Blog opportunity

Since very few of you took me up on the extra credit opportunity, let's give it a shot here ...

1) What are some common themes that we've discussed throughout the course?

2) What is the role of economics in natural resource policy?

3) Are sustainability and economic growth complements or substitutes?

4) Are the players to blame for the over-use of natural resources, or is it the rules of the game?

Catch shares

Information about catch share programs in fisheries here from EDF.

Good article here from Science Daily.

and another good article here from RFF and here from The Economist.

PERC's Daniel Benjamin has a clearly written piece here (I love the quote in the by-line).

Here's a critique of catch share programs from ESPN's Robert Montgomery. Some good points are made, but the article also has some misleading information and some statements that are downright false. For example, in the second paragraph:

"Some also charge that, at its worst, Catch Shares is a variation of a much discredited cap-and-trade energy policy, in which government limits access and gives away a public resource for commercial profit by a few. "

Catch shares are indeed a variation of cap-and-trade, but cap-and-trade has in no way been discredited (at least not by anyone who knows what they're talking about). Government does indeed limit access, but does not need to "give away" a public resource. Shares can be auctioned or sold in an open market. Besides, the public nature of the resource is the root of the problem to begin with. Montgomery misses that and also seems to completely miss the idea that catch share programs have proven to enhance stocks, which of course will improve recreational opportunities, not diminish them.

No doubt catch shares/ITQs have their problems. All regulations do. And there's no doubt that much more work is needed in perfecting how to implement these systems in ways that balance efficiency, equity and sustainability. But until we come up with something else (?), these systems seem the only way to achieve sustainable harvest.

Land preservation easement in Wilmington

Airlie Gardens is a pretty amazing place and likely worth millions in terms of potential (private) land rents. Its preservation surely generates massive rents to the public at large (via recreation, education and aesthetics). Environmental rents are a public good, and as such those rents will not likely be provided by markets. Preservation may indeed be what's best for society, but without government intervention of some sort, it won't happen.

Because of tough economic times we're experiencing, the opportunity cost of Airlie preservation (lost revenues from sale) made its way into budgetary discussions by the county. The need to safeguard Airlie is therefore getting some attention.

Read the story here at the StarNewsOnline

Read an editorial comment here

What do you think about the easement?

An interesting read

"What the Green Movement Got Wrong" from Charles Moore of The Telegraph, presents an interesting perspective on solutions to environmental issues. He's referring to a program that aired on BBC. I haven't seen it yet, but will search for a link.

There are a few issues here that I agree with. First, trying to change human nature is a losing battle. Human nature is just nature after all, and people, like all animals, will always pursue their own best interest. Sustainable solutions can be achieved using human nature as an ally rather than trying to stop it. Incentives work because incentives are how people make decisions. Which leads to a second point, the idea that claiming you have the moral highground because you favor conservation overlooks the very simple idea that traditional environmental conservation is not at all compatible with the alleviation of human poverty. I listened to a lecture a few weeks back (David, what was that guy's name?), and he said something like "the romantic environmentalist is dead", because true conservation of nature (in the sense of limits to extraction) often means that people die. Not exactly a morally superior argument, is it? Finally, and obviously related to the first two points, is the idea that a lot of what we've attempted has failed miserably. Top-down, draconian, command-and-control via standards most often does not achieve anything close to sustainable outcomes. Here's a link to a great paper by Jon Sutinen regarding the efficacy (or lack thereof) of CAC approaches to fisheries managment.

Obviously there's more, and of course a series of articles could be written on what the environmental movement has done right, but I'll leave that up to the discussion.

What kind of values are being estimated here?

From Conservation Magazine (yes, shameless self promotion).

the Nagoya Protocol

United Nations member states agreed to a set of provisions - dubbed the Nagoya Protocol - aimed at reducing species loss. Read about it here at the NY Times or here at the Guardian.

A critical aspect of the negotiations relates to the property rights associated with goods and services derived from plants and animals. Suppose country A discovers genetic information from a species in country B, and then uses that information (coupled with other inputs, lots of R&D, etc..) to produce and sell a good that earns $X in revenue.

How does requiring A to provide B with a share of X address the basic economic cause of the extinction problem? Lots of topics from our course can be considered: discount rates, common property resources, the importance of property rights (Coase), negative and positive externalities, the distribution of costs and benefits and how that affects individual incentives.

There's some other interesting stuff here, including the requirement of payment for genetic info discovered in the past, the lack of an agreement on how to finance such payments, and the importance of biodiversity for economic growth.

Valuation in the Gulf

From USA Today

Note the distinction between monetary compensation and compensatory restoration.

I've done some work on the NRDA process and damages to fisheries from small spills. Obviously, the Gulf spill falls under "type B".

National Petrolium Reserve

The National Petroleum Reserve (near ANWR) doesn't appear as useful for extraction as previously believed. Read about it here at CNN. Related story here (note the last paragraph). History here.

Implications for land rent?
Implications for conservation?
Implications for extraction from other areas?
Will this affect petroleum prices?
Implications for renewable energy policy?

This is cool

Clean and green.

More here.

Would you buy this?

The double-edged sword of tourism

People come to see the natural resources, economy grows, external effects are not internalized, natural resource suffers. Read a recent example in the news here. What kinds of policies might be useful to remedy these types of situations? What types of research questions should be answered first? Are economic growth and nature-based tourism compatible?

Trees are good

A version of this story appeared in today's local paper.
Trees do a great job cleaning up the air.
What are the implications for policy?

A cement plant, a cruise ship port, an airport, or something else?

There's an interesting development vs. conservation issue on the horizon in St. Lucy, Barbados. Read about it here at the Barbados Advocate. The Arawak cement plant is currently located in the relatively undeveloped northwest region of the island, near Maycock's Bay. The plant is located right on the coast, and if you swim in the area you see a film of particulate matter on the surface of the sea. In addition to this air pollution, the plant is also quite noisy. The combination of air, noise and water pollution no doubt creates a host of negative external effects for nearby residents. The site apparently looks appealing for a new cruise ship port, or perhaps a new airport. Of course, the land could also be set aside for conservation, or developed for residential uses.

What can we say about how land rents for the area will depend on alternative uses? What kind of research questions might we consider before going forward? Does anyone have an indication as to how this might play out?

Implications for land rent?

Soils in the southern hemisphere are drying up.

Read about it here at Science Daily

Word of the day: "Envirotranspiration"

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Aside: 30+ authors on the study! Four is considered a lot for an econ article. What is it about the natural sciences that leads to such a huge number of co-authors on research articles?

Offshore energy

Wind or oil?

A new study from Oceana suggests that offshore wind energy could be more cost effective and create more jobs than offshore oil.

Coming soon to a gas station near you ... E15

The U.S. Environmental Protection Agency is about to approve 15% ethanol blends in motor fuels (most gas today has 10%).

Economic implications?
Good for the environment? Bad? It depends?

Read the story at:

Bloomberg

The Wall Street Journal

Reuters

Here's a story from the New York Times in 2008 that addresses both the econ and the environmental effects of biofuels (thanks to Gina at env-econ for the link). Gotta love it when a basic understanding of economics helps you see unintended consequences.

Aside: There's only one gas station here in Wilmington where you can buy non-ethanol gasoline... does anyone know where it is?

Mining is profitable

What's going on here?

Why is the mining of natural resources so profitable during an economic downturn?

Are there externality issues that should be addressed? If so, how, and how might addressing externalities affect profitability and social well-being?

We'll be starting our study of mineral extraction soon.

Are electric cars really better for the environment?

Interesting article from Slate.com here

Popular mechanics likes them

We have a chicken-and-the-egg problem

Should EV's be subsidized?
How about pushing fuel economy via command-and-control?

Read one viewpoint here, and the other here.
(Warning: strong opinions and normative content in the articles)

What do you think?

There's a much deeper issue underlying all of this: Can individuals (and nations) on the lower end of the income spectrum afford to be green? Are higher income individuals (and nations) who most certainly create more pollution in some way obligated to do more abatement?

200 new species

This happens every year and it always amazes me... we know so much and at the same time we're clueless.

Economic implications?

10.10.10

"Global Work Party" day... seems a strange name.
Are you doing anything on Sunday?
Why? Why not?

NFWF and fisheries catch shares

Read about it here.

How do catch shares work? (we'll get to this later in the term, but you can start researching it now)

Is this command-and-control, incentives or combination policy?

Why is NFWF providing money for this type of research?

NOAA fisheries research

Here's a link to an outline of NOAA grant support for endangered species research.

Can you link one or more of these to a valuation research question?

That is, once the science is complete, how might the resulting information be combined with economic valuation (market or non-market) to address a policy question?

What valuation techniques might be employed?

Are we subsidizing over-fishing?

According to this article from Reuters, yes.

Here's a link to a similar story from a couple of years ago.

Why do nations continue to subsidize fishing, when the evidence is overwhelmingly clear that such subsidies make the situation worse?

What are some examples of these subsidies?

Solution?

We will not formally cover fisheries econ until later in the term, but one of the things we'll learn is that the best economic solution is also the solution that's best for the fish (i.e. truly sustainable use). We'll also learn that command-and-control (standards) simply will not get us there.

Stavins on Cap & Trade

Robert Stavins of Harvard University has an excellent blog post on the merits of market-based solutions to environmental problems. His essay is full of useful links and information. Everyone should give this a careful read.

Hat tip: env-econ

Where I'll be this week

I'm traveling to University of Exeter, UK to participate in a meeting regarding a multinational project titled "The Future of Reefs in a Changing Environment".

The working group that I'm involved with is livelihoods and coral reefs. PhD student David Gill (with Prof. Hazel Oxenford and yours truly) will be conducting economic valuation research regarding extractive and non-extractive values of reef fish in the Caribbean.

How might understanding the relative values of extractive uses (fishing) and non-extractive uses (snorkeling and diving) be useful to inform policy?

Biodiversity as a global public good

The following excerpt is from an article recently published in the journal Science (one of the most widely read and prestigious science journals in the world). The numbers in parentheses are citations from the article. I can list those for you if you're interested.

Citation: "Biodiversity Conservation: Challenges Beyond 2010", Michael R. Rands et al., Science, 329, 1298, 2010.

"To address the continued global loss of biodiversity, we propose the pursuit of three interconnecting priorities: (i) to manage biodiversity as a public good, (ii) to integrate biodiversity into public and private decision-making, and (iii) to create enabling conditions for policy implementation."

"Managing biodiversity as a public good. An appreciation of biodiversity as a public good (65)
and of its economic value (66) is, we believe, central to future effective conservation. Biodiversity loss is rarely the intended consequence of human actions; more often it is an unintended side effect of decisions taken for other reasons—an economic “externality” (67). Biodiversity is a special kind of externality, as the impacts of a particular action are often distant in space and time (e.g., local rainforest loss may affect the global carbon cycle, with consequences for future generations). This makes effective regulation difficult, as no single body has jurisdiction over the world’s biodiversity. It also makes transaction based
solutions difficult, because those who damage biodiversity are often widely separated, in
space or time, from those who experience the consequences. Actors have few incentives or opportunities to change their behavior, whether they are small holder households planning their annual agricultural cycles or large multinational companies determining their corporate priorities. Thus, understanding and managing biodiversity as a global public good,which must be provided through conscious collective choices (68), is fundamental to achieving its conservation (5). "

"The recognition of biodiversity as a public good is not a new concept, and in recent years
economists have made substantial progress in developing valuation techniques that quantify the local and global benefits of biodiversity (69). Measuring the economic values of biodiversity (5) and estimating spatially explicit economic values of services across landscapes to inform management decisions (70) are vital. However, making these values explicit is insufficient to bring about a change in behavior, unless supporting public policies are in place that either reward positive individual actions or penalize harm. Economists need to work more closely with conservationists and policy makers to develop intervention strategies
that shift individual actors toward more biodiversity-friendly behavior, using regulatory
devices as well as incentives, thereby securing the provision of biodiversity conservation as a
global public good. "

"Integrating biodiversity into public and private decision-making. The value of biodiversity
must be made an integral element of social, economic, and political decision-making, as is starting to happen with carbon and climate change. Government, businesses, and civil society
all have crucial roles in this transition. For government, maintenance of stocks of natural capital must become an explicit, accountable, and implemented element of policy. Concern
for biodiversity cannot be restricted to a nation’s environment ministry but must extend
across all sectors of government, such as treasury, industry, and defense. Policy change will require clear and cost-effective metrics of natural capital consumption and depletion (71) and the development of systems of public accounts that include both sustainability (72) and the specific issue of biodiversity loss (5). Government staff and politicians may need in-service training in biodiversity science and ecological economics, with effective research support. Research investment will need to focus on applied transdisciplinary problems. Government will need to remove perverse subsidies detrimental to biodiversity, such as in agriculture, forestry, and fisheries. Fishing subsidies encourage overexploitation of two-thirds of fish stocks across the globe, threatening both the fishing industry (worth $80 billion to $100 billion per year) and the 27 million people dependent on it (5, 73). Government policy needs to integrate biodiversity conservation, poverty alleviation, and the demands of a sustainable
economy (74) to meet the Millennium Development Goals (75)."

There's a lot of stuff here related to our class. Personally I was really excited to this in Science, as these are messages that colleagues and I have been trying to deliver for a long time.

Anyone care to attempt a summary sentence or two?

Lots of small MPAs better than one big one?

From Rueters: A new UN study suggests that a network of small marine protected areas may be more effective than few big MPAs.

First, what is the basic economic problem here? That is, why do we need MPAs in the first place?

What type of solution (command-and-control or incentives) would we classify marine protected areas as?

What problems arise with MPAs?

What are the goals of an MPA? Are most MPAs reaching those goals?

Read about MPA effectiveness here and here.

Here is an excellent article from Resources for the Future on the economic and social implications of MPAs.

Here is an informative site from NOAA regarding economics and MPAs.

Welcome CERMES students

Starting this week 17 graduate students at the Center for Resource Management and Environmental Studies (CERMES) University of the West Indies-Cave Hill will be joining our blog.

These students hail from 8 different countries (Barbados, Guyana, Jamaica, Nigeria, St. Lucia, Suriname, Trinidad & Tobago and the U.S.). Welcome to the blog!

CERMES students - we started class here about 2 weeks ago, so you'll see some blog posts and comments. Feel free to join those conversations if you find them of interest.

Some blog topics will be US-centric, some will pertain to the Caribbean and some will be international in scope ... I do hope that everyone contributes to the discussion regardless of the context.