Environmental Economics

SBCA Online Learning: Valuing Nonmarket Benefits on July 11 & 12, 2023

From the inbox:

Join us online July 11 & 12, 2023, 1:00 p.m. ET to 3:30 p.m. ET for Valuing Nonmarket Benefits. Presenters Vic Adamowicz, Cathy Kling, Nic Kuminoff, Dan Phaneuf, Christian Vossler, and John Whitehead will provide a primer of the field including both the theoretical basis and current state of best practice for the most common methods. Core topics include basic welfare theory, stated preference methods, hedonic property value approaches, recreation demand modeling, hedonic wage studies, benefit transfer, the value of risk reduction, and other special topics. 

Description: The development of methods to estimate welfare changes for use in benefit-cost analysis began as a nascent field in the U.S. in the middle of the 20th century to support decision making for environmental investments. It then progressed as part of regulatory impact analyses required under multiple presidential executive orders beginning with EO 12291 issued by the Reagan administration. At the same time, the valuation of ecosystem services and natural capital throughout the European community expanded quickly with the U.K. Treasury “Green Book” and E.U. Water Framework Directive. Methodological improvements followed rapidly for both stated and revealed preference methods, leading to the now relatively mature set of methods available to practitioners.

These methods are being routinely applied to support benefit-cost analysis of regulatory programs, prioritization of conservation spending in government and non-governmental organizations, natural resource damage assessment, and private firm’s analyses of sustainability issues in their sector.

In this workshop, we provide a primer of the field including both the theoretical basis and current state of best practice for the most common methods. Core topics include basic welfare theory, stated preference methods, hedonic property value approaches, recreation demand modeling, hedonic wage studies, benefit transfer, the value of risk reduction, and other special topics. The workshop is intended for professionals and analysts who use the results of these studies in their work and wish to better understand the basics of these methods. The course should also serve as a refresher for those who have been away from the field and applications for some time and are looking for a brief review of the current state of the art.

Explore fees and register now

I'm covering benefit transfer. 

Make sure that you sign up for the May 9th "Revising Regulatory Review: Expert Insights on the Biden Administration’s Guidelines for Regulatory Analysis"

From the GW Regulatory Resources Center: 

Revising Regulatory Review: Expert Insights on the Biden Administration’s Guidelines for Regulatory Analysis
Tue, 9 May, 2023 10:30am - 3:00pm

Please join the GW Regulatory Studies Center and the Society for Benefit-Cost Analysis for a timely discussion of recent changes to regulatory practices and analysis.

In April, the White House released much-anticipated revisions to federal regulatory practices, including a new Executive Order 14094 on “Modernizing Regulatory Review,” draft revisions to OMB Circular A-4 governing regulatory impact analysis, and draft guidance on meetings with entities outside of the executive branch. The Office of Information and Regulatory Affairs (OIRA) is working to implement these changes, which comprise the most significant regulatory policy initiatives of the Biden administration and raise interesting benefit-cost analysis issues, including the appropriate discount rate, who has standing in a benefit-cost analysis, and how distributional impacts should be measured.

At this forum, OIRA Administrator Richard Revesz (invited) will discuss these changes with a panel of former OIRA administrators who served in the Clinton, Bush, Obama, and Trump administrations. Following that discussion, a panel of experts experienced in regulatory impact analysis at the federal level will explore in more depth the draft changes to Circular A-4.

Register for virtual attendance here: https://docs.google.com/forms/d/e/1FAIpQLSeelAAXOwChP9y9ygk7YDxRTGEtb5_m1A_54yG-MBGccMOcUw/viewform

 

Free Webinar: Valuing Environmental Catastrophes (with an impressive lineup of experts if I do say so myself!)

Feel free to promote far and wide. Intended for a non-expert audience (my goal is to get a spot in the sequel to this blockbuster).

If you don't like QR codes, you can register here.

 

 

 

 

The Society for Benefit-Cost Analysis is offering six professional development workshops this year

via the SBCA email list:

The Society for Benefit-Cost Analysis is offering six professional development workshops this year, organized by leading experts. They include the following; more information is available here: https://www.benefitcostanalysis.org/workshops.

• Benefit-Cost Analysis for Beginners (Glenn Blomquist and David Weimer)
• Economics of Addiction (Elizabeth Botkins, Aaron Kearsley, Don Kenkel, David Watkins)
• Estimating Program Effects (Craig Thornton, Anu Rangarajan, Randall Brown)
• Valuing Nonmarket Benefits (Vic Adamowicz, Cathy Kling, Nic Kuminoff, Dan Phaneuf, Christian Vossler, John Whitehead)
• Estimating Costs (Jason Price, Doug Meade, Brad Wong)
• Benefit-Cost Analysis for U.S. Regulations (Aliya Sassi, Elizabeth Quin, Chris Dockins, Charles Griffiths, Aaron Kearsley)

We hope you will join us for what promises to be a terrific set of workshops, and will forward this email to anyone else who might be interested.

EPA: The benefits of proposed automobile tailpipe standards are estimated to be $1 trillion more than costs

From the WSJ (EPA Seeks to Boost EVs With Toughest-Ever Rules on Tailpipe Emissions):

The Biden administration is proposing new limits on vehicle tailpipe emissions, seeking to spur U.S. auto makers to generate two-thirds of their sales through electric vehicles in a decade.

The new standards for light-duty vehicles, announced Wednesday by the Environmental Protection Agency, will apply to the 2027 to 2032 model years. They would be the nation’s toughest-ever restrictions on car pollution and one of President Biden’s most aggressive moves yet to combat climate change.

The proposal moves beyond Mr. Biden’s ambitious target for half of all new-vehicle sales to be electric-powered by 2030. The EPA projects that the EVs could account for 67% of new- vehicle sales by the 2032 model year. ...

The EPA estimated that the benefits of the proposal would exceed costs by at least $1 trillion. The proposal is expected to avoid 7.3 billion tons of carbon-dioxide emissions through 2055, EPA Administrator Michael Regan said.

Does anyone know where I can find that benefit-cost analysis? I'm wondering what social cost of carbon estimate they are using, among other things. The Google didn't help. 

OIRA has released its proposed revisions to OMB Circular No. A-4 and the comment period is open

From Richard L. Revesz, Administrator, Office of Information and Regulatory Affairs via a Society for Benefit-Cost Analysis email blast:

I am excited to share with you that the Office of Information and Regulatory Affairs (OIRA) has released its proposed revisions to OMB Circular No. A-4: Regulatory Analysis. The preamble to the proposed revisions provides further information as to the nature of the proposed changes and identifies issues for which public comment may be particularly useful. The proposed Circular is available at https://www.whitehouse.gov/wp-content/uploads/2023/04/DraftCircularA-4.pdf, and the preamble to the proposed Circular is available at https://www.whitehouse.gov/wp-content/uploads/2023/04/DraftCircularA-4Preamble.pdf.

Circular A-4, which provides guidance to agencies on how to conduct regulatory analysis, has not been revised since it was first issued in 2003. The proposed revisions to the Circular reflect new developments in economic and other scientific understanding. Our goal in these proposed revisions is to help agencies produce analyses that facilitate better policymaking. To that end, the proposed revisions address a range of issues, including discount rates, distributional analysis, and accounting for uncertainty. Proposed revisions to material on discounting help ensure that the present value of future effects, and the relationship of capital and risk to discounting, are more accurately accounted for. Proposed revisions to the material on distributional analysis will help facilitate efforts by agencies that are seeking to account for the distributional effects of regulations. And proposed revisions to the section on uncertainty, such as moving away from a default assumption of risk neutrality, will help agencies to more accurately capture the value of regulations that reduce risk.

We invite public comment from April 7, 2023, to June 6, 2023, via http://www.regulations.gov. To submit a comment during that period of time, simply type “OMB-2022-0014” in the search box, click “Search,” click “Comment,” and follow the instructions for submitting comments. All comments received will be posted to http://www.regulations.gov, so commenters should not include information they do not wish to be posted (e.g., personal or confidential business information). Receiving input from a wide range of commenters, including experts reflecting an appropriate breadth of economic and scientific perspectives, will aid in this revision process, so OIRA welcomes your help in spreading awareness of this public comment period. OIRA is also requesting nomination of experts to serve as peer reviewers of the proposed Circular, sent to [email protected], from April 7, 2023, to April 28, 2023.

As the preamble notes, public comments are helpful both when they note proposed revisions to the Circular that appropriately reflect the best available economics and science, and when they address places where further revisions to the Circular would be appropriate. I look forward to the opportunity to modernize the regulatory review process through the implementation of a revised Circular A-4, following public comment and peer review.

Finally, I wanted to note that our colleagues at OMB also released today proposed revisions to Circular A-94, which addresses the use of benefit-cost analysis in the context of federal grant funding. Those interested in providing public comment on Circular A-94 can do so at the docket OMB-2023-0011.

There are alot of potential changes including recommendations on distributional effects: 

Uncertainty:

And discount rates:

Society for Benefit-Cost Analysis: "Benefit-Cost Analysis for Beginners" workshop

From the inbox: 

Location: Via Zoom
Please note: All workshops will be recorded. Registrants will have access to the recordings.

Dates and Times: 

April 28, 2023 - Online
9:30 a.m. – 11:30 a.m. ET 
1:00 p.m. - 3:00 p.m. ET 

This short course provides an introduction for “beginners” who have not previously had formal instruction in benefit‐cost analysis. It is designed to help those who encounter benefit‐cost analysis to better understand its purpose and methods as well as those who are curious about how it might be useful in their work. Although some prior exposure to economics would be helpful, the workshop is designed to be accessible to a general audience. Upon completion of the workshop, attendees should have a clear understanding of the purpose, underlying concepts, strengths, and weaknesses of benefit‐cost analysis.

The workshop will compare benefit‐cost analysis to other analytical approaches commonly employed by policy analysts to put it into perspective. It will also introduce and explain a number of key benefit‐cost analysis concepts including standing (whose costs and benefits count), incremental costs and benefits (clear alternatives to current policy), opportunity cost (what we give up to do the alternative), willingness to pay (how much people value the impacts of the alternative), “shadow prices” (monetizing impacts), discounting (taking account of the timing of costs and benefits), and sensitivity analysis (taking account of uncertainty). Several examples of benefit‐cost analyses will be discussed to provide illustrations of concepts and facilitate discussion among attendees.

For more information and to register: https://www.benefitcostanalysis.org/workshops

If the WIllow Project is approved and fewer people know about it, are the environmental costs reduced?

One of the big problems of nonmarket valuation of projects that impact the environment is that the benefits and costs from the project depend on how many people know about it. 

US government officials are expected to make a decision on one of the biggest US oil projects in decades this week.

Environmental groups and some Native residents have long opposed the proposal because of its potential for climate impacts and wildlife damage.

But opposition has grown rapidly in the last few weeks as the #stopwillow campaign has gone viral on TikTok.

So, if Congress bans TikTok, will that decrease the net costs of the Willow project.

When is the right time to measure economic damages from a disaster?

By now most know of the train derailment in East Palestine (pronounced pal-uh-steen), Ohio and the ensuing decision to burn the chemicals spilling from the train rather than wait for a potentially more disastrous--and perhaps more lethal--explosion. What is not yet known, and likely won't be known for some time, is the scope and extent of the full set of damages. Within days of the derailment I received calls asking something along the lines:

"Would you and your team please move forward with determining the agricultural, environmental and health impacts of the train derailment in Columbiana County?" 

My standard response is along the lines:

"That’s a big (and broad) ask. We have experts who may be able to estimate the economic impacts once the scope of the damages are known. Do we know the potential for short-term vs long-term effects at this point? Estimating economic impacts/damages will require a coordinated effort between those measuring and cataloguing the physical damages and then those who are well-versed in understanding the market and non-market values associated with damage assessment (the economics folks).

I realize this is a frustrating response and likely to make people wonder what economists really do, but the need for patience in determining the full value lost is important to ensure we capture all of the damages. For example, here's a story that came out yesterday highlighting the potential scope for damages:

The East Palestine train derailment has had a far reaching impact on businesses even outside of the village.

21 News reporter Leslie Huff spoke with one farm in Columbiana who says they have lost nearly half of their business, not because there is anything wrong with their product, but because of fear of the unknown.

For Lamppost Farm in Columbiana, their sales have dramatically fell by 50%.  Executive director Steve Montgomery says concerns about product contamination is the reason they are seeing a decrease. 

These types of damages are likely to persist and the full scope of health, social, economic, and environmental damages is likely to take months if not years to know with any sense of accuracy. Does this mean we should withhold aid until all damages are known?

 

No, of course not. Immediate aid should be focused on medical and income support for those directly impacted and documented. Once the urgency of the event subsides, the the real works begins to understand and estimate the full scope of damages and the associated loss of economic value.

 

Until then, the focus should be on taking care of the people and limiting future damages.