Natural Resource Econ

Lots of oil in the U.S.

2011-12-08T07:55:00.000-08:00

Here's an interesting article from Real Clear Politics citing some thought-provoking stats regarding untapped domestic energy resources. Things to consider:
- implications for alternative energy development
- implications for economic growth (and by extension poverty-reduction) at home

I think the article does a great job of illustrating the fact that there's no such thing as a free lunch. If you want more environmental quality, you're probably going to sacrifice something else. What if that something else is significant poverty reduction or world peace?

Back story reading:

The Solyndra controversy

Hydraulic fracturing (hydrofracking)

Saving species

2011-11-16T14:14:00.000-08:00

Here are three articles that consider the merits of saving endangered species:

Panda 1
Panda 2
Dormouse
Hattip: DG

Jobs and recycling

2011-11-16T14:07:00.000-08:00

Here is a link to a report stating that increasing the rate of recycling in the U.S. from 33% to 75% over the next 20 years could create a lot of jobs and less pollution.

I have not read the study all the way through.

Where will the jobs come from?
Have the analysts omitted anything?

Greenhouse gas tax and airlines

2011-11-01T19:32:00.000-07:00

There's an interesting argument place between the US and the UK related to emissions from airlines.

Read about it here and here.

Economics and Darwin

2011-10-24T07:42:00.000-07:00

Robert Frank (Econ prof at Cornell) has an interesting opinion piece in a recent LA Times. There are several parallels with this line of reasoning and the article I linked to in the last post. I'm not a fan of the political turn that Frank takes in the last two sentences. As you know, I think that our job as economists is to be as apolitical as possible, but I wanted you to read this.

Frank's article is based on his recent book "The Darwin Economy". John Whitfield of Slate reviews the book and provides another perspective (part critique, part agreement) on the issue.

Selfishness: problem or solution?

2011-10-23T16:02:00.000-07:00

A long but excellent read here at the Atlantic. Incentives, common property, "greed" and an overly optimistic environmental movement.

Hat tip: Kafi G.

Should government subsidize renewable energy?

2011-10-17T09:19:00.000-07:00

Robert Semple Jr. of the NY Times say yes.

not WTP for EVs

2011-10-14T11:25:00.000-07:00

People want to use electric vehicles (that's good) but they aren't willing to pay for it (that's bad).
Here's a short article at CNET.
What to do?
Hat tip: DGill

Strong policy and tough decisions needed

2011-10-14T11:07:00.001-07:00

This could be the mantra for just about any conservation policy, and is especially true in tough economic times, but in this case pertains to renewable energy in the Caribbean.
Here's a short article at the Barbados Advocate.
How do we garner the support for these tough decisions? How do we get people, businesses and governments to forsake personal gain for the long-term betterment of society? What are the primary obstacles? What are examples of other problems we face today (i.e. other than renewable energy) that can be presented in the same framework?

Readings on valuation

2011-10-06T08:10:00.000-07:00

As we get deeper into our discussion of non-market valuation, I'm going to continue my efforts to convince you that economic analysis has a indispensable place at the conservation policy table. This argument is fairly easy to make when I'm talking to economists or economics students, but for those that have never really studied econ before, it's a bit tougher. This is because people who have only studied natural sciences may have a tendency to view all things dealing with markets as the causes of environmental problems rather than the solutions. I hope you're starting to see that it's both.

Please read:

Why Economics Matters for Endangered Species Protection (Shogren et al., 1998)

The Role of Economic Valuation in the Conservation of Tropical Nature (Naidoo, 2008)

Conservation Pays (Yuskavitch, 2007, Defenders of Wildlife)

Marine Conservation: How Economic Valuation of Ecosystem Services Can Help (Environment Matters, 2008)

Can Environmental Economic Valuation Techniques Aid Ecological Economics and Wildlife Conservation? (Loomis, 2000, Wildlife Society Bulletin)

Of additional interest:

Economic Incentives and Wildlife Conservation (Bulte et al., 2003)

Tons of references and links here:

Economic Valuation References WRI

Reefs here and here and here

Wetlands here

This is a tiny fraction of what's out there. Thoughts?

The political history of cap & trade

2011-09-20T15:13:00.000-07:00

Good reading here at Smithsonian.com

Turtle bycatch improving

2011-09-20T12:14:00.000-07:00

Here's an article from the local paper describing the downward trend in sea turtle bycatch. Turtle- excluder devices (TEDs) seem to be helping on a national scale but the NC fishers interviewed for the article don't seem to think that bycatch is an issue here. The article also cites a decreased number of vessels in the water (due to low profit causing exit from the industry) and a performance standard.

the Coase Theorem in action

2011-09-08T11:55:00.000-07:00

Here at the WSJ

Here at the Independent

the true cost of a gallon of gas

2011-09-08T11:25:00.001-07:00

Here is a report suggesting that externalities bring the true cost of a gallon of gas up significantly (between $5 and $15). The report is several years old and pre-9/11, so we can probably assume that the numbers would be higher today.

Here's a piece by Ezra Klein at the Washington Post from 2010 that discusses the same issues.

More here at Catalyst.

Collective action requires incentives

2011-09-08T11:15:00.000-07:00

Gernot Wagner (an economist at Environmental Defense Fund) has a thought-provoking piece in yesterday's New York Times. He hits on a lot of issues that we've been discussing in class or will discuss later in the semester. Notably topics are the need for incentives to curtail externalities and the notion that it's easy to make marginal movements toward being "green" when you're rich.

Elkhorn coral and pollution

2011-09-05T06:39:00.000-07:00

Next week we'll be beginning our discussion of externality theory, which allows us to look at the inefficiency created when costs are created by a market but are not accounted for in the price of the good. Once we understand the cause of the inefficiency, we can develop measures to address it.

Externality theory is easily understood in the context of pollution in its many forms. Here is a study suggesting that white pox disease in elkhorn corals is attributable to improperly treated human waste. We can categorize solutions into two broad groups: "command-and-control" (standards) and incentive-based systems.

What are the external costs associated with this pollution?
What solutions might work?

The cost of air pollution

2011-08-31T13:33:00.000-07:00

A new study out of MIT calculates the long-term economic costs of lax air pollution standards in China. These costs include increased expenditure on health care and lost work and leisure time due to illness. The study estimates the total lost value (between 6 & 9 percent of GDP) and suggests that even modest pollution control efforts could have turned the loss into an economic gain via enhanced productivity. However, the authors of the study did not estimate the costs of implementing tighter standards. These would have to be accounted for to understand the true net change in economic welfare.

In related news, the US EPA is putting forth seven new environmental regulations for air pollution in the US. These regulations are being criticized for the extra costs that they will impose on businesses that have to comply. Read about it here at the News & Observer. The costs are indeed real (the price everyone pays for power will increase), but this is only half the story. There are also significant benefits to pollution control, as shown in the above MIT study. Fewer deaths and less illness means more productivity. Less illness means people can work harder, longer, stronger and smarter. Fewer sick children and elderly means parents and caregivers can work more. Framing the issue based only on an estimate of the costs or benefits is incorrect and misleading. We need both.

More on energy externalities

2011-06-15T10:38:00.000-07:00

Great article here at Politico describing the external costs of our energy.
Everyone should read this.

The most important question of our age?

2011-06-15T10:21:00.000-07:00

I think this is it: What is the backstop energy source?

The only options right now are nuclear, solar, hydro, geo, and of course fossil fuels like oil, natural gas and coal. Every one has pros and cons, which means this is great stuff for economic analysis. Will nuclear ever be safe? Will coal ever be clean? Will solar ever be cost effective? Is there something else on the horizon?

We know that we have to start addressing these questions, but we can't agree on how to do it.

Here's a link to an article discussing the results of a survey of consumer attitudes. Here's another poll on the same set of issues. Note the serious split between those that say "more" and those that say "less" for just about everything currently on the table. No wonder our politicians can't put together an energy policy... no matter what they advocate, around half the country will be opposed.

Pigouvian tax on gasoline

2011-06-15T10:12:00.000-07:00

Interesting article here at 3P.

Note the importance of incentives in affecting behavioral change and the discussion of standards vs. market-based policies. I also like the discussion of the vulnerability to price shocks. Curtailing our use of gasoline is a kind of insurance against economic instability. As much as I like these arguments for raising the price of gas, we also have to recognize reasons for keeping the price of gas low (at least for some users). The U.S. is really big geographically speaking, so within country commerce may depend more critically on cheap transport than in smaller nations. Check out the linked Economist article. It's short and good.

Hog farms and water quality

2011-06-07T06:05:00.000-07:00

Here's a story from Reuters about command-and-control regs on hog farms that are intended to improve water quality (in Manitoba). This is clearly an interesting application of cost-benefit analysis.

What are the benefits of tighter restrictions? Are these values market or non-market? For the non-market components, what valuation procedures might be used to estimate the monetary value of better water quality?

What are the costs of the restrictions? How might they be estimated?

The Coase Theorem in action

2011-06-07T05:55:00.000-07:00

Here's a story at the WSJ about some really rich people arguing over views from their mansions.

Here's the part where the Coase Theorem comes in.

Hat tip: Tim Haab

This week

2011-06-01T07:27:00.000-07:00

For the rest of the week I'll be in Port of Spain, Trinidad, attending a conference on sustainable development in coastal communities. Read about it here, and here. I'm giving a talk on Friday.

Driving externalities

2011-05-26T07:20:00.000-07:00

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

2011-05-25T14:13:00.000-07:00

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

2011-05-24T09:22:00.000-07:00

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

2011-05-23T05:30:00.000-07:00

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

2011-05-14T10:42:00.000-07:00

Welcome to the blog.

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

I'll be posting links and questions here periodically.
Check back often.

The blog has been active for a while, so feel free to browse older content.

A unique illustration of the tragedy of the commons

2011-04-05T10:08:00.000-07:00

On YouTube from Washington and Lee ... very cool.

Blog opportunity

2010-12-01T10:20:00.001-08:00

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

2010-12-01T09:48:00.000-08:00

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

2010-11-17T08:13:00.000-08:00

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

2010-11-09T11:41:00.000-08:00

"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?

2010-11-08T05:59:00.001-08:00

From Conservation Magazine (yes, shameless self promotion).

the Nagoya Protocol

2010-10-31T13:46:00.000-07:00

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

2010-10-29T12:08:00.000-07:00

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

2010-10-27T09:03:00.000-07:00

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

2010-10-24T16:17:00.000-07:00

Clean and green.

More here.

Would you buy this?

The double-edged sword of tourism

2010-10-24T16:09:00.000-07:00

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

2010-10-24T16:02:00.000-07:00

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?

2010-10-14T07:04:00.001-07:00

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?

2010-10-13T10:24:00.000-07:00

Soils in the southern hemisphere are drying up.

Read about it here at Science Daily

Word of the day: "Envirotranspiration"

---
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

2010-10-13T10:19:00.000-07:00

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

2010-10-13T09:57:00.001-07:00

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

2010-10-09T08:12:00.001-07:00

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?

2010-10-09T07:59:00.001-07:00

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

2010-10-09T07:54:00.000-07:00

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

2010-10-09T07:41:00.000-07:00

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

NFWF and fisheries catch shares

2010-10-09T07:29:00.000-07:00

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

2010-10-09T07:25:00.000-07:00

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?

2010-09-16T11:46:00.000-07:00

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

2010-09-16T11:37:00.000-07:00

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

2010-09-10T12:38:00.000-07:00

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

2010-09-09T11:56:00.000-07:00

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?

2010-09-08T11:30:00.000-07:00

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

2010-09-07T14:46:00.000-07:00

Starting this week 17 graduate students at the Center for Resource Management and Environmental Studies (CERMES) University of the West Indies-C ave 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.

standards

2010-09-07T11:28:00.000-07:00

Today in class I mentioned ambient air quality standards under the Clean Air Act.
Click here to view the standards.
Basic CAA info here.

We also talked about CAFE standards.
Read about those here and here.

Here's a simple example illustrating the Coase Theorem (published in 1960 by the way) from Thayer Watkins at San Jose State.

More on Coase here and an interesting discussion at Freakonomics from '07.

Pigou

2010-08-31T09:09:00.000-07:00

Today we'll be talking about externalities.

Alfred Marshall first introduced the concept.

A.C. Pigou (a student of Marshall's) proposed a solution.

An interesting solution to an invasive species problem

2010-08-31T07:02:00.000-07:00

Invasive species can cause serious harm to ecosystems, often out-competing native species.

The economic and biological damage can be significant.

Invasive species can be considered biological pollution and as such we can use externality theory to frame and study the issue. When we get to the topic of solutions, we can also consider addressing invasive species with standards and incentives.

Here's a short article from ENN regarding lion fish and a cool solution ... eat them! I've never eaten lion fish myself (I had one in an aquarium when I was in college), but a student that I had in the Caribbean tells me they're delicious.

Other examples? Other notable solutions?

Coal ash and water pollution

2010-08-27T13:42:00.000-07:00

A version of this story from USA Today appeared in today's local paper.

A new study suggests that damages from coal ash pollution are worse than we thought. The results are timely as the US EPA is about to begin a series of regional hearings on whether and how to regulate coal ash waste from coal-fired power plants.

Things to think about:

1. The negative externality. Is this a production externality or a consumption externality? Who are the market participants here? Who is on the demand side and who is on the supply side? Who is the third party affected by the externality? Have the health effects been qualified or quantified? Monetized?

2. Standards for pollution control. We'll get to the study of standards soon. For now, consider how and why EPA is considering restrictions. In terms of the 'how', Are limits (standards) on output or limits on technology being proposed? What should be the basis for the determination of acceptable standards? Health? Efficiency? Something else?

3. What are some important research questions related to this issue that would help inform policy?

Related local news here.

Opportunity costs

2010-08-24T08:54:00.000-07:00

Ah yes, one of the first things you learned in economics: opportunity costs are real and affect our decisions.

Here are links to a few articles illustrating a common (though often flawed) theme: "The economy vs. the environment":

From Freakonomics: Two economists suggest that consideration for the environment wanes during times of high unemployment.

From ABC: A March 2010 Gallup poll shows a similar trade off.

From Reuters: It's not all bad news... people create less pollution during economic downturns.

Thoughts? Can you think of micro-level examples of this (i.e household, individual, firm)?

Welcome!

2010-08-20T14:07:00.001-07:00

Welcome to the blog.

To comment to a post, simply click on the words "Post a comment" at the bottom of the post.

Then simply type your comment in the dialogue box where it says "leave your comment".

If you have a google account, you can use that user name or you can post anonymously.

Please be sure to leave your full name so that you can earn proper credit for your contributions.

"Greed"

2010-06-14T13:31:00.000-07:00

I've been teaching this class for a long time (over 15 years), and I always encounter this word (greed) as a supposed explanation for environmental problems. "It's greed!" they shout... "People just need to stop being greedy!".

I have to tell you. I couldn't disagree more with this perspective.

Let's think about this for a second... what is greed? Are people truly greedy? I know some people sure are, but is this really the best way to explain over-use of the environment?

Is it "greedy" to pursue your own best interest? If so, aren't all living things greedy? Indeed, if this is a workable definition of greed, then are humans not one of the only creatures on the planet that are NOT greedy? Higher-order mammals are just about the only living things that display altruism aren't they? Ever seen fish on a reef? What are they all doing? Well, every one of them is trying to eat as much as possible and have the biggest cave to live in and attack (till death if necessary) anything that gets in their way. Are the fish "greedy" for doing so?

Is the slash & burn farmer in the Amazon greedy for trying to feed his family? Is a commercial fisher greedy for eking out a living doing what his family has done for generations? Are YOU greedy for driving your car every day and consuming hundreds of products that cause pollution?

Or is it that we're all just doing what is perfectly rational given the rules of the game.... if you benefit from something and someone else pays (most of) the costs, you keep doing it.

If you believe that "greed" (self interest) is the cause of environmental problems, what are you saying about the potential for solutions? Do you think there is any way to stop people from pursuing their own self interest?

Friedman is channeling me!

2010-06-14T10:30:00.000-07:00

Ok, maybe that's a bit strong... but he does seem to agree that when it comes to assigning blame for the BP spill, we all need to look in the mirror.

The editorial I'm referring to appeared in today's Star News (and Friday's NY Times).

Summary & common themes

2010-06-13T15:21:00.000-07:00

Blogging (class participation) opportunities:

(1) Develop short summary sentences for main points of the class.

We covered many resource issues (pollution, land use, mineral extraction, deforestation, over-fishing), but there were some common themes throughout.

(2) What are common themes regarding the economic perspective on natural resource problems?

(3) What are common themes regarding the economic perspective on solutions to those problems?

Big oil, big profits and the future of energy production

2010-06-13T10:37:00.000-07:00

Deborah Gordon and Daniel Sperling of The Washington Post provide a thought-provoking look at what the big oil companies see in terms of the future of energy production. In short, same-'ol same 'ol. Energy demand is increasing at an astonishing rate. Renewable energy supplies are not. Market answer: more oil. And, if this problem is left to market forces, its more oil for a very long time.

Obviously, this is a real problem for society. As Gordon and Sperling put it "...oil companies are, quite rationally, investing the equivalent of pennies in biofuels and other alternative energies, compared with dollars in unconventional oil prospects. But while they are behaving logically in economic terms, they aren't serving the public interest."
Hmm... that sounds familiar.

Household waste and recycling in New Hanover County

2010-06-13T09:58:00.000-07:00

An article from today's Star News highlights some of the issues inherent in municipal solid waste management. New Hanover County is currently negotiating a 10-year $71 million deal with a company called R3 Environmental Inc. to take over the county's waste management operations.

R3 is a relatively new company, and aspires to succeed in an area where numerous North Carolina operations have failed in the past: reducing landfill use, turning waste into bio-fuel energy and profiting from the sale of recycled raw material. The article highlights some past failures, noting in particular the technological difficulties in separating trash into usable and unusable components.

Here's another short article on the company and the NH County deal. Perhaps one of the more interesting aspects of the proposal is that - despite the known difficulties of separating trash from usable material - R3's procedure will eliminate the need for curbside recycling. All the trash will be collected together and sorted by R3.

Cost and benefit considerations? Other thoughts on this?

Energy, politics and the costs and benefits of extraction

2010-06-11T06:05:00.000-07:00

Matthew Yglesias at The American Prospect has an interesting piece on energy and the surrounding issues. The notion that our attention to environmental matters tends to be short-lived is one that we've seen quite a bit lately.

As the economic downturn really started hitting home, concern for the environment waned. The BP spill has brought environmental concerns to the forefront again, but as some of you commented in response to my last post, we don't expect people to change their behavior (at least not for very long) unless the issue hits them in the wallet.

This is one of the main ideas I want you to leave this class with: notions of ethics, morals and environmental stewardship are real motivators to engage in conservation, but when push comes to shove, people make decisions based on their own costs and benefits. In the context of the environment, the costs and benefits that individuals act on are different than those that affect us as a society. And there's big rub. If we want what's "best" for society, we have to develop policy tools that push individual costs and benefits toward those of society at large. This is not news. But as Yglesias points out, people tend to balk at the very solutions that we know will work, because implementing proper market signals for energy will raise resource prices. Again, people seem to want a solution, but they don't seem to want to pay for it.

Yglesias also points to the idea that our concern for nationalism might not be as fickle as our concern for the environment. But he questions the underlying net gains of "energy independence", because home-grown energy means that the external effects occur in our front yard.

Thoughts?

Wow

2010-06-08T18:17:00.000-07:00

From USA Today: Another Gulf rig has been leaking oil for 5 weeks

This is obviously disturbing news. I'm going to go off-script a bit and ask for your opinion (related to the econ perspective of course) ... Do you think that people's values will change as a result of all of this? Do you think that people will change the way they view driving their cars and heating their homes? Do you think people will be more open to policy change (e.g. carbon taxes or cap-and-trade legislation) that will cost them money but promote more sustainable uses of natural resources? Have you changed your behavior, your willingness to pay, your appreciation of the fact that your "need" to purchase so much gasoline is partially to blame for this? Sorry about that last bit, but I have to keep reminding you that you this is just an example of Hardin's tragedy, and we are all the herdsmen. It's too easy to blame BP (though they most certainly are responsible for blatant rule-breaking) and shirk personal responsibility. All of us that drive cars and demand low prices for gasoline (and other petroleum products) share in the blame here.

Trash

2010-06-08T11:30:00.000-07:00

"Bag-and-tag", "pay-per-throw", "polluter pays", it's all the same idea:

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?
Is there another way?

Breaking news

2010-06-04T12:45:00.000-07:00

Here's another local story, just posted at the Star News Online.

Sewage spills into Smith Creek

How does this relate to class topics like cost-benefit analysis and valuation?

How does this story relate to the other local stories in the previous post in terms of the economics?

Today's local paper

2010-06-04T07:32:00.000-07:00

Today's Wilmington Star News is chock full of local environmental/natural resource issues:

Titan Cement appeals SEPA ruling

House of Reps votes to prohibit funding for new "megaport"

Business leaders pushing for Skyway bridge

Local group wants more recycling on Pleasure Island

Rare leatherback turtle nest on Holden Beach

In preparation for Monday's exam, choose one of these issues and describe how a benefit-cost analysis might be useful for policy makers. What economic values would need to be measured and what valuation procedures might be useful?

Higher profit from sustainable uses

2010-06-02T12:29:00.000-07:00

An interesting angle on market incentives from Reuters.

More info about REDDs here and a recent news article here.

More about carbon offsets here.

And carbon markets here.

Costs and benefits of government regulation

2010-05-29T05:51:00.000-07:00

In our brief study of market failure we arrived at government intervention as a general solution. Because the market fails to produce the outcome that is best for society on its own, some form of "regulation" of the market is necessary to achieve the socially efficient result.

The imposition of performance standards or technology standards, Pigouvian taxes on negative externalities, the establishment and enforcement of property rights ala Coase, and administration of tradable permit systems (cap & trade) are all examples of regulation.

Importantly, in cases of market failure, regulation is intended to promote economic efficiency - making the size of the "economic pie" larger allows everyone to have a larger slice (at least in theory). Yet "regulation" is often considered a dirty word, and associated with less economic growth. "Deregulation" likewise is often viewed as promoting efficiency. Clearly, there's an argument to be made from both sides of this messy issue, and the realized outcome likely depends on the source and nature of the market failure and government's ability to correct it.

In light of notable recent events, Steven Pearlstein of the Washington Post calls for consideration of not only the costs of regulation, but also the benefits in terms of protecting the public interest and productive natural capital. This is obviously a controversial issue, but this article makes for an interesting read.

Sustainability?

2010-05-25T09:26:00.000-07:00

Big topic. Messy topic. Political topic. Potentially ugly topic. Let's keep it objective please...

Sustainability goes beyond natural resources to include human wants and needs. That is, the notion of sustainability includes economic sustainability. People value the environment, but people also value goods and services and their standard of living. We know that imposing Pigouvian taxes (e.g. a carbon tax) or standards (e.g. mandates on allowable technology) or a combination policy (e.g. 'cap and trade') will increase firms marginal cost and increase the prices of goods and services. In other words, if you want a cleaner environment, you're going to have to pay for it. Note that "pay" here could include opportunity costs - you can have more X if you give up Y, and Y doesn't have to be dollars. I hinted at this idea in the first lecture, when I asked if you think the environment is "priceless" and then I asked what kind of car you drive (if you truly felt the environment were priceless, you wouldn't drive any car).

Joel Kotkin of Forbes has an interesting article titled "The limits of the Green Machine", where he discusses these issues and the political viability of environmentalism. His basic thesis is that pushing for too much environmental protection would be a mistake (especially during an economic downturn), because people just aren't ready or willing to give up their way of living.

Thoughts? Again, I'm not looking for normative opinion here.

How does this idea fit in with the lecture readings on common property/public goods?

Clean up costs and lost value

2010-05-22T06:53:00.000-07:00

OK, so it seems fairly obvious that the economics of the recent oil spill can be explained using externality theory. A market creates a cost realized by a third party, and that cost is not reflected in the market price of the good. As such, the market outcome is inefficient in the sense that total net gains to society are not maximized.

My last post was an attempt to get you to think about how a single, accidental imposition of costs onto a third party might be different than a continuous release of pollution from production or consumption, and to consider how Pigouvian taxation may or may not apply in cases of a "one time" release of pollution. To get you to think about it a bit more, here's a follow-up question:

How much should responsible the responsible party pay in these situations?

For context, check out this short article from CNN Money on the clean-up costs associated with six big oil spills.

Background reading:

CERCLA and Superfund from the US EPA

The Oil Spill Liability Trust Fund from the US Coast Guard

Is the Deepwater Horizon spill an externality?

2010-05-18T13:39:00.000-07:00

It seems to have the characteristics of a negative production externality:

The market for petroleum creates a negative effect (putting it very mildly) on third parties. This cost is not incorporated into the producer's supply curve and as a result is not reflected in the market price of petroleum products. As such the market price and quantity of petroleum can be considered inefficient. That is, the market outcome does not result in maximum gains to society.

So, does Pigou's solution to negative externalities apply here? If so, how would it be put into practice?

A hint...

2010-05-17T09:58:00.000-07:00

The question about pros and cons of the anthropocentric view of value always generates a lot of discussion and hand-wringing. It seems like a philosophical question, so students tend to search for deep meaning. What I'm looking for is fairly simple, but I don't want to give it away.
Here's a hint from today's local paper.

Supply & Demand, N.C. Oysters and Oil

2010-05-15T05:46:00.000-07:00

From the Raleigh News and Observer.

Yep. Supply and demand in action. Supply shifts back, price goes up.

What should happen to the price of farm-raised oysters, if anything?

Hat tip: env-econ.net

Moral Hazard, Liability and Oil Spills

2010-05-13T09:46:00.000-07:00

At the end of my junior year at UNCW, the Exxon Valdez ran aground in Prince William Sound, Alaska. The biological and economic damage was nothing short of catastrophic. 20 years later... here we go again.

It's a stretch to say that anything good comes of disasters like these, but Valdez gave us the Oil Pollution Act (OPA), and considerably tighter standards on shipping. Valdez also greatly accelerated the use of non-market valuation methods, especially contingent valuation (CVM), advancing the science and practice of economic valuation at speeds that would have not occurred otherwise. We'll study CVM in lecture 4. You can read about some of the value estimates here at the Encyclopedia of Earth entry for the spill (scroll down to the section on "economic impacts").

The Gulf Coast spill should have similar legal repercussions. Of particular interest is the legal cap on liability. OPA limits liability to $75 million, which was a lot of money in 1990, but seems far too low today. The White House is already pushing for the cap to be removed, but as good students of economics, we have to ask if things might have been different had the cap been changed earlier.

The topic here is "moral hazard" and it's one that has been in the news a lot lately (bank bailouts). Basically, if you have really good insurance (coverage against loss), you're more likely to engage in risky behavior. In the context of the Gulf Spill, if the responsible party were liable for 100% of the damages (with no maximum), would they have taken more caution than if their liability were limited?

Here's a long quote that addresses the point:

"If the consequences of one's actions are felt only by one's self, one will take optimal precautions to avoid accidents. Economists predict that a rational person will invest in accident avoidance just enough resources so that the marginal cost of accident avoidance equals the marginal benefit of accident avoidance. This minimizes the total of the two costs: the cost of accidents plus the cost of precautions.

In the case of accidents that affect others, the individual's incentive to take precautions is not optimal, unless the liability system acts to "internalize" the costs of accidents. Various liability rules (such as strict liability, negligence, and no fault) affect people's incentives to take economically appropriate precautions. If people know that they can be held responsible for some or all of the costs or damages sustained in an accident, they will change their behavior to make the accident less likely to occur or to reduce the damages should it occur.

Some liability systems produce too much precaution; others produce too little. An excessively cautious individual may reduce the chances of an accident to zero by staying home in bed all day, but the cost in lost income would be very high. Similarly, a liability system that yields too much precaution may lead manufacturers to produce the only perfectly safe airplane--one that never leaves the ground.

Conversely, if the liability system did not allow people involved in automobile accidents to sue the responsible party for damages, drivers would have less incentive to be careful. The actions people take every day indicate that individuals and society accept the riskiness of some activities. Eliminating all risks, if possible, would be overly cautious.

Any liability system that seeks to optimize the trade-off between the costs of accidents and the costs of preventing them must take into account, among other things, all the costs associated with accidents. If some important category of costs is ignored by the system, individuals will tend to take too little precautionary action. By the same token, if the system exaggerates the costs, there will be a tendency to take too much precaution"

It is interesting to note that this was written in 1995, in a book titled: "The Economics of a Disaster: The Exxon Valdez Oil Spill" by Argue, Furchtgott-Roth, Hurdle, Mosteller, and Owen.

Seems pretty timely now too.

Thoughts or questions?

Applying basic supply and demand modeling, what kinds of effects do you think we'll see in the wake of the Gulf spill?

Welcome Summer Class

2010-05-11T13:19:00.001-07:00

Welcome all.

This purpose of this blog is to facilitate discussion for students of natural resource economics at UNC Wilmington.

I'll post questions for discussion and tips to relevant news and on-line material throughout the semester. My goal is for us all to learn from each other.

Best,
-PS

Krugman on Climate Change

2010-04-12T10:51:00.000-07:00

Paul Krugman has a great piece in Sunday's NYT Magazine.

Copenhagen

2009-11-25T06:39:00.001-08:00

Chance for some blogging...

What is happening in Copenhagen next month?

What are the goals?

What are some of the keys to success?

What is the general outlook?

Cruise port expanding in Barbados

2009-11-25T06:31:00.000-08:00

From today's NationNews: $70 Million Cruise Plan.

Wow.

Was there an environmental impact analysis?
Was there a cost-benefit analysis?

Suppose we were interested in understanding the merits of this plan. What information would we need? What costs and benefits would we have to measure? What valuation methods might be useful?

The article mentions a sustainable recreation experience. I wonder what that means...

Chance for some blogging credit

2009-11-25T06:20:00.000-08:00

As we approach the end of the term, among other things I'm considering how everyone is grasping the big picture.

One central theme throughout the course is that while sustainable resource use is best for society, most decisions regarding use are made at the individual level. Often, when it comes to the environment, what is best for the individual is not what is best for society as a whole. Result: over-use.

Here's a question to think about ...

Are there circumstances under which the individual considerations of self-interest and the resulting social outcomes are compatible with true environmental sustainability? Or does this notion of compatable individual and social well-being have to be forced by policy?

Feel free to provide real, hypothetical or historic examples or a general description.

The definition of sustainable development

2009-11-25T06:18:00.001-08:00

The United Nations Division for Sustainable Development defines sustainable development as:

"Development that meets the needs of the present without compromising the ability of future generations to meet their own needs".

What do you think about this definition?

Particularly, do you think this definition is useful for policy action?

Unintended consequences of REDDs

2009-11-19T09:14:00.000-08:00

REDD stands for Reducing Emissions from Deforestation and forest Degradation.

The system works as follows:

Estimated carbon savings from standing trees are estimated.
Those carbon credits are then sold in international carbon markets.
This provides a monetary incentive to preserve standing forests, essentially by increasing the environmental rent to a point where it is higher than the rents from various forms of development.

Sounds good. We address the issues associated with the skewed intertemporal and international distribution of costs and benefits associated with deforestation, as developed countries buy carbon credits from developing nations and forests are preserved for future generations.

Problems and unintended consequences? Yep.

Read more here and here.

Norway to fund forest preservation in Guyana

2009-11-19T09:06:00.000-08:00

From WorldWatch: "Norway to help protect Guyana's Forests".

This is a great example of econ principles in action.

Quotable line regarding land rent, discount rates and incentives: "If we don't start paying people for the ecosystem services that forests provide, they'll be used for other economic activities that result in deforestation and degradation." (Brendan Mackey, forest ecologist with the Australian National University)

Pigouvian tax on driving

2009-11-19T08:42:00.000-08:00

From Deutsche-Welle (German newspaper), the Dutch government is imposing a new tax to replace current road taxes and auto sales taxes. The new system will impose a tax on each car based on distance driven. More fuel efficient cars will be taxed at a lower rate. Driving during congested periods will be taxed at a higher rate. How can they do it? GPS tracking. Interesting (and pretty solid IMO) application of Pigou ... but a bit scary in terms of, you know, the big brother implications.

What do you think?

Thomas Friedman on tropical deforestation

2009-11-11T08:44:00.000-08:00

From today's N.Y. Times.

Friedman describes the state of the problem (it's all about relative discount rates isn't it?), and the need for wholesale change in the way we go about encouraging economic development.

He sums it up in one sentence: "But it takes money."

Connection between this post and the previous one?

Meat production, consumption and climate change

2009-11-11T08:13:00.000-08:00

A new report from Worldwatch Institute suggests that up to 51% of annual worldwide GHG emissions are attributable to meat (cows, pigs, chickens, etc) grown for food. Previous estimates from FAO suggested the figure was 18%. Some of the conclusions of the new study will certainly be questioned. For example, the study includes animal respiration (breathing) in its calculations. You can read it yourself (pdf available here). But either way, there is no question that meat production is a huge source of emissions, responsible for more GHGs than transport (driving cars).

So, does this mean that you can't really claim to be an "environmentalist" if you eat meat?

Hat tip: env-econ

Costs and benefits aren't always immediately obvious

2009-11-10T08:56:00.000-08:00

Here is a short report on an interesting discovery from the British Antarctic Survey.

Basically, melting ice can have positive impacts on climate change. New open land (that once was ice) allows trees to grow, sequestering C02. New open water (that once was ice) allows phytoplankton to bloom, also sequestering carbon. The former effect appears larger than the latter, and both are small relative to global emissions (less than 1%). Neither effect appears to have been incorporated into climate modeling and the associated predictions.

Science people... we call this 'negative feedback', right? That is, higher C02 creates conditions that diminish C02.

Sustainability fee shot down by UNCW student government

2009-10-30T10:59:00.000-07:00

It didn't even come close to passing.

Read about it at the Seahawk online.

Cash for clunkers was really expensive (on average)

2009-10-29T10:48:00.000-07:00

I haven't seen the actual report, so their numbers might be bad, but I found this interesting:

"Taxpayers real cost for cash-for-clunkers"

Note that this is an incentive program for getting old, inefficient cars off the road.

What were the goals behind the program? That is, what were the benefits that gov't was seeking to achieve?

We have an estimate of the average cost here... what would we need to complete the analysis?

UPDATE: It seems that the White House is not too happy about the report.

Krauthammer on climate change

2009-10-27T12:22:00.000-07:00

Below is an excerpt from an interview that Der Spiegel did with Charles Krauthammer.

Der Spiegel is a German weekly news magazine.

Charles Krauthammer is a (very) conservative columnist for the Washington Post. I won't tell you whether I agree with his politics (I hope you have no idea about my political leanings, or even if I have any), or his thoughts about nuclear power, but he is an excellent writer; always clear, always concise, often biting, usually witty. He's won the Pulitzer Prize, and has an M.D. from Harvard. He also has an undergrad degree in economics and poly sci. He left medicine in the late 70's to work for the Carter administration, at which time he also began writing (including writing speeches for Walter Mondale, Carter's VP).

Note: If you're going to read Charles K., you've also got to read Paul Krugman, the Nobel Prize winning economist and liberal columnist for the New York Times. As I've said before, read everything (left, right and center) and form your own opinions. You won't learn much if you only listen to people that you agree with.

I've cut most of the interview, because the topics don't relate to our class, but I found this portion interesting enough to share.

"

SPIEGEL: How do you solve problems like climate change if international institutions are failing?

Krauthammer: It's not the institution that does it, it's the confluence of interests. Where there is a confluence of interests among nations, as, for example the swine flu or polio, you can get well functioning international institutions like the World Health Organization. And you can act. Climate change is different, because the science remains hypothetical and the potential costs staggering.

SPIEGEL: You think it's a speculative theory?

Krauthammer: My own view is that there is man-made warming. On several occasions I have written that I don't think you can pump carbon dioxide into the atmosphere indefinitely and not have a reaction. But there are great scientists such as Freeman Dyson, one of the greatest physicists of the last hundred years, who has studied the question, who believes quite the opposite. The reason transnational action is so difficult is because the major problem with climate change is, A, that there is no consensus, and, B, that the economic cost is simply staggering. Reversing it completely might mean undoing the modern industrial economy.

I'm not against international institutions that would try to tackle it. But the way to go, at least in the short run, is to go to nuclear power. It's amazing to me that people who are so alarmed about global warming are so reluctant to adopt the obvious short-term solution -- the bridge until the day when we have affordable renewable energy -- of nuclear power. It seems to me intellectually dishonest. Nuclear is obviously not the final answer because it produces its own waste -- but you have a choice. There's no free lunch. If you want an industrial economy, you need energy. If you want energy, it will produce pollution. You can have it in two forms. You can have it dissipated in the atmosphere -- like carbon dioxide -- which then you cannot recover, or you can have the waste concentrated in one small space like nuclear. That is far easier to deal with. The idea that you can be able to create renewable energy at a price anywhere near the current price for oil or gas or coal is a fantasy."

Tropical forests, carbon credits and discount rates

2009-10-21T08:51:00.000-07:00

There's a good read over at WorldWatch: "U.S. Under Pressure to Protect Tropical Forests".

The short of it:

To meet emissions reduction goals via cap & trade, polluters in more industrialized nations need to purchase carbon offsets.

Reducing rates of deforestation in less developed nations (allowing standing forests to stand) can offset carbon emissions cheaply and effectively.

Now, think about discount rates and incentives ... does this sound like "win-win"?

Note the discussion of risks. Ideas for how to mitigate those possibilities?

Loggerheads in trouble

2009-10-21T06:51:00.000-07:00

From Oceana: 2009 Nesting Data for SE States Shows Dire Status of Loggerhead Sea Turtles

Note that some of the data comes from Topsail and some from Baldhead (beaches immediately to our north and south).

Lots of issues here besides the obvious non-use benefits from the existence of charismatic megafauna...

When we think of turtle population trouble, we might first think of marine issues such as turtles being incidentally caught or trapped in fishing gear ("by-catch") or the destruction of habitat. But land use activities are also critical to turtle populations. Here's the rub. Beach renourishment generates or maintains untold millions in tourist revenues and protects valuable coastal investment. We all benefit from such investments via economic impacts, the beneficial effect of wider beaches on insurance rates and our share of the land rents from wide coastlines. Yet this same renourishment threatens an important species. What information do we need in order to inform policy aimed at protecting beaches AND protecting turtles?

More action on plastic bags

2009-10-19T10:30:00.000-07:00

This time from Target and CVS.

Yes, incentives matter.

The Nobel Prize in Economics

2009-10-13T09:02:00.000-07:00

On Monday, two American economists won the Nobel Prize in economics.

Read about it here at CNN.

Notably, Professor Elinor Ostrom (Indiana University) won the award for her work on governance of common property resources.

Check out this short YouTube video (a little over 8 minutes) for her take on the issue.

Notice:
Her opposition to "top down" control,
her insistence that it doesn't have to be a "tragedy",
her notion of collective ownership and enforcement of property rights ("who is a member?"),
her push for adaptive management, trust in the other members, the importance of local knowledge and that the diversity of management institutions match the diversity of the resources being governed.

Awesome.

P.S. We'll cover the Gordon model that she references later in the term when we get to fisheries econ.

China's Green Initiative

2009-09-30T05:44:00.000-07:00

Thomas Friedman of the New York Times has a great piece on what is perhaps the biggest environmental news of the past few weeks.