Environmental Economics

EPA must be having computer problems--all of their climate change stuff has disappeared

 Hmmmm...when I click on the EPA Climate Change page, I get this:

That's peculiar.

I'm looking forward to the updates.

 

Sponsor bias

Alison McCook at Retraction Watch:

First, an occupational health journal appointed a new editor with industry ties without consulting the editorial board. Then, with no explanation, it withdrew a paper by the previous editor that was critical of corporate-sponsored research — again, without consulting the editorial board.

At that point, they’d had enough.

Yesterday, the editorial board of the International Journal of Occupational and Environmental Health sent a letter to the publisher, Taylor & Francis, expressing their “grave concerns” over the future of the journal, and its recent actions.

As part of the letter — signed by 30 past and present editorial members and the founding editor — they write:

IJOEH has stood in a class by itself in publishing critical analyses and challenges of improper corporate influence on the standards of practice and scientific literature in our field.

Originally, we raised serious concern that the Editorial Board was never consulted or informed by T&F about the change of editors, replacing Dr. David Egilman with corporate consultant Dr. Andrew Maier.  We wrote to the publisher on February 11 requesting to know the process and justification for changing editors of a scientific journal without involving the Editorial Board.

As an illustration of their concerns, the board members note that Maier — chair of the fellows program at Toxicology Excellence for Risk Assessment (TERA), which the letter-writers dub a “corporate consulting firm” — recommends a significantly higher safe limit for diacetyl, a flavoring chemical used in microwave popcorn, than did former editor Egilman.

This month, the journal withdrew a 2016 paper by Egilman, “The production of corporate research to manufacture doubt about the health hazards of products: an overview of the Exponent Bakelite simulation study,” with a curt statement:

This content has been removed by the publishers.

The board members conclude their letter (which you can see here, with contact information redacted) with four demands ...

It is difficult to fully trust research that has been conducted for a business firm, government agency, non-profit, or whatever, that has clear organizational goals that may deviate from discover of facts or the truth. Business firms that seek to maximize profits tend to sponsor research that leads to higher profits. Non-profit organizations and government agencies tend to sponsor research that expands and/or protects the organization/agency. The degree to which you can trust the research can only be judged on a case-by-case basis considering context, the degree to which the research seems biased towards the sponsor's goals, etc. The problem is much worse when the researchers are not required to reveal their funding sources, but this problem seems to be going away as researchers are required to disclose funding and conflicts of interest. 

This journal sounds like it is going downhill.

BP has funded a book critical of the contingent valuation method

Exactly one week after the CVM article estimating BP damages appears in Science this book critical of the CVM is being published:

Contingent Valuation of Environmental Goods: A Comprehensive Critique

Edited by Daniel McFadden and Kenneth Train

Contingent valuation is a survey-based procedure that attempts to estimate how much households are willing to pay for specific programs that improve the environment or prevent environmental degradation. For decades, the method has been the center of debate regarding its reliability: does it really measure the value that people place on environmental changes? Bringing together leading voices in the field, this timely book tells a unified story about the interrelated features of contingent valuation and how those features affect its reliability. Through empirical analysis and review of past studies, the authors identify important deficiencies in the procedure, raising questions about the technique’s continued use.

Individual chapters investigate how respondents answer questions in contingent valuation surveys, with a particular focus on how the procedure’s estimates change based on the costs that the researcher specifies, the payment mechanism, and the scope of the environmental improvement. Other issues covered include whether the survey respondents make trade-offs between the program costs and benefits; and whether corrections can be applied to account for any misunderstanding of the questions by respondents and for the hypothetical nature of the survey.

This book will appeal to environmental economists and students in environmental and resource economics. Government staff at environmental agencies and survey researchers will benefit from the close analysis of previous applications.

The acknowledgement says:

The research presented in this book (with the exception of Chapter 6) was partially funded by BP Exploration & Production Inc. ... The research conclusions and opinions contained in this volume are solely those of the authors.

The price is $155 but the book is currently open access. I've successfully downloaded all of the PDFs (and ordered the hardback)*. My book review is forthcoming in 2018**. 

*Discrete choice experiment folks ... enjoy the ride because they're going after you too (see chapters 1 and 9)!

**A commitment mechanism.

People are willing to pay a lot to prevent another BP-like oil spill

In my best Thomas Dolby voice: SCIENCE!

...According to a paper published in the journal Science on Thursday, Americans are willing to pay $17.2 billion to prevent another BP Deepwater Horizon oil spill. Thanks to a team of scientists who conducted a six-year study into the effects of the 134-million-gallon spill, we now have a more accurate picture of the devastating consequences—and also how desperately we want to reduce our dependency.  

To relate the true damages of an oil spill of this magnitude, researchers set out to equate the damage in monetary terms, as so often we view natural resources as permanent and limitless. In order to arrive at the $17.2 billion figure, scientists surveyed households across the country to see how much they’d be willing to pay to avoid similar spills in the future. Along with asking participants these questions, the study authors included detailed accounts of the damage already done to beaches, animals, marine life, and marshland. As one of the paper’s authors, Kevin Boyle, explained to Virginia Tech News, “This is proof that our natural resources have an immense monetary value to citizens of the United States who visit the Gulf and to those who simply care that this valuable resource is not damaged.”

Commissioned by the U.S. National Oceanic and Atmospheric Administration one month after the 2010 spill, the long-awaited study can now give us some insight into the actual dollar value of devastating the environment. What they also found was an overwhelming public willingness to put hard-earned cash into prevention funds. According to the survey, the majority of households said they’d willingly pay $153 each for prevention measures. Adding up all the reported figures led researchers to the $17.2 billion total.

Here's a link to the Science article.

Daily Demand and Supply: Supporting evidence for the standard minimum wage example

The simple minimum wage example in a principles of microeconomics goes something like this:  If the minimum price of labor (wage) is set above the existing equilibrium wage in the market for labor, the result will be a decrease in the quantity demanded for labor (hiring), and an increase in the quantity supplied of labor (more people want to work at higher wages).  The result in a surplus of workers willing to work at the minimum wage (unemployment).  If prices work properly to ration labor, then we would expect wages to fall, but because the price cannot fall below the minimum wage, the surplus of labor (unemployment) is persistent.

An ironic caveat to this simple analysis is that the expected unemployment occurs among the group of people at whom the minimum wage law is targeted--those willing and able to work at the minimum wage. That is, if the simple analysis of minimum wages hold, then minimum wage laws are likely to cause unemployment among the lowest wage workers.

Until now, the empirical evidence on whether minimum wages laws cause unemployment has been mixed at best.  In most studies, the change in minimum wage has been small, and authors have had to rely on comparing labor markets in similar cities that border policy jurisdictions with different minimum wage laws (think difference in minimum wage laws for similar cities in New Jersey and Pennsylvania, both located near the state line).  But with the recent move toward large and geographically disparate changes in minimum wage laws, it looks like we will be seeing more studies examining this question.  

And here's one from Luca and Luca* of the Harvard Business School put out in the last month that seems to support the simple model prediction that minimum wage laws result in decreases in employment:

We study the impact of the minimum wage on firm exit in the restaurant industry, exploiting recent changes in the minimum wage at the city level. The evidence suggests that higher minimum wages increase overall exit rates for restaurants. However, lower quality restaurants, which are already closer to the margin of exit, are disproportionately impacted by increases to the minimum wage. Our point estimates suggest that a one dollar increase in the minimum wage leads to a 14 percent increase in the likelihood of exit for a 3.5-star restaurant (which is the median rating), but has no discernible impact for a 5-star restaurant (on a 1 to 5 star scale).

Seems to be consistent with what we would expect from simple economics.

*I wonder if they live on the second floor?

What do Environmental and Resource Economists Think?

Blatant self-promotion alert.  Just a reminder to read John and my article: What do Environmental and Resource Economists Think?  in the Review of Environmental Economics and Policy.  Right now we're #4 on the Most Read list, but we're not happy until we're #1.  

And why wouldn't we be with profound insights like this:

...political ideology may play a role in how AERE members view the issues.

A grand carbon tax bargain is supposed to be proposed by the politically dominant party, right?

David Roberts at Vox:

The dream of a bipartisan deal on carbon taxes is evergreen in US political circles. Lately, it has taken on a somewhat more specific form. The Climate Leadership Council (led by emeritus Republicans George Shultz and James Baker III) and the libertarian Niskanen Center have both proposed various forms of a deal in which Republicans would agree to a carbon tax in exchange for Democrats agreeing to repeal regulations on carbon emissions and fuel economy (among others).

Reporter Amy Harder (who recently moved from the Wall Street Journal to Axios) points out that no Republicans support the deal. But she also says that environmental groups and Democrats will not accept it — and their refusal is “the logjam preventing any climate compromise.”

Niskanen’s David Bookbinder (formerly of Sierra Club) told Harder that green groups actually would accept the trade if the price was right, they just won’t say so. "Like most entities that have no experience in actual negotiations,” he said, “[environmental groups] believe that they can't say publicly that they will make the trade until the R's put the tax on the table.”

Harder adds:

Our thought bubble: At least one side is going to have to be the first to show a willingness to compromise privately and eventually publicly to break the logjam that is this perennial carbon tax debate. So far, that's not happening. A spokesman for the Sierra Club declined to comment on the record about their official position, which is that they wouldn't support a trade of EPA regulation for a carbon tax.

This is shaping up to be a classic Washington dynamic: Democrats being pressured to compromise in advance, with phantoms.

Here’s the thing about the “perennial carbon tax debate” — it’s not a debate between the two parties. No actual Republican officeholder has proposed a carbon tax or signaled support for one. Conservative power brokers like Grover Norquist and the Heritage Foundation (which is writing Trump’s environmental initiatives) have stated in no uncertain terms that a carbon tax is a non-starter.

[...]

"We could spend time coming up with this grand compromise and then start working with the Hill and it would all collapse," a Trump administration official told Harder of the tax-regulation swap. "We wouldn't waste our time on it."

That may be the only smart decision made by this administration yet.

There’s nothing wrong with people pushing this idea, if they think it’s a good idea. But elected Democrats are surely aware that a) there is no actual support for it among the GOP and b) when it comes to carbon, federally speaking, EPA regulations are the only tool left on the table.

via www.vox.com

There are lots of reasons in the [...]. I agree that it would make sense for everyone to relax until someone with any political power acts as if a carbon tax is a serious proposal during this political cycle. Blaming environmental groups and Democrat politicians for their lack of compromise about a vague non-congressional proposal is just bat poop crazy.

I'm still not convinced this is the best way to set environmental policy

I imagine a Trump family meeting goes something like this*:  

Donald: "OK kids, what can we do to make your lives better?"

Baron: "Gee Dad, I wouldn't mind being able to leave my shoes all over the foyer when I walk in the door."

Tiffany: "I hate cleaning up after the dog and I really don't mind stepping in dog poop."

Ivanka: "Do we really need to eat off of clean dishes?"

Donald Jr: "The toilets don't really need to be cleaned every week, do they?

Eric: "I thought my bed made itself."

Donald: " Sounds good to me.  Awesome meeting.  Amazing ideas.  Bigly.  And if you all don't mind, I'm going to adopt this management strategy as I make America GREAT again."

Just days after taking office, President Trump invited American manufacturers to recommend ways the government could cut regulations and make it easier for companies to get their projects approved.

Industry leaders responded with scores of suggestions that paint the clearest picture yet of the dramatic steps that Trump officials are likely to take in overhauling federal policies, especially those designed to advance environmental protection and safeguard worker rights.

Those clues are embedded in the 168 comments submitted to the government after Trump signed a presidential memorandum Jan. 24 instructing the Commerce Department to figure out how to ease permitting and trim regulations with the aim of boosting domestic manufacturing. The Environmental Protection Agency has emerged as the primary target in these comments, accounting for nearly half, with the Labor Department in second place as the subject of more than one-fifth, according to a Commerce Department analysis.

• BP wants to make it easier to drill for oil and gas in the Gulf of Mexico by reducing how often companies must renew theirleases.

• A trade association representing the pavement industry wants to preclude the U.S. Geological Survey from conducting what the group says is “advocacy research” into the environmental impact of coal tar. The Pavement Coatings Technology Council says this research could limit what it uses to seal parking lots and driveways.

• The U.S. Chamber of Commerce wants to reduce the amount of time opponents have to challenge federal approval of projects. Challenges would have to be filed within two years, down from six.

• The Chamber also wants to jettison a requirement that employers report their injury and illness records electronically to the Labor Department so they can be posted “on the internet for anyone to see.”

• And in its 51-page comment, “Make Federal Agencies Responsible Again,” the Associated General Contractors of America recommended repealing 11 of President Barack Obama’s executive orders and memorandums, including one establishing paid sick leave for government contractors.

*OK, maybe that was a Haab family meeting.

Drink at each awkward pause / stupid mistake / embarrassing gesture

"U.S. asked for more time on climate policy"

There you go again: 

Countries from the G7 group of advanced economies did not sign a joint declaration at the end of an energy meeting in Rome as the administration of U.S. President Donald Trump needs more time to work on its climate policy, an Italian minister said on Monday.

"The United States is in the process of reviewing many of its policies. This includes a review of policies relating to climate change and the Paris Agreement," Italian Industry Minister Carlo Calenda said on the sidelines of the meeting.

"While this is under way the United States reserves its position on these key priorities ... It was not possible to sign a joint declaration since it would not cover the whole range of topics in the agenda," he added.

Calenda said that all other European Union countries remained strongly committed to the Paris accord to curb greenhouse gas emissions.

via in.reuters.com

Remember how we messed up the Kyoto Protocol? Dave McEvoy on international environmental agreements in this book:

As of today, the Kyoto Protocol remains the only international treaty requiring binding greenhouse -gas emissions limits. Unfortunately, the treaty has been largely unsuccessful. The impending failure of Kyoto can be largely attributed to two major shortcomings. First, the treaty failed to motivate the two biggest greenhouse -gas emitters to commit to reducing, or even stabilizing, their emissions. The United States, at the time the biggest emitter (now second biggest), chose not to ratify the treaty. One of the fundamental reasons for the defection was that the United States felt her participation would be futile without having China, then the second biggest emitter (now the biggest), also take on emissions abatement responsibilities. While China is a signatory to the protocol, its classification as a developing country precluded it from any emissions abatement responsibilities.

I think that China is participating in the Paris Agreement.