Environmental Economics

Env-Econ Book Review: The Fishermen and the Dragon

I just finished reading Kirk Wallace Johnson's The Fishermen and the Dragon: Fear, Greed, and a Fight for Justice on the Gulf Coast. Here's my book review (from the view of an Environmental Economist of course).

The Fishermen and the Dragon tells the true story of the evolution of the Texas Gulf Coast crab and shrimp fisheries in the post-Vietnam era. The era is important to the story because tension builds along the Texas coast when post-war Vietnamese refugees locate to the Gulf Coast creating economic competition and (racial) tension between the existing anglers and the refugees. The racial tensions play out against the backdrop of the encroachment of the Ku Klux Klan into post-war political asylum issues and the the environmental problems that come along with rapid industrialization of the Gulf Coast. 

So why would an environmental economist care? Honestly the story has a bit of everything: Tragedy of the commons, Coasian bargaining, Ostrom-like institutional building, credible (and incredible) threats, industrial organization, the role of government in regulating the commons, natural resource damages (oil spills), environmental and health externalities, social and environmental justice. 

Part Erin Brokovich (an initially reluctant environmental crusader), part John Grisham-like southern legal thriller tinged with undertones of racism, part Pat Conroy-like description of the hardships of coastal life, this true story reads like a popular fiction thriller.

If I have one complaint, it would be that there is a slight disjoint between the story of race tensions between the refugees and local fishers, and the story of corporate greed and environmental disaster. There is overlap in the main characters, but stories seem to be separated in both time and presentation.

Nevertheless, a good read with Env-Econ lessons abound. 

I give it a solid four out of five beers raised.

 

Daily Demand and Supply: Bill Nye Explains the Law of Demand...and Carbon Pricing, MFers.

Warning:  NSFW (Unless you work at a University and part of your job is to watch stuff like this and post it on a blog).

The highlights of this have been around all week, but most of the clips are just Bill Nye the Science Guy saying "motherf***ers.   But this segment on Last Week Tonight really does a nice job of simply explaining how Carbon Pricing works.  If you don't want to watch the whole thing, just fastforward to the 9:27 mark or so, and sit back and enjoy.

Bill Nye explains the Law of Demand from 10:21 to 10:37.

Now if I can just figure out how to use this in class without trigger warnings.

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.

 

Is Climate Change Fair?

Just got around to reading the Hsiang et al piece in Science on the inequitable economics impacts of climate change.  Here's the abstract:

Estimates of climate change damage are central to the design of climate policies. Here, we develop a flexible architecture for computing damages that integrates climate science, econometric analyses, and process models. We use this approach to construct spatially explicit, probabilistic, and empirically derived estimates of economic damage in the United States from climate change. The combined value of market and nonmarket damage across analyzed sectors—agriculture, crime, coastal storms, energy, human mortality, and labor—increases quadratically in global mean temperature, costing roughly 1.2% of gross domestic product per +1°C on average. Importantly, risk is distributed unequally across locations, generating a large transfer of value northward and westward that increases economic inequality. By the late 21st century, the poorest third of counties are projected to experience damages between 2 and 20% of county income (90% chance) under business-as-usual emissions (Representative Concentration Pathway 8.5).

Here's a pretty picture (with a really long caption) that sums things up:

Caption: County-level median values for average 2080 to 2099 RCP8.5 impacts. Impacts are changes relative to counterfactual “no additional climate change” trajectories. Color indicates magnitude of impact in median projection; outline color indicates level of agreement across projections (thin white outline, inner 66% of projections disagree in sign; no outline, ≥83% of projections agree in sign; black outline, ≥95% agree in sign; thick white outline, state borders; maps without outlines shown in fig. S2). Negative damages indicate economic gains. (A) Percent change in yields, area-weighted average for maize, wheat, soybeans, and cotton. (B) Change in all-cause mortality rates, across all age groups. (C) Change in electricity demand. (D) Change in labor supply of full-time-equivalent workers for low-risk jobs where workers are minimally exposed to outdoor temperature. (E) Same as (D), except for high-risk jobs where workers are heavily exposed to outdoor temperatures. (F) Change in damages from coastal storms. (G) Change in property-crime rates. (H) Change in violent-crime rates. (I) Median total direct economic damage across all sectors [(A) to (H)].

Env-Econ Summary: We're all screwed, just some of us are screwed more than others.   

Things Indiana Jones and I have in common...

...we're both college professors, and we both hate snakes:

Get ready to update your nightmares.

A scientist from the University of Tennessee, Knoxville has discovered that a species of snake, the Cuban boa, hunts in groups, and through teamwork improve their chances of catching prey.

It's the first time that reptiles have been observed to have been involved in "coordinated hunting," where individual animals take into account the location of others of the same species to maximize their hunting successes.

I may never sleep again.

 

Quote of the day: "...we're in the sixth mass extinction."

Here's the full quote:

"This is definitely human impact, we're in the sixth mass extinction. There's only been five before this and we're definitely in the sixth," WWF conservation scientist Martin Taylor told CNN."

...and here's more of the story:

More than two thirds of the world's wildlife could be gone by the end of the decade if action isn't taken soon, a new report from the World Wildlife Fund revealed on Thursday.

Since 1970, there has already been a 58% overall decline in the numbers of fish, mammals, birds and reptiles worldwide, according to the WWF's latest bi-annual Living Planet Index.

If accurate, that means wildlife across the globe is vanishing at a rate of 2% a year.

...and here's a link to the full story.

...and here's a picture of a giraffe I took in Tanzania two weeks ago.

...and here's a lion that smiled for the camera:

...and here's a young zebra to add gratuitous emotional impact to the story:

 

 

An environmental issue to watch this election season

Tired of presidential politics? Here's a local (Florida) issue that could have interesting national and international impacts:

The main focus of this election has been the presidential race, but so many other things will be on the ballot Nov. 8. In the Florida Keys, local voters will be asked whether they are in favor of releasing genetically modified mosquitoes somewhere on the islands as part of an experiment that ultimately aims to reduce the transmission of mosquito-borne diseases like dengue and Zika.

Many locals are opposed to the research and have several reasons for not wanting to be exposed to the risk of a new technology: Current methods for mosquito control are working relatively well, and it’s not clear whether the genetically modified mosquitoes will be able to reduce disease, especially in the short term. People in favor of the research point to the large quantity of insecticide currently being used to keep mosquitoes at bay and the growing problem of insecticide-resistant mosquitoes as some of the reasons that new technology is necessary. The vote brings up a lot of big questions about how a society should deal with risk, particularly when it comes to new technology and public health.

Photo of the Day: Origins of the expression "I'm so hungry I could eat the ass-end out of a cow."

 

Photo Cred:  Me

"Wildlife Refuges Boost Home Values" on the 90-Second Naturalist

This study: 

Liu, Xiangping, Laura O. Taylor, Timothy L. Hamilton, and Peter E. Grigelis. "Amenity values of proximity to National Wildlife Refuges: An analysis of urban residential property values." Ecological Economics 94 (2013): 37-43.

Abstract. This research quantifies the property value benefits of National Wildlife Refuges near urban areas on the eastern coast of the U.S.A. Our approach is made possible through access to confidential U.S. Census data identifying property values surrounding all refuges with high geographic resolution. Results from hedonic property value models suggest that the amenity values of refuges located near urbanized areas are capitalized into the value of homes in very close proximity, averaging $11 million per refuge. These capitalized values add directly to the local tax base and are considerable complements to the annual economic value created by the refuge system.

via www.sciencedirect.com

Was picked up by NPR's 90 Second Naturalist (" A daily glimpse into the natural world from Thane Maynard, President of the Cincinnati Zoo and Botanical Garden") on October 7. The podcast is here: http://www.npr.org/podcasts/404960608/the-90-second-naturalist.

Today's Buzz*

From EcoWatch:

The U.S. Fish & Wildlife Service (USFWS) has added seven bee species to the endangered species list, a first for bees. Native to Hawaii, these yellow-faced bees are facing extinction due to habitat loss, wildfires and invasive species.

...

The listing comes just a week after the USFWS proposed listing another bee, the rusty patchedbumble bee, to the endangered species list. During the past 50 years, about 30 percent ofbeehives in the U.S. have collapsed, according to the the U.S. Department of Agriculture.

*Buzz!

Get it?

Bees--Buzz.  

Buzz--News.

It's a play on words!

And it's punny.