Driving externalities

Interesting (and kinda scary) example of estimating the external cost of an activity: Pollution from idling vehicles in traffic leads to premature deaths.

Read about it here at USA Today.

People don't seem to want electric cars

At least in the U.S.

The opposition seems to come from driving range issues and battery cost. From what I understand the battery cost worries are overblown. I'd consider buying one if they weren't so expensive, even with the subsidy. Right now I drive a beat-up old Honda Civic (1992 model and still runs like a champ), and get incredible gas mileage.

We know that gas prices are changing the way people drive and affecting purchasing power. Read about it here and here. So, what will it take for people to make big changes?

Outsourcing emissions

A new study published in the Proceedings of the National Academy of Sciences suggests that declines in emissions in developing world are misleading in terms of pollution gains by those nations. In short, while developed nations may be producing less emissions within their own borders ("territorial emissions"), they are consuming more products produced abroad where pollution standards are less stringent. When these "consumption emissions" are factored in, developed nations are actually producing more emissions, not less. China is the clear global leader in terms of manufacturing and outsourced emissions. My brother-in-law is currently living in China with his family (he designs running shoes for Nike), and tells us that sometimes the air is so bad that they can't go outside.

Can anyone think of a micro-level example where individual consumers outsource their pollution?

Hat tip: ENN

Coal pollution externalities in VA

The Chesapeake Bay Foundation has released a report cataloging the economic and environmental impacts of a proposed coal-fired power plant.

Here's a short blurb at the Washington Post

Here's the full press release from CBF

OK, so what do we have to take into consideration?

First, the source of the report is a conservation agency. The Chesapeake Bay Foundation does great work. But they have an agenda. Here's a link to CBF's main page. I'm not saying that they are wrong or lying or fudging data, just saying that when analyzing a situation objectively we must always question the source of our information.

Second, coal generates most of our electricity. Nation-wide, around half of all electric power comes from coal. In the eastern part of the country it's a much higher percentage. (aside: Think that electric car is "clean and green"? Think again.) We use so much coal because it is cheap. If we're going to curtail the use of fossil fuels, we have to be willing to pay for it. Higher electricity rates, higher prices at the pump.

Third, the report suggests significant health and environmental impacts. These are well known. More here from The US EPA.

So, like most things in life we have a trade-off. There are benefits from our actions and there are costs. The economic question is: do the benefits outweigh the costs? i.e. Is it worth it?

Some of you are probably wondering how we can objectively compare these disparate costs and benefits. How can we compare the value we derive from cheap electricity with the value of human and environmental health? This is a central issue that we'll be dealing with in this class, and the unit on economic valuation will help quite a bit. Short answer: it's difficult, but we can do it.

Before we get to the details, consider this: when we make decisions as individuals about what to eat, how fast to drive, and how much to exercise, are we not implicitly placing a value on our own lives? When we make decisions about what products to consume, how much to recycle, whether to ride a bike or drive a car... are we not placing a value on the environment?

I know that many of you are environmental studies majors, so I want you to consider how you perceive the value of the environment... do you think that environmental quality is "priceless"? Or are you willing to sacrifice some environmental quality for your own comfort and convenience?

Likewise for the econ and business majors... do you think markets truly send appropriate signals in all cases? Or can markets fail to efficiently allocate resources in some situations?

Welcome UNCW summer session students

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This blog is used primarily by my students at UNCW and UWI.

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