Environmental Economics

Marine Resource Economics 2022 Outstanding Article Award Winner

From NAAFE:

Marine Resource Economics (MRE) is pleased to present the 2022 Outstanding Article Award to:

Ted E. Gilliland, James N. Sanchirico, and J. Edward Taylor for their article:

A Bioeconomic Local General Equilibrium Assessment of Distributional Consequences of Small-Scale Fisheries Reform in Developing Countries, MRE 37(2): 111-134.

Gilliland, Sanchirico, and Taylor (2022) develop an economic model to assess the short and long-run effects of fisheries reform for local economies in developing nations. Coastal fisheries in many developing nations are characterized by poorly defined property rights and weak collective governance, such that the fish stock is essentially an open access resource – leading to overfishing and a loss of economic value. Prior theoretical and empirical work has demonstrated the potential for fishery governance reforms to recover stocks and increase the economic value of the industry. However, few studies have measured the spillovers of these reforms beyond the fishing sector or have examined how impacts may differ across socioeconomic groups.

The authors address these knowledge gaps by developing a bioeconomic local general equilibrium model and calibrating it using data from a municipality on the island of Palawan in the Philippines. This model explicitly considers the flows of benefits and costs of reform over time as the stock recovers, while also accounting for economic spillovers from the fishery sector to the non-fishery sector. In addition, the authors separately evaluate impacts to poor and non-poor households over 20 years, as well as households participating in fishers versus those that do not participate. The authors find that fishing households eventually benefit from governance reform – despite early losses in harvesting income – with wealthier households securing the largest absolute gains. However, non-fishing households in the local economy are never made better off by the reform due to increases in fish prices and indirect economic spillovers such as reduced spending on non-fish goods during the fishery rebuilding phase.

Editor in Chief, Joshua Abbott of Arizona State University notes: “Fisheries reforms in the Global South are often touted as a form of ‘pro-poor’ conservation policy. However, knowledge of how the benefits and costs of reform are distributed across households is very limited. Gilliland, Sanchirico, and Taylor have made a significant contribution to filling this knowledge gap. Most notably, they have demonstrated that non-fishing households in the local economy may be harmed by reforms – suggesting that additional policy tools beyond the usual scope of fisheries governance may be needed to address these spillovers.”

This annual award recognizes outstanding works published in Marine Resource Economics, with selections made by the associate editors[*], who consider articles published during the award year.

Visit the journal’s Outstanding Article Award webpage https://www.journals.uchicago.edu/journals/mre/oaa for more information about the award and to see the list of previous recipients.

*I am one of those associate editors.

A revised contingent valuation entry in the Elsevier Encyclopedia of Energy, Natural Resource and Environmental Economics

The second edition of the Encyclopedia of Energy, Natural Resource, and Environmental Economics is in the works. Me and Tim have revised our entry on the Contingent Valuation Method. Other than annoying required format changes from the first to the second editions (e.g., adding references), we didn't do much. But there is one substantive change in the validity section*: 

*ANA and CVM is my theme for the next 12 months.

 

There's nothing wrong with Ohio, except the snow and the rain*

Yikes.

*Ohio (Come Back to Texas)

What sort of outdoor recreation data can you collect without a research budget?

I'm doing a small study at Fire Mountain Trails (FMT) in Cherokee, NC: 

The Fire Mountain Trails are Cherokee’s source for big adventure—a multiuse trail system that’s made to mountain bike, hike, or run. The network of trails is more than 11 miles total, so there’s plenty of room for everyone to recreate safely, responsibly…and flowy?

That’s right—if you like your trails with a nice flow of features, with fun berms and quick hits of elevation that are manageable and fun, Fire Mountain is made for you. You’ll find tables, rock gardens, and blinds for those who know, along with single-track and wider sections, spots that are smooth and fast, and trails that invite the more technically accomplished with options for those less so. The trailhead is located at 160 Indian Village Road, about 100 yards from the Oconaluftee Indian Village in Cherokee and shares a parking lot. The trails interlace through the nearby Great Smoky Mountains, so you already know the views and terrain will take your breath away, even if your recreation of choice doesn’t!

The data collection is going to cost less than $250 out of pocket. Right before Memorial Day weekend we put up a sign with a QR code that takes you the online survey. As of the July 4 week we have a disappointing n=23 responses. We have n=96 responses from outreach on social media. The folks at FMT are interested in any economic impacts generated by the trails. I'm interested in collecting data for students and wondering how the two survey modes differ. Real quick, here is the t-test on distance traveled.

Sample 1 is from the QR code and sample 2 is social media. Social media seems to be missing people who travel farther to get there. I'll be posting the link on the WNC mountain bike trails facebook next week so, in addition to more responses from the QR code, there should be more responses by the end of summer. 

A couple of years ago I did a similar study at Beech Mountain trails but Beech Mountain spent about $600 to pay App State students to hang out and pass out rack cards with the QR code. That generated about n=400 responses. I'm concluding that a passive QR code is no substitute for college students pleading with potential respondents at the trailhead. 

Here is a view from my hike on one of the trails:

Stated preferences in the AER

American Economic Review Vol. 113, Issue 7 -- July 2023:

The authors mention stated preference research in environmental economics (where it all began, right?) a couple of times. First, we get the obligatory CVM critics pat-on-the-back on page 2010:

The advantages of the stated-preference approach come at potential costs, in particular the concern that actual job choices may differ from stated preferences for jobs (Diamond and Hausman 1994; Manski 1999; Hausman 2012).

They could have chosen some better references to the issue of hypothetical bias, but no. See the comment on Hausman 2012 here. 

But, then the second is more positive (page 2011):

More generally, the stated-preference approach has provided valuable evidence for many economic topics, including environmental policy (Carlsson and Martinsson
2001; Carson 2012), consumer preferences (Revelt and Train 1998), labor supply (Kimball and Shapiro 2008), retirement decisions (van Soest and Vonkova 2014),
and long-term care (Ameriks et al. 2015). 

Congrats to Carlsson, Martinsson and Carson for being singled out from the thousands of articles to choose from!

In spite of some warts (e.g, Hausman 2012), this is progress.

References:

Carlsson, Fredrik, and Peter Martinsson. 2001. “Do Hypothetical and Actual Marginal Willingness to Pay Differ in Choice Experiments? Application to the Valuation of the Environment.” Journal of Environmental Economics and Management 41 (2): 179–92.

Carson, Richard T. 2012. “Contingent Valuation: A Practical Alternative When Prices Aren’t Available.” Journal of Economic Perspectives 26 (4): 27–42.

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. 

Red is bad, right?

Current air quality. Oof.

 

Just your friendly periodic reminder that mileage taxes create disincentives for fuel efficiency.

If there's been one consistent thread since the beginning of Env-Econ.net, it's our endearing commitment to helping you understand the incentives of gas taxes vs. mileage taxes. 

Well, the debate is back in the news again as the governments debate ways to overcome...  

...the myriad hurdles U.S. states face as they experiment with road usage charging programs aimed at one day replacing motor fuel taxes, which are generating less each year, in part due to fuel efficiency and the rise of electric cars.

So here's a[n updated] view from the wayback machine at some of issues that arise from a mileage tax:

It's been [over 16] years now (May 8, 2007) and people still aren't listening to me. 

Taxing miles creates perverse incentives for fuel efficiency.  A $0.015/mile tax (the size of the tax mentioned in the article) is the equivalent of a $0.015 * X tax per gallon where X is mpg.  In words, a mileage tax increases the tax per gallon the more fuel efficient the car.  Now granted, with higher mpg you use fewer gallons to drive an equivalent number of miles, and in the end, everyone driving 100 miles will pay the same tax.  And from a revenue perspective, that might be OK.  But there might be a way to kill fewer birds with one stone.

As I have written a number of times, a more straightforward proposal is to simply raise the gas tax.  Reaising the gas tax accomplishes a number of things 1) It raises revenue, 2) It discourages miles driven, and 3) It increases the incentive for higher fuel efficiency. 

Because my previous posts on this have been written with an ironic twist (I propose a mileage tax that is inversely proportional to fuel efficiency and then show that such a tax is the equivalent of a $1/gallon gas tax), here's the direct, non-ironic version:  A $1/gallon gas tax...

...places a higher burden on those driving less fuel efficient vehicles--that should satisfy those blaming the SUV drivers for all of the problems*.

...places a higher burden on those driving more.  By increasing the marginal cost per mile driven, total miles driven should decrease.

...assuming fuel efficiency and income are negatively correlated--that is, the rich tend to drive larger, more expensive, less fuel efficient cars--[higher gas taxes] place a higher burden on higher incomes.

...provides an incentive for drivers to switch to more fuel efficient vehicles.

It's really simple.  Why worry about complicated milage programs?  The gas tax infrastructure is in place.  Raise the gas tax and meet multiple public policy and economic goals simultaneously.

Peak oil (demand)

From the WSJ (Oil Demand Expected to Peak This Decade as EVs Boom): 

Rising demand for crude oil is set to slow to a trickle within five years and peak before the end of the decade, as electric-vehicle uptake surges and developed nations rapidly transition to cleaner sources of energy, according to a prominent energy forecaster.

The International Energy Agency, a group funded by some of the world’s largest oil consumers, expects demand for transport fuels derived from oil such as gasoline will be the first to peak before starting a steady decline—hastened by a sharp uptick in EVs and a long-lasting shift to remote working spurred on by the Covid-19 pandemic.

Rapidly growing Asian economies will continue to prop up the global appetite for oil in the coming years, and demand for jet fuel, naphtha and other oil products with industrial uses will continue to tick higher, the IEA said in a report released Wednesday. But even in China, which has long been the powerhouse of global oil demand, the appetite for crude will slow markedly before the end of the decade. India will surpass China as the main driver of oil growth as soon as 2027, the IEA said.

The forecast, which the IEA made in an annual report that considers oil demand as far away as 2028, isn’t the first time the Paris-based group has laid out a timeline predicting a zenith for oil. But it envisages a far more rapid shift away from fossil fuels than previously expected—a shift that has been sharply accelerated by the Covid-19 pandemic and the energy crisis that followed Russia’s invasion of Ukraine.

Joe Manchin: “If I can’t go home and explain it to the people West Virginia, I can’t vote for it. I just can’t. I’ve tried everything humanly possible. I can’t get there,”

2023 Berkeley Summer School in Environmental and Energy Economics | August 14-18, 2023

via Max Auffhammer:

Thanks to generous renewal funding from the Alfred P. Sloan Foundation, the Berkeley Summer School will take place again this year – in person! The goal of the summer school is to provide doctoral students nationwide, who have completed the core first year microeconomics and econometrics requirement, with an overview of the most important and current topics in the fields of environmental and energy economics. Previous incarnations of this summer school have helped students identify promising dissertation projects, build networks and gain valuable insights on how to be a productive researcher. This year students will have an opportunity to get feedback on a research idea from one of the instructors. The instructors’ expertise covers a range of important topics. More details and up to date information can always be found on the summer school website. The currently planned lineup of instructors is:

 

Meredith Fowlie, UC Berkeley
Joseph Shapiro, UC Berkeley

Maximilian Auffhammer, UC Berkeley

Susanna Berkouwer, Wharton

Marshall Burke, Stanford 

Koichiro Ito, University of Chicago

(more TBA)

 

The summer school will start on Monday (8/14) at noon with a virtual welcome lunch for all attendees, followed by the first session at 1:30pm PDT. For the remaining four days, there will be a 3-hour lecture in the morning beginning at 9:00am, a one hour lunch followed by another 3-hour lecture. We are planning a number of other exciting activities and will keep you posted. There is no tuition, but space is limited. We provide breakfast and lunch and can accommodate dietary restrictions! Students are expected to attend all sessions.

 

To apply for the summer school, you must be a registered PhD student in an economics department, business or policy school and have completed your first year of coursework. Only PhD students in universities in North America (Canada/USA/Mexico) are eligible to apply. Please submit your application online here.  Please ask your advisor or a faculty member that knows you well to fill out a very brief confirmation that they support your recommendation here.

 

We are funding a number of diversity fellowships to offset travel and lodging expenses, which will require awardees to write a brief application statement to apply, as well as a two-page research proposal for a new idea in the field of EEE (due the week after camp). We will then match up fellows with one of the instructors, who will provide feedback on the idea in a one-on-one meeting. You can apply for the fellowship within the application form linked above.

 

The application deadline is 5pm PST June 23, 2023. We will notify you of your admission by end of June. If you have any questions, please email Karen Notsund, [email protected] or Maximilian Auffhammer ([email protected]).