Environmental Economics

I try to assign a number to Krugman's estimate of the value of not commuting and come up short

Krugman (Working From Home and Realizing What Matters):

First things first: The reduction in commuting time is a seriously big deal. Before the pandemic, the average American adult spent about 0.28 hours per day, or more than 100 hours a year, on work-related travel. (Since not all adults are employed, the number for workers was considerably higher.) By 2021, that number had fallen by about a quarter.

Putting a dollar value on the benefits from reduced commuting is tricky. You can’t simply multiply the time saved by average wages, because people probably don’t view time spent on the road (yes, most people drive to work) as fully lost. On the other hand, there are many other expenses, from fuel to wear and tear to psychological strain, associated with commuting. On the third hand, the option of remote or hybrid work tends to be available mainly to highly educated workers with above-average wages and hence a high value associated with their time.

But it’s not hard to make the case that the overall benefits from not commuting every day are equivalent to a gain in national income of at least one and maybe several percentage points.

If median household income is $70,000 and 1 earner in each household works full-time then the household wage is $35. If time is valued at 1/3 of the wage (the number typically used in travel cost demanad models) then the average household enjoys $1200 in additional time at home (100 hours at $12). If there are 125 million households in the U.S. then the number aggregates to $150 billion.

That is lower, 0.65%, Krugman's 1-3% of US GDP ($23 trillion) estimate. There is some slippage between households and individual adults here, but you get the idea. Krugman is making assumptions less conservative than mine. 

 

And you may find yourself in another part of the world

We started blogging again this year and it has been fun. I've managed to keep up with my quantity expections (quality is an issue) ... until I took two trips in April. I've found that I can't do everything anymore. Actually, I can't do hardly anything anymore, it seems, but keep up with my classes. I think I have finally caught up and have posts written for Thursday, Friday and Monday. 

The first trip was a two day trip to Charleston for the SAFMC's Socio-Economic Panel meeting. Here is a piece of what I helped write in our report in response to the questions posed in item 8 on the agenda:

• The economic definition of angler welfare is captured by the consumer surplus, or net willingness to pay, of recreational trips and harvest/catch. There are a number of studies that estimate these values for snapper-grouper in the South Atlantic.
• There are several methods that could be used to estimate economic values for the snapper-grouper fishery. There is existing MRIP data that can be used to develop revealed preference models of angler behavior. A stated preference survey could be developed to provide value estimates but this is costly and time-consuming. Given that there are usable value estimates for this fishery in the peer-reviewed literature, the SEP recommends that benefit transfer methods be used to support the MSE.

The second trip was the following week to Tampa for NMFS's 2023 Recreational Fisheries Economics Constituent Workshop (here is a description). I gave the first presentation where I was supposed to cover valuation methods in 10 minutes (10 minutes). One of the organizers told me afterwards that "you had the hardest job". IKR. Anyway, here is my presentation and, yes, I stayed within 10 minutes. 

In both locations I beat the drum that the National Marine Fisheries Service has the data available to annually estimate regional recreational demand models for management purposes. I got serious about this issue in 2013 and wrote this paper (SAFMC NRUM 2013) in a couple of days (if I remember correctly). I said the exact same thing at the 2014 Recreational Fisheries Economics Constituent Workshop (see #1 on the list). I think I have some folks half-way interested in this so we'll see if anything happens.

I'm at the Society for Benefit Cost Analysis conference in DC

This is the first in-person SBCA conference since 2019 following a cancelled 2020 conference and online conferences in 2021 and 2022. I organized two sessions on environmental nonmarket valuation and, in my opinion, they turned out great. 

The sessions were put together following a "call for papers" on Twitter. Five guys were interested and with my paper that made 2 sessions. I'm hoping to do this again next year but know that a tweet isn't the best way to try to put a session together (e.g., 3 sessions is better than 2!). If anyone is interested in participating next year or has ideas about how to get the word out, please let me know (I'll probably risk the wrath of AERE with an email on the RESECON listserv). 

Here are the session details:

Estimating Environmental Benefits from Housing Markets
Thursday | 10:45 am-12:15 pm | GWU Amphitheater

Organizer:John Whitehead, Appalachian State University
Chair:John Whitehead, Appalachian State University

• The Economic Consequences of Local Gas Leaks: Evidence from Massachusetts Housing Market. .....Pengfei Liu, University of Rhode Island
• Environmental Valuation Across Time and Benefit Cost Analysis. .....Patrick Walsh, US EPA NCEE
• Untangling Willingness to Pay for Public Land Use Change: An Analysis of Greenways in Raleigh, North Carolina. .....Lee Parton, Boise State University

Estimating Willingness to Pay with Stated Preference Methods
Thursday | 2:15 pm-3:45 pm | GWU Amphitheater

Organizer:John Whitehead, Appalachian State University
Chair:Patrick Walsh, US EPA NCEE

• Distribution-free Methods to Estimate Willingness to Pay Models Using Discrete Response Valuation Data. .....Samuel Zapata, Texas A&M University
• A Meta-Analysis of Recreational Fishing Benefits. .....Matt Massey, US EPA NCEE
• Sea level rise, drinking water quality and the willingness to pay for coastal tourism. .....John Whitehead, Appalachian State University

Does this mean the tenure police are coming to revoke my tenure?

From the inbox:

The SSRN Processing Team has added the following comment to your submission, Count Data Models and the Problem of Zeros in Recreation Demand Analysis (Abstract ID 3559768):

This submission has been removed from SSRN at the request of Wiley-Blackwell, copyright holder of the work. The publisher will allow authors to submit a working paper or preprint version to SSRN by going to https://hq.ssrn.com and starting a new submission. Once Submitted, contact the SSRN Support Center (https://service.elsevier.com/app/home/supporthub/ssrn/), and we will assist in reinstating your views and downloads.

Some thoughts:

1. I didn't submit anything to start with.
2. That paper was published in 1996--one year after I got my PhD. It was also my job market paper that got me my first job at East Carolina University, where I met John.
3. That paper was also part of my dissertation that won the the AAEA Outstanding PhD Dissertation Award in 1996 (talk about peaking early).
4. It has been cited 132 times according to the Google.
5. A copy of the paper can be found here, (so take THAT SSRN).
6. It has been cited once for each of the last two years. I think its useful life might be over.

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.

AERE Sessions at the 2019 SEA meetings @AereOrg

There are 70 papers in 14 regular sessions, 17 papers in 4 graduate student sessions and the (first ever) AERE keynote session. The keynote speaker is AERE immediate past president Laura Taylor. She will present "Reflections on the Credibility Revolution in Nonmarket Valuation".

Here is the link to all of the sessions: https://www.southerneconomic.org/current-year-program/?conferenceId=5&organizationId=2

We had a great panel of speakers for another professional development session but someone (me) screwed up and didn't get it submitted on time. My apologies to Elaine Frey who organized it and everyone who agreed to present. Hopefully, this panel is ready to go in 2021. 

AERE sessions at the SEA meetings are posted @AEREorg

There are 17 sessions with 5 papers each (no discussants), 3 student sessions (with discussants, organized by Elaine Frey) and 1 panel discussion (the last session so attendance will be lower than our usual "tips" session):

Tips for Students and Newish Economists

Moderator: Elaine F. Frey, California State University, Long Beach

Panelists:

• Jill L. Caviglia-Harris, Salisbury University, "Applying Design Concepts to Increase the Impact of your Presentations"
• Christopher F. Dumas, University of North Carolina - Wilmington, "Adding Logic and Proof Concepts to Your Intro Courses"
• Sarah Andrea Jacobson, Williams College, "Social Media but in a Way That's Kind of Useful"
• Will Wheeler, U.S. Environmental Protection Agency, "Writing Grants is a Skill: Tips for Success"
• John C. Whitehead, Appalachian State University, "Consulting on the Side"

Here is the link to all of the sessions: https://www.southerneconomic.org/current-year-program/?conferenceId=4&organizationId=2.

 

Daily Demand and Supply: Government prevents entire island population from getting crabs*

From NBC.com:

This community voted overwhelmingly for Donald Trump. But now his immigration changes are killing its livelihood — legendary crabs that are a mainstay of the local economy and a regional delicacy.

For decades, Hoopers Island, known for its crabbing industry, has relied on a federal seasonal work program — known as H-2B visas — to keep its businesses humming. This has allowed employers to hire foreigners, mostly Mexican women, to come temporarily to pick crab meat.

But this year, the cap on H-2B visas — and a shift from the first-come, first-served based model to a lottery system that has disadvantaged Hoopers Island seasonal workers — has left the island without 40 percent of the visas they have needed in the past.

The economics here are pretty straight forward.  The number of workers supplied at any particular wage is equal to the number of domestic workers willing to work at that wage, plus the number of H2B (foreign) workers willing to work at that wage.  For example, if the crab-picking wage is $10 per hour, and the number of domestic workers willing to pick crabs at $10 per hour is 100, and the number of H2B workers willing to pick crabs for $10 per hour is 200, then the total number of workers supplied at a wage of $10 per hour is $300.  If the number of H2B visas are cut by 40%, then the number of H2B crab pickers willing to work at $10 per hour becomes 120, and the total number of workers supplied at $10 per hour is now 220.  In other words, restricting the number of foreign workers results in a decrease in the supply of labor to the crab-picking industry.   So what are the effects of a decrease in the supply of labor in teh crab-picking industry?

 

• Wages for crab-picking will increase.  A decrease in supply of crab-pickers will cause the equilibrium price of crab-pickers to increase.  Those crab-pickers who are hired will get higher wages.
• The number of domestic crab-pickers will increase.  At higher wages, the number of domestic crab-pickers willing to work will increase.  Since the supply of foreign crab-pickers has been reduced, a part of the shortage of workers will be filled by drawing new domestic crab-pickers into the crab-picking jobs.
• The total number of crab-pickers will decrease.  As with any decrease in supply, the equilibrium quantity of workers in the crab-picking market will decrease as the supply of workers decreases.  The gain in domestic workers is more than offset by the loss of H2B workers.  

So in the market for crab-picker we will have higher wages for more domestic workers, with fewer H2B workers in the market, and lower total employment among all crab-pickers.  SO if you are a protectionist, this doesn't sound all bad.  We have more domestic workers employed at higher wages.  Right?

Well, sort of.  We also have to think about what else happens.

Right now we have full employment.  With full employment, those domestic crab-pickers have to come from somewhere. The only place from where they can come are other, similar, jobs.  SO another effect is:

• A decrease in supply of H2B workers in the crab-picking industry will decrease the supply of domestic workers in other industries--driving up those wages as well.

But workers getting paid more is a good thing, right?

Sort of, but we have to remember that workers are an input into the production of outputs.  When the price of an input increase, the supply of the output decreases.  This means:

• A decrease in the supply of any output for which wages have gone up will see higher prices and lower quantities produced/consumed.  The decrease in the supply of labor will cause higher crab (and other food goods) prices.

For reference, here's the current price of crabs at a Baltimore area restaurant: 

Males by the Dozen

• Small (5″-5 ¾″) $30
• Medium (5 ¾″-6 ¼″) $48
• Large (6 ¼″-6 ¾″) $68
• XLarge (6 ¾″-7 ¼″) $101
• Jumbo (7 ¼″-8″) $124

Males by the Bushel

• Small $249
• Medium $309
• Large $379
• Lights (picking crabs) $120

Yikes.

 

*I know that's a cheap joke, but I bet John laughed.

 

Where I'll be this weekend ... [don't get excited, I'm not going to "America's top roots based music festival"]

From the website:

The Department of Economics and the Center for Economic Research & Policy Analysis at Appalachian State University will hold the 2018 Appalachian Experimental and Environmental Economics Workshop on April 27-28, 2018 at the BRAHM in Blowing Rock NC.  
 
This workshop is part of a regular series of workshops hosted by Appalachian State that brings together junior and senior scholars that use experimental methods (lab, field and survey) to study issues related to environmental and natural resource policy.

Here is the program: https://2018-exp-env-workshop.weebly.com/program.html. 

BTW, who scheduled this during MerleFest?

Call for papers: AERE @ the Southern Economic Association Annual Meetings

The Southern Economic Association Annual Meetings will be held November 18-20, 2018 in Washington, D.C.: https://www.southerneconomic.org/conference/

Submit your abstract for presentation in an AERE session at the 2018 SEA here: http://www.mymeetingsavvy.com/aere-sea/login.aspx

You will be asked to enter relevant author information and upload a pdf document with your paper's title, author names and an abstract of no more than 1,000 words. Authors may submit more than one abstract.

Abstracts are due March 15. Authors will be notified of paper acceptance by March 30. A draft AERE program will be available on April 15 when sessions are due to the SEA.

Please note that:

1. The presentation of research in AERE-sponsored sessions is a benefit AERE provides expressly for its members. Although membership is not required to submit an abstract for consideration, if your paper is accepted, you will be required to join AERE, or renew your membership, in order to be placed on the draft program on April 15.
2. Presenters are required by the SEA to register for the SEA meetings.