics 129 (2016): 210-219.

Daily Demand and Supply: A tax example

The standard market-based solution to reducing unwanted behavior is to place a tax on the unwanted behavior, causing people to want to do the unwanted stuff less (that's the law of demand). Here's a good example:

Customers at most stores in Baltimore would have to pay 10 cents for almost every bag they accept — whether paper or plastic — under legislation headed to the City Council for a vote next week.

The legislation — which would apply to most purchases at grocery stores and major retailers such as Target and Walmart — cleared a key council committee Tuesday.

The proposal is the latest in a decade-long effort against disposable bags that advocates say is intended to reduce litter and help the environment. Roughly 100 communities nationally, including Washington, D.C., and Montgomery County, have banned plastic disposable sacks or imposed a fee on them.

And if you're one of the many who think "Pffft, $.10 ain't gonna change nothin' (that's how opponents of externality taxes talk), here ya' go:

In 2011, Wales started charging 5p per bag and saw a 71% drop in the number used by customers.

Scotland and Northern Ireland introduced their charges in 2014 and 2013 respectively and have also seen significant drops in usage.

In Scotland the charge was introduced in the final 11 weeks of 2014 and figures show a drop of 18% when compared with the statistics for the previous year. Similarly, in Northern Ireland in 2014 there was a 42.6% annual reduction following a previous drop of 71%, after the carrier bag charge was introduced.

Damn Brits!

Pilgrimage complete