Environmental Economics

Climate change book reviews: do nothing, do a little, do a lot (or just drink beer?)

My review of the BP-funded book critical of the contingent valuation method is online

Here is a link from 2017 with some background: BP has funded a book critical of the CVM. In that post I boasted that my review would be forthcoming in 2018. That boast was a commitment mechanism. I don't know if it would have worked unless Marit Kragt had not invited me to review the book for the Australian Journal of Agricultural and Resource Economics (thanks for the invitation!). Here is the link: https://doi.org/10.1111/1467-8489.12280.  

Here are two other reviews:

• Ute Barbara Thiermann. Journal of Environmental Assessment Policy and Management, https://doi.org/10.1142/S1464333217800035
• Silvia Ferrini and Kerry R. Turner, Journal of Economics, https://link.springer.com/article/10.1007%2Fs00712-018-0606-4

I knew the second review was out but I refrained from reading it until today. Ferrini and Turner point out a major concern:

In total, the book presents 11 chapters co-authored by 21 researchers. The majority of the authors (16) are established consultants, and with the exception of chapter 6 by McFadden, all chapters are partially funded by BP Exploration & Production Inc., as reported in the book acknowledgement. The book’s strength lies in the clarity and simplicity of the argumentation presented, with many chapters that do not get bogged down in details and technicalities. However, the reader might worry that BP sponsorship influenced the authors’ objectivity in testing SP failures. The authors are professional researchers and experienced consultants and readers might wonder whether researchers’ expectation (or preference) in poor results impact studies lay out [sic?]. Economists can easily spot a potential moral hazard here!

It concludes like this:

The key meritocratic conclusion that this book suggests is that ‘experts’ are the best judge of many environmental damages and the general public is often not capable of expressing a meaningful value. However, SP valuation economists do not seem to have a place in the ‘experts’ set.

The book is open access here: https://www.elgaronline.com/view/9781786434685.xml

Forthcoming book review

From the inbox:

Thank you! Your proof corrections for AJAR - AUSTRALIAN JOURNAL OF AGRICULTURAL AND RESOURCE ECONOMICS : 12280 : Contingent Valuation of Environmental Goods: A Comprehensive Critique, by Daniel McFadden and Kenneth Train (Eds.). Published by Edward Elgar Publishing, 2017, 319 pages, ISBN: 978-1-78643-468-5, AU$210 have been received.

My new autoresponse to appstate.edu emails

Hello,

John Whitehead is happy to report that he is no longer a part-time academic administrator (i.e., Economics Department Chair). If your email is regarding department business, please redirect it to our new chair Todd Cherry at cherrytl at appstate.edu.

John Whitehead is also happy to report that he is on Off-Campus Scholarly Assignment (i.e., sabbatical) in Fall 2017 and back to teaching, research and service in Spring 2018. If your email is about non-department business, he'll reply ASAP (or maybe not).

Thanks,

John Whitehead

P.S. For the remainder of his academic career, John Whitehead will refer to himself in the third person.

The first review of Environmental and Natural Resource Economics: An Encyclopedia

From Booklist:

Arguably, our adherence to the free-market model of economics has been among the major factors that have contributed to environmental deterioration. This is because environmental benefits are treated as public goods and are hence underpriced and undervalued. This work introduces readers to some of the factors that have caused that economic model to fail, some of the most prevalent solutions to address these failures, the challenges of these solutions, and some of their successes. Government regulation has traditionally been used to safeguard the interests of those not represented in the economic transaction. More recently, economists have tried to use corrective mechanisms to account for environmental costs. The result has been not only greater government regulation but also publicity campaigns to raise consumer awareness. This has led to international agreements (albeit applied unevenly) that consider the environment.

The entries in this book highlight areas where market-based economic models are inadequate and need to be supplemented to protect our natural resources. An introductory essay summarizes key economic concepts, environmental concerns, and some of the methods used to address these concerns. Entries related to basic economic concepts (specifically market failure and contemporary movements to correct for these failures) are well written. Entries that address valuation models require additional resources for readers who want a working background in these methods. Other entries profile the work of prominent environmental economists, events, and environmental policies. The work is well suited as a supplemental reference for introductory college-level environmental-economics courses.

— Muhammed Hassanali

Buy our book! ; - )

Here are a couple of excerpts ($ link):

The book’s introduction does a good job of describing both the historical and current issues and problems in this area of economic research. The literature review presented in the introduction is helpful in putting content to the problem at hand. The 19 papers presented in the book are subdivided in five sections, with the first section discussing theoretical and modeling issues and the mathematical and statistical tools needed to address the many empirical problems that arise in combining SP and RP data. The remaining sections focus on specific empirical problems, identified in the theory section, applied to many different research areas from travel cost models, demand for coastal management and beach erosion, to risk of exposure to pesticides. I was impressed with the scope of the empirical research, as it addresses and confronts many of the problems in applied research in this field. ...

The editors are to be commended for the structure, organization, and consistency across papers to the general research theme of the book. All economists should read at least the first section on modeling and measurement, but for environmental economists this book is a must for both research and teaching. A good read.

An economist reviews Dan Brown's 'Inferno'

Warning: Spoiler Alert below the jump.  If you haven't read 'Inferno' yet, don;t read below the jump, I'm going to give away the plot and ending.

I recently finished reading Dan Brown's (author of The Da Vinci Code) newest book 'Inferno.' As a casual reader of the book, I found it entertaining.  Brown does his typical job of keeping the action moving, mixing in some interesting conspiracy theories, making me want to visit some cities I've never been to, and making it seem like being a college professor might be cool (although I have my doubts).  I didn't enjoy it as much as The Da Vinci Code, which I didn't enjoy as much Angels and Demons, but still a good read (and I refuse to accept that The Lost Symbol was written). 

But, as an economist, I found the book to be complete nonsense. 

Why?  Read below the jump (SPOILER ALERT AGAIN).

Another university cheating scandal

This time it was (allegedly) for $923k: 

Sylvia Nasar, a longtime journalism professor and prize-winning author, says the university underpaid her from an endowment fund dedicated to provide her with compensation. Ms. Nasar, a former economics reporter for The New York Times, won acclaim for A Beautiful Mind, a 1998 biography of John F. Nash Jr., a Nobel Prize-winning mathematician who has suffered from paranoid schizophrenia. The book was later adapted into an Oscar-winning movie. Ms. Nasar has taught since 2000 at Columbia, which declined to comment on the dispute.

via chronicle.com

Have I told you what I thought of Nasar's lastest book? Didn't think so ...

I'm glad I read the book but I'll be danged if it didn't take me about 10 months to plow my way through it (2-3 pages each night). In contrast, I read The Hunger Games trilogy in about 4 hours. I had forgotten that Karl Marx never visited a factory, Joan Robinson was a Commie and Beatrice Potter (who?) had such a difficult love life. I was looking forward to much more on Marshall, much less on Beatrice Potter. 

 

Hey hey, my my, rock and roll will never die

I'm using Tietenberg and Lewis, Environmental Economics and Policy, in my sophomore level environmental and resource economics class this semester. I haven't taught this course in awhile so it seems very fresh. As such, I had some fun with planning out the order of topics. Here it is:

 Chapter 1 – Visions of the Future
 Handout: The Market Forces of Supply and Demand
 Chapter 2 – Valuing the Environment: Concepts
 Chapter 4 – Property Rights, Externalities, and Environmental Problems
 Chapter 5 – Sustainable Development: Defining the Concept
 Chapter 7 – Natural Resource Economics: An Overview
 Chapter 14 – Environmental Economics: An Overview
 Chapter 8 – Energy
 Chapter 15 – Stationary‐Source Local and Regional Air Pollution
 Chapter 17 ‐ Transportation
 Chapter 16 – Climate Change
 Chapter 9 – Water
 Chapter 11 – Agriculture
 Chapter 18 – Water Pollution
 Chapter 12 – Forests
 Chapter 13 – Common Pool Resources: Fisheries
 Chapter 10 ‐ Land
 Chapter 19 – Managing Waste
 Chapter 5 – Valuing the Environment: Methods

Tietenberg and Lewis first cover the basic welfare economics and intertemporal allocation of nonrenewable resources (under the guise of sustainable development). They then present a natural resource economics overview and march through natural resource topics. Next, they present an environmental economics overview, which is really a misnomer since all of the meat and potatoes of environmental policy analysis is contained in this chapter, and then march through environmental topics. 

My rearrangement first covers the basic welfare economics and intertemporal allocation of nonrenewable resources. I pushed the valuation chapter 5 to the end of the course for two reasons: (1) I'm not sure my students really need to know this stuff in detail and (2) I just finished teaching it in my Fall semester benefit-cost analysis course and am a bit burned out by it (i.e., "hypothetical bias, blah, blah, blah"). Then I'll run through the natural resource economics overview chapter quickly and spend plenty of time on the environmental economics "overview".

My guess is that we'll be about halfway through the course at this point. The rest of the course is divided into four modules:

1. Energy and the environment - energy econmics, air pollution and climate change
2. Water resources - water allocation, agriculture and water pollution
3. Renewable resources - forestry and fisheries
4. Land resources - Land use and waste disposal

I tacked on valuation at the end just because at that point I'll bet I'm ready to talk about it (if not before), but I doubt that we'll be able to get that far. 

That is the plan. Comments are most welcome, especially if you see a problem with how I've rearranged the chapters. 

A valuation book I won't buy

From the Edward Elgar email (Amazon link to the book):

Valuing Environment And Natural Resources    

Kenneth G. Willis, Guy Garrod

Edited by Kenneth G. Willis, Emeritus Professor of Environmental Economics, University of Newcastle upon Tyne, UK and Guy Garrod, Reader in Environmental Economics, University of Newcastle upon Tyne, UK

May 2012 1,440 pp Hardback

Series: Elgar Mini Series

Description
Over-exploitation of environment and natural resources is becoming increasingly widespread in the modern world. To combat this, environmental economists have attempted to value such resources in order to ensure that they are given due recognition in any ex ante appraisal, or ex post evaluation of projects or policies; and also to ensure that optimal levels of consumption are determined for the resource. This authoritative collection, along with an original introduction by the editors, brings together seminal papers published in the last three decades which demonstrate the application of a number of techniques employed to value a range of environmental and natural resources. It will be of immense value to students, scholars and practitioners with an interest in environmental affairs and natural resources.

Nothing against the editors (who have done a lot of work putting together a very comprehensive reading list), or the authors of the papers, they are all fine papers (although I have some quibbles -- many are not "seminal" -- and there is no random utility model in the travel cost section), but the price? $693. 78 reprinted journal articles from 1986 to 2011, 1440 pages, for $693. That is way above my choke price (the table of contents is below the jump).

There was a time when these EE collections were valuable. No one wants to schlep over to the library, purchase a copy card, search for hardbound copies of journals and stand in front of the copy machine for hours? When the ECU Library didn't have a journal, sometimes I would drive the Raleigh and find it at NCSU (and don't even ask me about when that journal issue couldn't be found or was checked out). But these days, you can spend a few hours and get all of the PDFs you'd like nestled snugly in your cloud folder so you can read it at work or at home.

So, where is the demand?

Let's say you are new to the field and want to read 50+ papers to get a good feel for the literature. Do you buy this book? No, you use it to reduce your search costs. You can Google the title, save the PDF and read at your leisure. If it takes all afternoon (i.e., four hours) and your time costs are $50 per hour (I'm assuming you don't have a graduate assistant) then the cost is only $200.

Do libraries buy these rapackaged volumes? I can't see how Edward Elgar would have the same sort of bundling power that Elsevier has. If so, that is a shame since the material is already in the library and their purchases are seriously constrained by state and other budget makers.

The only market that I see for this sort of book is someone who is very rich. But if you are very rich, with high opportunity costs, why would you be interested in two volumes of environmental valuation literature? Since your time is constrained you'd much rather read a review paper. Or, you could afford to hire a GA to compile the book for you.