Thursday, October 29, 2015


This week we move into a discussion of mineral extraction and a related topic: trash and recycling.

Below are links to some examples of formal bag/tag (pay-per-throw) systems in the US.

Dover, NH,
Charles County, MD
Mount Pleasant, MI
Sunnyvale, CA
Houston, TX
Duluth, GA
Tompkins County, NY
Malden, MA
Grafton, MA
Shrewsbury, MA

This is just a few. 

Here is a link to details on the success of a bag/tag program in Worcester, MA.

Success in Maine

Variations on pay-per-throw in RI

Can anyone provide international examples of pay-per-throw systems?

Good reading on the topic of waste in NC from NCSU

The idea behind these systems is a fairly straightforward application of internalizing a negative externality:  Impose Pigouvian taxes on things that cause external damage and society will be better off, because raising marginal costs creates an economic incentive for people to reduce quantity.

Here's a writer in Washington DC lamenting the lack of pay-per-throw trash disposal.

A related issue: plastic grocery bags. 

What do you think about this approach versus this approach? 

Tuesday, October 20, 2015

More valuation readings

Here is a great website for additional reading on valuation: 
Ecosystem Valuation

This article by john Loomis is also a good read for the "big picture": 
Economic Values without Prices (Loomis, Choices, 2005)

Here is another good summary article from Robert Mendelsohn and Sheila Olmstead:
The Economic Valuation of Environmental Amenities and Disamenities 

Thursday, October 8, 2015

Settlement with BP to Resolve Civil Claims Over Deepwater Horizon Oil Spill

This came out on Monday, while most of us were engaged in watching the storm and ensuing flooding...

Attorney General Loretta E. Lynch Delivers Remarks at Press Conference Announcing Settlement with BP to Resolve Civil Claims Over Deepwater Horizon Oil Spill
Washington, DC
United States
Monday, October 5, 2015
Here are some parts that pertain to non-market valuation:   

...  The Gulf was flooded with oil.  And the Gulf coast way of life – a uniquely American way of life – was hanging by a thread.  Over the course of nearly three months, the Gulf region was inundated with more than three million barrels of oil.  And by the time the torrent stopped, it had inflicted unprecedented harm on the economy, the environment and the population of the Gulf region.  Ecosystems were disrupted, businesses were shuttered and countless men and women lost their livelihoods and their sense of security.  

... in December of 2010, the Department of Justice filed a lawsuit against BP to hold the company accountable and to provide vital relief for the people of the Gulf region.

... we have secured a historic resolution of our pending claims against BP totaling more than $20 billion – making it the largest settlement with a single entity in American history.  The resolution includes civil claims under the Clean Water Act, for which BP has agreed to pay a $5.5 billion penalty – the largest civil penalty in the history of environmental law.  It includes natural resources damages claims under the Oil Pollution Act, for which BP has agreed to pay $7.1 billion – on top of the $1 billion it previously committed to pay for early restoration work.  And it includes economic damages claims, for which BP has agreed to pay $4.9 billion to the five Gulf states and up to $1 billion to local governments.
... In addition, BP’s payments for natural resources damages will help fund Gulf restoration projects that will revitalize damaged habitats, such as coastal wetlands and support the revival of wildlife populations, including marine mammals, sea turtles, oysters and birds.  
I hope you see the role of non-market valuation in natural resource damage assessment. BP caused damage and should pay a fine. Many goods and services that are not traded in markets were damaged, impaired or ruined.  In order for the fine to be commensurate with the damages, we need to do the non-market valuation work.  
The Oil Pollution Act is an interesting piece of legislation. Enacted in the wake of the Exxon Valdez oil spill, it combines command-and-control (e.g. mandating double-hulled tankers) with Pigouvian taxation. The Valdez spill had a big impact on the subject of non-market valuation, especially as it pertains to the estimation of non-use values via the Contingent Valuation Method. 

I was an undergrad at UNCW when Valdez happened in March of 1989. Like the 2010 BP spill, it was big news.  You can see some of the images here at the Atlantic.  26 years later, while some of the natural resources in Prince William Sound have recovered, many have not