Environmental Economics

Proof: Things are getting warmer

This:

A sharp spike in Greenland temperatures since 1995 showed the giant northern island 2.7 degrees (1.5 degrees Celsius) hotter than its 20th-century average, the warmest in more than 1,000 years, according to new ice core data.

and this:

“This is an important finding and corroborates the suspicion that the ‘missing warming’ in the ice cores is due to the fact that the cores end before the strong warming sets in,” said climate scientist Martin Stendel of the Danish Meteorological Institute, who wasn’t part of the research.

mean this:

“We should be very concerned about North Greenland warming because that region has a dozen sleeping giants in the form of wide tidewater glaciers and an ice stream,” said Danish Meteorological Institute ice scientist Jason Box. And when awakened, it will ramp up melt from Greenland, he said.

And that means “rising seas that threaten homes, businesses, economies and communities,” said U.S. National Snow and Ice Data Center Deputy Lead Scientist Twila Moon.

Resource and Energy Economics published a corrigendum that adds authors

Here is how it looks in my inbox: Corrigendum to “Exploring the shelf-life of travel cost methods of valuing recreation for benefits transfer” [Resour. Energy Econ. 63 (2021) 101123]. If you click on that it takes you to something I've never seen before: 

The article previously included Xiaoyang He and Gregory L. Poe as authors. Muhammed Jawad Khan and Elizabeth M. Spink have been added as authors to reflect their substantial contributions to data generation, analysis, and the empirical strategy used in early stages of this research. The corrected authorship is as follows: He, Xiaoyang, Muhammed Jawad Khan, Elizabeth M. Spink, and Gregory L. Poe.

The original article was published in "Introduction to valuing and managing the environment: A special issue in honor of Gregory L. Poe."

In April 2018, a symposium was held at Cornell University to celebrate the life and professional contributions of Gregory L. Poe. Greg was a Professor of Environmental and Resource Economics at Cornell from 1993 until his unexpected passing in 2017. ...

Below is what you see when you click on the original article. The two authors under the title and then you need to go to the corrigendum to see that there are two more authors. 

Some thoughts on equity and efficiency

I was recently looking back on some notes I wrote a while back on the difference between efficiency and equity. These notes came about for two reasons: 1) I've had fits and starts over the years of writing a Principles-level economics book from an environmental/sustainability perspective, and in thinking about this, 2) I've realized that by presenting markets as 'efficient' in the standard Principles-level treatment, we may be missing the mark.

In deciding how best to allocate our scarce resources, there is thought to be a trade-off between equity and efficiency.  As Greg Mankiw puts it in his Principles of Microeconomics textbook:

Another trade-off society faces is between efficiency and equality.  Efficiency means that society is getting the maximum benefits from its scarce resources.  Equality means that those benefits are distributed uniformly among society's members...When government policies are designed, these two goals often conflict...In other words, when the government tries to cut the economic pie into more equal slices, the pie gets smaller.

I agree with Mankiw, to an extent; given the social goal of maximizing the size of the economic pie, a policy that aims at equity creates incentives inconsistent with the goal.  But what is missing from this discussion and what is implicit in Mankiw's definition of efficiency is that everyone is OK with the goal of maximizing the size of the economic pie.  Efficiency does not imply the goal of maximizing total economic productivity; to the contrary, maximizing total economic productivity is the subjective goal to which the objective definition of efficiency is being applied. 

This distinction is important because it is often assumed that there is a one-to-one correspondence between total economic productivity and total societal well-being or happiness.  Therefore to improve societal well-being, concerns of equity must be thrown away since total economic productivity can only be maximized through efficiency.  Hence the trade-off.  But what if there is not a one-to-one correspondence between happiness and total economic productivity?  Does that render the concept of efficiency--and consequently economics--useless?  

Quite the contrary and this is where some of the critics of economics overreact when they see Mankiw-like definitions of efficiency.  Efficiency is usually defined with the underlying social goal of maximizing total productivity.  But what if society values equality?  That is, what if total productivity is only part of what determines well-being and people actually care about the distribution of resources--at least minimally. 

The trade-off that is typically discussed between equity and efficiency is really a trade-off between equity and total economic productivity.  The logical problem comes in assuming that total economic productivity and total well-being are the same.  But what if part of our societal goal is some concept of equity?  Can we still achieve it efficiently?  According to our definition of efficiency-- achieving a defined social goal using the least amount of society's resources as possible—yes, we can still achieve any societal goal efficiently if we allocate resources to align with the stated goal.  Efficiency doesn't have to be predicated on the particular goal of maximizing total economic productivity.  The social goal may be total economic productivity, or it may be any one of a million other distributions of social well-being.  No matter the goal, economics provides a valuable set of tools for understanding how to achieve those goals using the least amount of society's resources--and thereby freeing those resources for other uses (or nonuses).

Electric vehicles made up 10% of the market for the first time in 2022

From the WSJ (EVs Made Up 10% of All New Cars Sold Last Year): 

Electric-vehicle sales crossed a global milestone last year, achieving around 10% market share for the first time, driven mainly by strong growth in China and Europe, according to fresh data and estimates.

While EVs still make up a fraction of car sales in the U.S., their share of the total market is becoming substantial in Europe and China, and they are increasingly influencing the fortunes of the car market there as the technology goes mainstream. The surge in EV sales also contrasted with the broader car market that suffered from economic worries, inflation and production disruptions.

...

Other manufacturers reported a similar divide of strong growth in sales of electric cars—boosted in part by the availability of a wider array of models in addition to market leader Tesla Inc.—and weak or declining sales of conventional vehicles. Ford Motor Co., Mercedes-Benz Group AG and BMW each said their EV sales more than doubled in 2022, while their total vehicle sales declined.

The biggest reason for the increase seems to be sales in China but there have been increases in the rest of the world:

This is likely to change with subsidies in China expiring after more than 10 years and the new $7500 US subsidy from the Inflation Reduction Act (WaPo: Sparks Will Fly in the Electric-Car Trade War).

How not to answer the question "Why are carbon taxes unpopular with policymakers and politicians?"

I received the question "Why are carbon taxes unpopular with policymakers and politicians?" from a follower on Twitter recently (give me a follow @tim_env_econ). So, I had the brilliant idea to compare how I would answer the question compared to how the new trendy AI-bot ChaptGPT would answer (and I'm thinking to have a contest to see if you could tell if the answer is me or AI). Unfortunately, ChatGPT seems to be overwhelmed right now and is just giving me a sonnet:

Amidst the rush of curious minds, The chatbot ChatGPT stands strong and true, Withstanding the influx of requests, Working hard to fulfill each one's due. But alas, the server cannot cope, And the error message rings loud and clear, "Please check back soon," it gently hopes, As it begs for a moment's reprieve, to reappear. As the chatbot works to restore its might, We wait in anticipation, with hopeful hearts, For the chance to chat and learn, with delight, And see what knowledge and wisdom it imparts. So hold on tight, and wait for its return, For ChatGPT will soon be back, and your patience will be well-earned.

Oh well. I guess you're going to have to wait to see if I'm smarter than AI.

I went to 2+ climate change sessions at the ASSA meetings

Peter Coy on the ASSA meetings (How the Coachella of Economics Can Survive Covid) (emphasis added):

The annual three-day meeting is the Coachella of economics. It’s a be-in and a teach-in. In place of music, art and other earthly delights, there are PowerPoint presentations featuring innovations in econometrics. Nobel laureates rub shoulders with future ones. In any given time slot there might be 60 simultaneous sessions on how economics can fight climate change or reduce income inequality or help people save for retirement or rein in the tech giants.

I went to three climate change sessions:

• The first was a 5 loosely connected paper no discussant AEA session that I chaired on the first day. This format is something the AEA was trying to try to boost participation. The authors had heady affiliations but they were all relatively new and (much) younger than me. One of the authors got in late because of flight problems so were were left with 4 papers. We went from a 20 minute presentations with 20 minute Q&A at the end format to a 20 minute presentations followed by 10 minutes of Q&A format. The session was well attended and each of the authors had a good paper/presentation and kept to the time constraints. I vaguely understood one of the papers. 
• The second was an AERE sponsored session on the social cost of carbon. It covered the work behind this paper and it was great. I vaguely understood the whole thing. One of the guys sitting next to me fell asleep.
• The third was a Sunday 8am AEA session that started late because "someone was at some breakfast" (maybe not a totally accurate quote). I left and went to my backup session(s) where I heard a couple of interesting papers. I made it back to the climate session to hear a talk on a social cost of carbon where 2 huge names were co-authors on the paper. This paper was dated and disappointing. The contrast between the latter two sessions reminds me to venture outside an AERE sponsored session to hear environmental economics at a general economics conference with caution. 

Also this shout out to the SBCA (emphasis added):

For economists, this is heaven itself. In a typical year the annual meeting of the Allied Social Science Associations used to draw around 13,000 of them, of which about 30 percent represented institutions outside the United States. The American Economic Association was and is the anchor organization. There are 64 other participating organizations, including the African Finance and Economics Association, the Association of Christian Economists, the Society for Benefit-Cost Analysis and the Union for Radical Political Economics.

I also attended the lone SBCA session on addiction and had dinner with the past-president (oyster po boy at the Acme Oyster Bar -- $24.99 with no sides). The SBCA recently met the membership threshold to have an ASSA session and it was a good one and better attended than some of the random ASSA sessions I wandered in to.

Now this looks like a job for me; So everybody, just follow me; 'Cause we need a little controversy; 'Cause it feels so empty without me*

Since John called me out in public to start re-posting and then started while I was at an administrative retreat...well played John...I'm back!

When John and I started Env-Econ in 2005, our goal was to help bring economic thinking to environmental issues in a fun, casual way that is accessible to non-academic audiences. Over the years I think we accomplished a lot of what we set out to do, but things started to get a little stale (probably because John and I both took the leap into academic administration and lost touch with some of the advances in the field of environmental economics). But I'm pleased to say that my 13 year sentence term as department chair is coming to an end soon and I'm ready to start spouting a few smart things and a lot of stupid ones again. Only this time I'm going to be learning along with you all.

Some of what we say will probably be repetitive from Env-Econ 1.0. Some will be new. And hopefully all will be entertaining. If nothing else I get to start making fun of John again in public.

*

 

I'm working on the first day email to students in my 2000 level in-person environmental econ class

Class starts on Tuesday (1/17) and the email should go out on Friday or Monday. 

Welcome to ECO 2620!

This course is about environmental (air and water quality) and natural (oil, fish) resources. It is an economics course so the focus is on the efficient allocation of these resources. Efficiency is when the benefits minus the costs are maximized (much more on this later).

This semester I am teaching two sections of ECO 2620:

Section 101 is asynchronous online
Section 102 is in-person

This class meets on Tuesdays and Thursdays at 3:30 to 4:45 where I'll lecture using a mix of Powerpoint slides (yawn!) and the chalkboard along with some classroom activities (with inspiration from this book).

Last semester I taught an in-person section of this course for the first time since Covid. The in-person section mirrored the online section in terms of textbook, lectures, problem sets and exams. On the first day I told in-person students that all of the online resources were posted on AsULearn* and they could use those in case they had to miss a class.

So far so good, right? But, that plan didn't go so well for several reasons. First, on the second day of class attendance fell from 25 to 10 and never recovered. I was expecting this but the magnitude was still a surprise. Second, using the online course material was too constraining. The online course was lecture heavy (I've somewhat reduced the lecture material for this semester) and I had to use most of the in-person class time to cover everything. I knew that you could cover more material in a recorded lecture than in-person but the difference was a surprise.

So, this semester I am totally revising the in-person section with a new book** and I'm going back to more in-class activities beyond the lecture. I'm excited about this semester!

Some background: During the Covid-19 summer of 2020 the powers that be decided that this course would be a likely candidate for online delivery. I submitted a proposal to do so which was approved. I took a course in online teaching during Fall 2021 and began developing this course for online delivery. As a result, one section this course has transitioned from in-person instruction to fully online. During the Fall 2020 semester I taught the course using synchronomous Zoom with recorded lectures posted after the class meeting time. During the spring 2021 semester I revised the slides and recorded lectures which were then delivered asynchronously but "just in time". The first time that the course was delivered asynchronously fully online was during summer 2021. I also taught the course asynchronously and fully online during Fall 2021, Spring 2022 and Fall 2023. During the Fall 2023 semester, for the first time, there were two sections of ECO 2620 with about 45 students in an asynchronous online section and about 25 in the in-person section.

Pre-pandemic teaching was much easier. 

Notes:

*App State's learning management system is supposed to be pronounced "as you learn" but many call is "ASU learn" even though Arizona State University thinks they have dibs on ASU.

**I still really like the old book and the online section is still using it. But, I need a jolt to get me to reorganize my old lecture material and a new book will do that.

Env-econ: the reboot

Sometimes I forget the amount of content @johnwhitehead81 and I created at https://t.co/JbxmB6cByt for almost 15 years. Glad people are still finding it useful. Tempted to start posting again. https://t.co/WNvxWja9Dt

— Tim Haab (@tim_env_econ) January 8, 2023