Monday, September 30, 2013

NOAA's Environmental Econ site

The National Oceanic and Atmospheric Association has a great series of pages on environmental economics.

Be sure to use the blue side bar to check out the pages on valuation and discounting, topics that we're currently covering in class (UNCW and UWI).

Read about NOAA's Coastal and Ocean Resource Economics (CORE) program here.

Wednesday, September 25, 2013

Incentives for not cutting trees: REDD and REDD+

REDD stands for Reducing Emissions from Deforestation and forest Degradation.

The system works as follows:

The carbon stored in standing trees in a country is estimated.
Carbon losses from continued "business as usual"  deforestation and forest degradation are also estimated.
The country undergoes conservation activities to reduce deforestation below the projected BAU level.
The carbon "saved" via conservation activities is credited to the country and made available for sale in international carbon markets.
(Developed) countries (or states) that face carbon reduction requirements can reduce their own emissions and/or purchase credits on the international market.

This provides a monetary incentive to preserve standing forests when the profit that can be earned by selling carbon credits exceeds the profit that can be earned from various forms of development that require deforestation.

Sounds good. The skewed intertemporal and international distribution of costs and benefits are a big reason for tropical deforestation. If developed countries buy carbon credits from developing nations, forests are preserved for future generations.  Obviously there are a lot of complications and concerns. This will be true for any policy.

Read more about the basics of REDD and REDD+ here at the UN
FAQs here
Some cool videos here.

Are there problems and unintended consequences? Yes, of course.

Read more here and here.

Can these problems be overcome?

P.S. I have a former student who is working on this REDD project

Monday, September 23, 2013

Will a decrease in emissions postpone the need for policy?

In response to a comment by Stephanie, here is a recent article at the NYT regarding the recent decrease in C02 emissions in the US.  It seems that multiple factors are behind the decline: relatively mild temperatures last winter, the recession reducing the demand for heating fuel and the increased use of natural gas by energy plants (due to its recent price decrease). In other words, the demand for energy sources that produce a lot of C02 decreased for 3 reasons.

The price of natural gas has been rising more recently, but economic growth remains sluggish. It should be interesting to see if this trend continues.  Here is a look at emissions reductions in the US and EU from the Energy Collective, as well as some insight into potential causes for the declines.

Regarding the costs and benefits of a cap and trade program in the US, I found this short piece from the Brookings Institute, this short article at the NYT, and this summary of research from MIT (examining the distributional consequences).

Friday, September 20, 2013

Loss of Caribbean reefs spells big trouble for economies

The Guardian has a short piece detailing the estimated losses in Caribbean coral cover. It's more than depressing.

Here is a link to reef valuation studies in the Caribbean by WRI.

Pretty soon I'm going to ask everyone to read this report that I put together in 2011, detailing valuation work in the Wider Caribbean Region (warning: big file). It's a huge report, so you can focus your attention on sections 1,2,6 &7.

The SO2 cap & trade story and current applications

Here is a link to a great piece at Smithsonian regarding the political history of the SO2 trading program. My favorite part is G.H.W. Bush pushing for a bigger reduction (i.e. a tighter cap) because everyone understands that double-digits are important.

Here's a short blog post at the WP regarding Europe's program and a more recent post

Here is a short piece from WRI regarding cap-and-trade in California. 

The San Jose Mercury News has an informative piece on the nuts and bolts of California's system.

Tuesday, September 17, 2013

Incentives for clean up of marine debris

This sounds like a great project. I hope it works out.
Commercial Fishermen Needed to Remove Marine Debris - The N. C. Coastal Federation is accepting applications for fishermen to help get marine debris out of the water this winter.

In January 2014, the federation and the N.C. Division of Marine Fisheries will begin a pilot project to remove abandoned fishing gear from northeastern North Carolina waters. With a grant from NOAA and North Carolina Sea Grant, commercial watermen will be employed to help N.C. Marine Patrol during the period when the wire mesh crab pots are supposed to be out of the water, typically from Jan. 15-Feb. 7. This project is intended to improve habitat and water quality and support commercial watermen in northeastern North Carolina.

The collection will take place from the Currituck Sound southward to Oregon Inlet, including parts of the Albemarle Sound. Local fishermen with knowledge of these waters will be given preference.  Side-scan sonar will be used on a limited number of boats to detect abandoned gear underwater.

To qualify, fishermen must have filed at least one commercial landing trip ticket with the division's Trip Ticket Program within the past year.  Fishermen will receive $300 per day, and their mates will receive $100 per day. Three days of work are guaranteed with acceptance to the program. About 12 fishermen will be accepted, and volunteers are also needed.

Applications are due on Oct. 15. Participants will be notified of acceptance by Nov. 1.  

For more information and an application, contact Ladd Bayliss at 252.473.1607 or

NC gillnet setback rule

This just came across my desk...
100-yard gill net setback from most ocean beaches takes effect Sept. 15 – A 100-yard gill net setback from most North Carolina ocean beaches will go into place Sept. 15 for the protection of bottlenose dolphins.

N.C. Marine Fisheries Director Louis Daniel issued a proclamation today that will prohibit setting small mesh gill nets within 100 yards of the beach, except for the areas between Cape Lookout and Bogue Inlet and between Carolina Beach Inlet and the South Carolina line.

The measure was recommended by a National Marine Fisheries Service Bottlenose Dolphin Take Reduction Team after observer and stranding data collected for several years indicated small mesh gill nets in North Carolina continue to seriously injure and kill bottlenose dolphin at levels higher than allowed by a federal plan to reduce interactions.

The take reduction team recommended trying the two exempted areas for three years to allow officials to assess potential economic impact and conservation efficacy of the 100-yard setback. But the take reduction team also recommended that the state implement the setback in both these areas if there is one bottlenose dolphin interaction.

The N.C. Marine Fisheries Commission endorsed implementing these measures at its August meeting.
The restriction applies to commercially- and recreationally-set gill nets with a mesh size of 5 inches or smaller. The restriction does not apply to strike nets used to surround a school of fish and immediately retrieve the catch. 

For coordinates and other specifics of the regulation, see Proclamation M-26-2013 at
What type of regulation is this? How might we go about doing a cost-benefit analysis of this rule? What are the benefits? What are the costs? Are there similar regulations in place elsewhere?

When we lived in Barbados (down the hill from UWI in Prospect), my wife and I would always be dismayed to see the seine net boat arrive on the reef near our house. We snorkeled and scuba dived nearly every day, and after a visit from a seine boat, there wouldn't be much of anything on the reef for a couple of weeks.

Thursday, September 12, 2013

Trash and tourism in Barbados

Here is a short paper that I wrote a couple of years ago showing an empirical link between perceptions of beach quality and tourists' probability of return.

What policy recommendations might be derived from these results? 

Wednesday, September 11, 2013

Support for a carbon tax is bipartisan ...

... at least among economists.

Here is an op-ed from George Shultz and Gary Becker that first appeared in the Washington Post.

Here's a nice short piece on the topic (plus some good externality theory) at The Economist, and here at the National Journal (also with good background info).

an even shorter piece here at NPR.

So, why can't we get this done?

Standards vs. Incentives

Here is some additional reading from the US EPA on standards vs. incentives.

More detail is provided in this document (also from EPA). 

Here is a nice paper on the topic from the World Resources Institute.

What are some success stories where economic incentives have been used to reduce pollution?

Tuesday, September 10, 2013

Incentives and electricity use

Here's an interesting (and short) article from the WP regarding electricity use and incentives. Obviously it's a complicated issue, but interesting in that both producer and consumer face incentives to reduce electricity.

Here is a short video describing an incentive to reduce energy use from Duke Progress. $25/year isn't much of an incentive, but I just signed our house up to check it out.

With regard to the article, what are the incentives for the producers? What are the incentives for consumers?

With regard to the Duke incentive, why are they doing this?

Other than reducing your power bill, what are some other examples of economic incentives to reduce electricity use?

Welcome CERMES students!

Welcome CERMES students!

From today forward we will be joined by 14 students from the Centre for Resource Management and Environmental Studies (CERMES) at the University of the West Indies - Cave Hill.

These students come from Barbados, Belize, The Bahamas, Canada, Guyana, Jamaica, St. Lucia, Trinidad & Tobago and the U.S. I hope I didn't forget anyone...and I really hope that they will be more active on the blog than my UNCW students. Of course, it's not possible for them to be less active.

Monday, September 9, 2013

Biodiversity as a global public good

Below is an excerpt from a recently published manuscript regarding the conservation of biodiversity.  

Citation:  Rands, Michael RW, et al. "Biodiversity conservation: challenges beyond 2010." Science 329.5997 (2010): 1298-1303.

"...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 smallholder 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). 

The actions of the private sector are central to the future of biodiversity, as the CBD recognized in the context of the 2010 biodiversity target. Corporate environmental performance is increasingly important to investors and therefore corporate leaders (76), and many initiatives now exist to address corporate biodiversity impacts in particular business sectors or individual corporations (e.g., in minerals extraction). Yet a recent survey found that only two of the Financial Times Stock Exchange (FTSE) 100 companies recognize biodiversity to be of strategic importance to their business (5). Biodiversity lacks the visibility achieved by energy and climate change as issues important to corporate decision makers (77). Consistent government regulation is important in providing a level playing field for corporate environmental innovation and competition, but there are challenges in extending regulation internationally (78)...."

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

Anyone care to attempt a summary sentence or two?

Tuesday, September 3, 2013

Ronald Coase 1910-2013

Ronald Coase, father of the Coase Theorem, passed away on Monday at the age of 102.   Read about Professor Coase here at the NYT.

Ethanol subsidies and gas taxes

Here is an interesting editorial by Charles Lane at the Washington Post.  The topic is ethanol subsidies.

More on the topic here at Dickinson College. 

Here is an academic article on the topic, where the authors conduct a welfare analysis of the subsidy program (warning: math).

Here is an editorial by Valarie Karplus at the NYT, making a case for higher gas taxes. 

Reading academic articles

You're going to be doing a lot of reading in this class... at least I hope you do. One of the things you'll quickly learn is that reading academic articles (about economics or environmental studies, or anything else) is very different than other types of reading. First, it's hard work. You have to read slowly. You have to read everything at least once, and some parts multiple times. You'll encounter language and vocabulary and math that you don't understand (you'll have to look it up). You have to take notes. Yes, this is a lot of trouble. But, if you want to understand things deeply, this is the price you have to pay.  Real knowledge isn't going to land in your lap without hard work, and you can't find it on a bumper sticker or a YouTube video. You have to read, and then read more. Some of you may hide behind the "its too boring" claim, justifying not reading by saying you're not interested in the topic.  I hope you don't fall into that trap, because honestly, when you really understand something, it absolutely ceases to be boring.  

Dig in. Engage your brain. Read like crazy.

Here is a blog post on the topic of critical reading by Jennifer Raff, a research fellow at UT Austin and occasional cage fighter. She's in the natural sciences (using genetics to answer questions related to anthropology), but much of what she says is pertinent to all disciplines. Hat tip to NR for the link.
More on the topic here and here and here.