Environmental Economics

Benefits and costs of evacuation (under uncertainty)

This is a tough one (Watching a ridge slide in slow motion ...):

The fissure was first spotted in October on Rattlesnake Ridge in south central Washington State, overlooking Interstate 82 and the Yakima River. Since then, a 20-acre chunk of mountainside — roughly four million cubic yards of rock, enough to fill 25 football stadiums to the top of the bleachers, eight stories up — has been sliding downhill. Geologists can measure its current speed — about two and a half inches a day — but they cannot say for certain when, or if, it might accelerate into a catastrophe. And they are powerless to stop it. ...

The usual course of events when nature comes unhinged is for researchers and responders to look back in time, trying to understand what happened, as they assess and address the damage done. Here it is precisely the opposite: They are looking forward in time at a disaster in waiting, in which all is still potential and nothing is certain.

The worst-case scenarios — considered unlikely but possible — have the slide breaking loose suddenly and roaring down toward the Yakima River, blocking the channel and flooding the valley, or burying the interstate that runs along the river, carrying 30,000 vehicles a day. Either would mean big trouble for a rich agricultural district where apples and hops are king, about two and a half hours’ drive from Seattle. ...

By giving scientists, officials and the people who live nearby so much time to stew over what could be happening, the slow-motion nature of the slide — at least so far — has already created tensions. About 75 people have been evacuated from nearby houses that may or may not ever be damaged. The local road at the foot of the hillside has been closed. Irrigation canal operators stand ready to open dams and take water from the river if it is blocked by a rock slide. Alternate highway routes have been mapped out, in case the interstate becomes impassable.

Current projections, based on dozens of motion sensors that have been installed on the ridge, suggest that the collapse is most likely to happen sometime in late February. ...

Mr. Emmons, the emergency management director, says he gets updates every day from state geologists and other experts about the odds and percentage predictions of the slide’s likely path. And then he tosses those odds out the window.

“I can’t rely on percentages, because in my world, 1 percent is still a chance,” he said. “I don’t feel comfortable banking on a percent number for public safety, or life safety. In my view, everything is possible.”

My guess is that if the analysis was done using the expected* benefits and costs then the net benefits of evacuation are less than zero. The economic analysis would suggest no evacuation. But the worst case scenario is likely very large and a risk averse emergency manager (see the last two paragraphs) will likely base the decision on that number. 

*For example, the expected benefits would be estimated as E(B) = p1*B1 + p2*B2 + ... + pn*Bn; where p is the probability, B is the benefit of evacuation and slide scenarios go from 1 to n. 

Call for Papers | Environmental Economics and Policy Studies (EEPS) | Special Issue on Hedonic Price Method

From the AERE listserv (Resecon):

More data on household economic activities have been made available to the public in the past two decades.  Geophysical data, such as periodically global maps of night lights, aerosol, rainfall and temperature, are also produced and available (e.g., NASA Earth Observation).  Soon, large data sets collected through digital devices collected by large IT companies such as Google and phone companies may also become accessible.  The increasingly publicly available geophysical and household data provide new research opportunities for environmental economists, and at the same time, prompt re-examination and updates of existing techniques for non-market valuation.  One of these techniques that is expected to be revisited and further developed is the Hedonic Price Method (HPM).

This special issue in the EEPS wishes to review and advance the utilization of HPM for environmental valuation in the cases of both developed and developing countries. We are calling for all empirical and theoretical HPM analyses, independent of place or time, to help establish the current state of the art in HPM for environmental valuation.

Authors are invited to submit papers to be considered for publications in the special issue of EEPS by August 31, 2018.  Regular review process of the Journal applies. Please submit papers following the standard submission process at the EEPS website (https://link.springer.com/journal/10018) and include a cover letter stating the interest to be considered for the special issue on HPM.  Please send all inquiries to the editor of the special issue.

Ju-Chin Huang
EEPS Guest Editor for the Special Issue on Hedonic Price Method
Professor of Economics, University of New Hampshire
[email protected]

Oh goodness, I'm teaching this semester

From the WSJ Weekly Review email:

Trump Administration on Power Plants

By Timothy Puko | Jan 09, 2018

TOPICS: Energy, Regulation

SUMMARY: Federal energy regulators Monday rejected a Trump administration proposal aimed at shoring up struggling coal-fired and nuclear power plants.

CLASSROOM APPLICATION: Students can discuss whether Federal Entergy [sic] Regulatory Commission should alter the electricity market rules to promote coal and nuclear generation. Students can evaluate whether the benefit of multiple energy sources outweighs the allocative efficiency benefits of competitive markets. "The five-member Federal Energy Regulatory Commission ruled unanimously that the administration hadn't provided enough evidence that the measures proposed were needed. The commissioners said the government hadn't provided adequate justification for changing the rules currently governing competitive electricity markets and that the proposal would have unfairly limited competition."

QUESTIONS:

1. (Introductory) What are the benefits to power system of having multiple sources of energy?
2. (Advanced) What are the economic welfare benefits of designing an electricity market that is competitive?
3. (Advanced) Should the federal government distort the electricity market so as to promote coal and nuclear power plants? Should the federal government do so for the purpose promoting multiple energy sources?

Reviewed By: James Dearden, Lehigh University

My answers:

1. security
2. low prices
3. no, the government should not be subsidizing a particular energy source unless there is a market failure (let's say that non-coal and non-nuclear energy gets real expensive, it shouldn't be too hard to quickly ramp up production of coal)

Let's say you have coded your data and estimated your first model and, gulp, there are no results*; but then it turns out this is a @SurveyMonkey problem ...

Suppose you have a 3 x 3 experimental design in a stated preference survey with cost $100, $250, and $500 and benefit is 25%, 50% and 75% improvement (in quality or quantity) variables. You ask more than one choice question. SurveyMonkey spits out the data with a number code which you assume is ordinal. For example:

Cost	Code
$100	1
$250	2
$500	3

But actually you find that the code is not in order. For example:  

Cost	Code
$100	3
$250	2
$500	1

Similar things happen to the benefit variable. There is no pattern to the number code assignment across choice question. So, when coding the variable in your statistical software you must compare the the qualitative data (don't forget your labels John Whitehead!) to the quantitative data. 

SurveyMonkey recently "upgraded" their product and this quirk seems to be an unintended result. 

*For example, no scope effect! BP-funded economists are going to hop on that train big-time.

"Public willingness to pay for a US carbon tax and preferences for spending the revenue"

Abstract:

We provide evidence from a nationally representative survey on Americans' willingness to pay (WTP) for a carbon tax, and public preferences for how potential carbon-tax revenue should be spent. The average WTP for a tax on fossil fuels that increases household energy bills is US$177 per year. This translates into an average WTP of 14% more on average for households across the United States, where energy costs differ significantly across states. Regarding the tax revenues, Americans are most in support of using the money to invest in clean energy and infrastructure. There is relatively less support for reducing income or payroll taxes, returning dividends to households, and other expenditure categories. Finally, Americans support using the tax revenues to assist displaced workers in the coal industry enough to compensate each miner nearly US$146 000 upon passage of a carbon tax.

Matthew J Kotchen, Zachary M Turk, and Anthony A Leiserowitz, Environ. Res. Lett. 12(9), 2017: https://doi.org/10.1088/1748-9326/aa822a

via iopscience.iop.org

And this:

A separate survey question asked respondents about whether or not they think global warming is happening. The omitted category of 'don't know' is compared against respondents answering either 'yes' or 'no.' We find statistically significant results for both. Those who believe global warming is happening are 35 percentage points more likely to support the carbon tax, whereas those who do not believe global warming is happening are 25 percentage points less likely to support the carbon tax.

Looking at the supplementary tables, willingness to pay is $368 higher for the 70% who believe that global warming is happening and $260 less for the 13% who don't believe it is happening (estimated relative to the 17% who don't know). These are huge differences from the $177 mean willingness to pay. 

I found a way to highlight the gender problem in economics on this blog

What? There's a gender problem in economics?

It is not difficult to find an all-male panel at the annual January mega-gathering of American economists. They are as common as PowerPoint presentations and pie charts. One such panel this year met to sleepily critique President Trump’s economic policies, but it was overshadowed by another panel, two ballrooms away, that jolted a profession that prides itself on cool rationality.

That panel on Friday was stocked with women, each of whom presented new research that revealed a systemic bias in economics and presaged a move by the field’s leaders to promise to address some of those issues.

Paper after paper presented at the American Economic Association panel showed a pattern of gender discrimination, beginning with barriers women face in choosing to study economics and extending through the life cycle of their careers, including securing job opportunities, writing research papers, gaining access to top publications and earning proper credit for published work. ...

Janet Currie, chairwoman of Princeton’s economics department, and Claudia Goldin, an economist at Harvard, pointed to a recent study that found that women get significantly less credit than men when they co-write papers with them, as reflected in the way the paper affects their chances of receiving tenure.

When the co-author is a man, “people don’t say anything about it, it’s just normal,” Ms. Currie said. “When it’s a woman, it’s: ‘Oh, everything she wrote is with co-authors. How do we know she’s any good?’”

She said the behavior, detailed in a paper by Heather Sarsons of Harvard, was related to a more widespread phenomenon. “There are lots of examples of when a woman says something, no one pays attention,” Ms. Currie said. “A man says the same thing, everyone says it’s great. It happens a lot.”

Sarah A. Jacobson, an environmental economist at Williams College, recounted an experience during graduate school that she said was indicative: A well-respected female economist delivering a talk at her department was repeatedly interrupted by male economists when trying to answer questions from the audience.

“In the middle of the seminar, a male economist I respect turned around — they’re in the audience — and they were explaining the answer for her, on her behalf,” Ms. Jacobson said.

“You see it all the time,” she added. “You occasionally see it if a male is presenting. You see it pretty often if a woman is presenting.”

What Sarah is trying to say is this: male economists, especially the older ones, tend to try to explain things for female economists, who they feel superior to simply because of their gender. 

Why does Economic Inquiry shout their titles?

For example:

Mueller-Langer, F. and Watt, R. (2018), HOW MANY MORE CITES IS A $3,000 OPEN ACCESS FEE BUYING YOU? EMPIRICAL EVIDENCE FROM A NATURAL EXPERIMENT. Econ Inq. doi:10.1111/ecin.12545

Abstract. We analyze the effect of open access (OA) status of journal articles on citations. Using cross-sectional and panel data from mathematics and economics, we perform negative binomial, Poisson, and generalized method of moments/instrumental variable methods regressions. We benefit from a natural experiment via hybrid OA pilot agreements. Citations to pre-prints allow us to identify the intrinsic quality of articles prior to journal publication. Overall, our analysis suggests that there is no hybrid OA citation benefit. However, for the subpopulation of articles without OA pre- or post-prints, we find positive hybrid OA effects for the full sample and each discipline separately.

via onlinelibrary.wiley.com

$3000

"An Oath for Scientists"

I swear that I will, according to my ability and judgment, protect the credibility of science by carrying out this oath and this indenture.

To make the grounds for my scientific claims transparent and available for others to scrutinize, to welcome that scrutiny and accept that others will be skeptical of my claims, to help others verify the soundness of my claims; to describe my methods in sufficient detail for others to repeat them, to not obstruct others' attempts to replicate my work; to report all evidence I know of for or against my claim, to not suppress evidence against my conclusions, to correct my past claims if I learn that they were wrong, to support the dissemination of evidence that disconfirms or contradicts my past claims.

I will hold myself and all other scientists to this oath, and I will not exempt any scientist because of her status or reputation. I will judge scientific claims based on the evidence, not the scientist making the claim. Neither will I hold any scientific claim or finding as sacred. Similarly, I will recognize as valuable the work of scientists who aim to correct errors in the scientific record.  

In whatever claims I present in my role as scientist, I will not knowingly overstate or exaggerate the evidence, I will not make claims out of interest for advancing my own station, and I will disclose any personal interest that may be perceived as biasing my judgment.  I will protect the credibility of my profession by making careful, transparent, calibrated claims.

Now if I carry out this oath, and break it not, may I gain for ever reputation among all scientists for my work; but if I transgress it and forswear myself, may the opposite befall me.

via sometimesimwrong.typepad.com

Good luck to anyone who attempts to express concern / comment on a published paper

This is not one of my adventures*:

Three years after receiving a complaint about extensive plagiarism and major errors in an anti-global warming paper, Elsevier says it’s still reviewing the allegations. ...

After Jokimäki’s September 2014 exchange with Elsevier, he heard nothing from the publisher or journal for 10 months.

In July 2015, the journal’s editor-in-chief, Kazmerski, told Jokimäki he had conferred with the authors and the reviewers of the paper, who agreed “some action was needed.” Kazmerski proposed a solution: Jokimäki would write a commentary on the paper, to which the authors could respond. Kazmerski said he would publish Jokimäki’s comment regardless of whether the authors wrote a rebuttal. In August 2015, Kazmerski invited Jokimäki and corresponding author Florides to start the process.

In March 2016, Jokimäki sent Kazmerski his detailed commentary on the paper. Jokimäki co-authored the comment with John Mashey, a computer scientist who also writes for the blog Skeptical Science and has raised concerns about another controversial anti-climate science paper, which was ultimately retracted. The comment took about seven months to complete, Jokimäki explained, because he and others “are doing this as a hobby,” which meant that writing the comment paper “had to be done on our free time.”

Over the next year, Jokimäki says he heard nothing from the journal.

In March 2017, Kazmerski emailed Jokimäki explaining he had sent the authors’ rebuttal to Jokimäki 10 months ago. Jokimäki, however, says he never received that May 2016 email.

In May 2017, Kazmerski sent Jokimäki the authors’ comments, which Jokimäki describes in his blog as making “hand waving type arguments,” and saying it would be “too much work” to submit a formal response.

via retractionwatch.com

*An update on one of my adventures: My replication paper has now received three reviews. I have responded to the first and still need to respond to the next two.

The cost of offshore drilling safety regulations seem low relative to the costs

In case you missed it over the holiday break:

The Trump administration is poised to roll back offshore drilling safety regulations that were put in place after the 2010 Deepwater Horizon oil rig disaster in the Gulf of Mexico that killed 11 people and caused the worst oil spill in American history.

A proposal by the Interior Department’s Bureau of Safety and Environmental Enforcement, which was established after the spill and regulates offshore oil and gas drilling, calls for reversing the Obama-era regulations as part of President Trump’s efforts to ease restrictions on fossil fuel companies and generate more domestic energy production.

Doing so, the agency asserted, will reduce “unnecessary burdens” on the energy industry and save the industry $228 million over 10 years. ...

Industry groups like the American Petroleum Institute have long opposed the safety rules, calling them “flawed and costly.” The fossil fuel interest group warned in 2015 that the regulations would reduce capital investment in the Gulf by $4 billion a year and threaten 50,000 industry jobs. ...

The Obama-era rules, written in 2016, tightened controls on blowout preventers, devices that are intended to stop explosions in undersea oil and gas wells, and called for rig operators to have third parties certify that the safety devices worked under extreme conditions. In the Deepwater Horizon spill, a supposedly fail-safe blowout preventer failed after a section of drill pipe buckled.

As always with industry estimates you need to put them in context (ignoring the need to recognize that industry cost estimates are usually exaggerated to avoid regulations). The U.S. Energy Information Administration says that Gulf of Mexico oil production is 1.6 million barrels per day (2016). If the price per barrel is $65, then that leads to revenues of about $37 billion annually. The cost of the Obama-era rules is $22.8 million per year, about 0.06% of revenues or $456 for each lost job. The regulatory costs seem low to me, especially considering that the BP Deepwater Horizon blowout lead to 11 deaths and damages of $17.2 billion. 

Note, that in contrast to API's warning that 50,000 industry jobs were at risk in 2015, the EIA said that "Oil production in federal Gulf of Mexico expected to continue increasing."

What am I missing?