Visualization of the economics of deforestation in Sumatra

This is pretty cool. The website is a bit annoying, but once you get in and can move around, it's a pretty interesting view of values from forest regimes and the incidence of costs and benefits across users.

Here is a link to the publication upon which the values are based. What valuation methods did they apply?

Trash and tourism in Barbados

Here is a link to a short paper that I wrote a couple of years ago showing the empirical connection between beach litter and tourism.

Tourist perceptions of beach cleanliness in Barbados: Implications for return visitation - See more at: http://etudescaribeennes.revues.org/5251#sthash.sP2fYJeH.dpuf

Tourist perceptions of beach cleanliness in Barbados: Implications for return visitation - See more at: http://etudescaribeennes.revues.org/5251#sthash.sP2fYJeH.dpuf

Trash

Here is an interesting read from Brian Palmer at Slate regarding trash and landfill space in the US. I found the landfill statistics particularly interesting. When we recycle our trash, we typically think in terms of "saving land" from being used for garbage disposal. But, in most states, land availability is not a problem at all.  So, when you enjoy your non-use benefits from recycling, think in these terms as well.  I also find the NIMBY issue interesting. Despite the plethora of land available for trash disposal, no one wants a landfill near their city. As a result, we ship a lot of trash, creating more pollution along the way.  Of course, this is just one of many pollution problems that are simply outsourced to other locations.

As discussed in the lecture, recycling can create an host of benefits, including reduced energy use, reduced air pollution and reduced extraction of virgin raw materials. How does the US stack up when it comes to MSW generation and recycling? Not so great.

Check out some stats here from the UN, and here from Nationmaster.

This graphic is pretty cool too.

Land use

This week we'll be covering land, minerals and recycling. To get us started, here is a nice article on land use and its associated impacts by JunJie Wu at Choices. Note the discussion of tradeoffs as well as incentive-based options for regulation.  I think this article fits nicely with the land rents discussion in the lectures, especially with regard to the impact of urbanization on land use.

Time magazine recently posted a google-powered view of some interesting land use changes from all over the world. There's a lot of content on these pages, and I have not had a chance to go through all of it. Please check some of it out and let me know what you think.

The value of Caura Park in Trinidad

I'm one of the advisers for a masters student at the University of the West Indies. I'm reading her thesis (all 91 pages of it) at the moment and thought I would share this nice passage with you. She did TCM application for recreational use values and a CVM application for non-use values.

"In the absence of non-market valuation the true worth of national parks remains hidden and the attention that is due both in terms of their provision and management is sometimes not rendered. Not only may they be under-provided but they also become vulnerable to conversion (Buyinza et al, 2007). Lowered perceptions of a park’s value, may falsely imply that increased financial benefits stand to be gained by a change in land use. The costs associated with park provision typically have explicit price tags attached. The benefits publicly received however are more difficult to measure considering the fact that they may be intrinsic in nature. Non-market valuation helps to balance the scales by focusing on revealing those benefits in a like unit (money) so that fair comparisons can be made between them, the explicit costs of park provision and the opportunity costs of sacrificed investments (Loomis 2006). Thorough economic assessments therefore help to ensure that recreational parks are not mistakenly estimated to be less valuable to the public than they really are. It aids therefore in the process of sustainable development planning and it contributes considerably to the formation of sound environmental policy (Ndebele 2009).

Non-market valuation has the potential also to emphasize the importance of proper management. According to Robinson (2001) an understanding of the science regarding the degradation that may be imminent, on its own can be too one-dimensional and therefore insufficient to ensure that governments take action to address issues of overexploitation. The addition of valuation studies to such a debate however, can help to create more convincing arguments in that regard. The probable losses to society as a result of degradation may be quantified and it is this value estimate that tends to act as the stimulus that compels governments to action. It helps to highlight the urgency with which exploitation aversion strategies ought to be implemented (Alvarez 2008). For economic studies to reflect the true worth of recreational parks however, holistic analyses must be conducted such that their total economic values (TEVs) can be estimated." 

Nice, huh?

Valuation

We're starting our study of valuation. Valuation means figuring out what something is worth, usually in dollars.
It is important to note that economic value involves much more than market transactions. People value things that are not traded in markets and people value things that they never use.  Another important point is that economists don't just go around trying to place a value on things for no reason. We engage in valuation when understanding what something is worth can help inform the policy process. Any time there is a tradeoff involving environmental quantity or quality, valuation can serve an important role in terms of helping us understand what is at stake.

One situation where valuation is useful is in determining the monetary value of a fine or fee to impose on a responsible party in the case of natural resource damages. For example, BP will pay about $4.5 billion in criminal and civil penalties for the Deep Water Horizon spill.  Transocean (the owner of the rig) will pay $1.4 billion.
 
What are some other scenarios where valuation might be useful for informing policy?

I sometimes encounter hostility when I first present the idea of valuation to people who have never been exposed to it.  One line of reasoning is that valuation somehow "cheapens" the environment by expressing its worth in dollars and cents. My response to this objection is that the default value is typically zero. That is, most people treat the environment as if it were free, and you can't get much cheaper than that.  Valuation often helps people realize that the environment is extremely valuable, despite it being available for "free".

Another thing to realize is that we are constantly engaging in valuation anyway, through our actions.  For example, when society chooses to spend a certain amount of money on highways, healthcare, and social security and NOT spend that money on environmental protection, are we not indirectly placing a value on the environment relative to those other things?  On a micro level, when you choose to drive your car instead of walking, are you not revealing that you value your own convenience more than you value the environmental damage from your emissions?


Here are some links to more reading about valuation:

The National Ocean Economics Program

NOAA's State of the Coast

Ecosystem Valuation

Economic Values without Prices (Loomis, Choices, 2005)
FAO Fisheries Valuation Summary
Here is a pdf version of a presentation that I put together for SocMon Caribbean

Fuel efficiency standards and holiday travel

Here is a link to an interesting article by the Union of Concerned Scientists. Note the highlighting of opportunity costs as well as the projected impact of new fuel efficiency standards.

These CAFE standards are a type of performance standard.

These standards set the minimum fuel efficiency for a fleet of vehicles. They are not without controversy. Improving fuel efficiency means a lower marginal cost per mile driven, which may induce people to drive more (at least partially offsetting the intended effect). Further, it can be argued that the same result can be achieved with a gasoline tax, but at lower total cost to society. A gas tax is of course the classic Pigouvian solution to negative externalities.

Here is more detail on the research noted above.

Here is more on the issue from Resources for the Future.

And even more RFF reading here.

If you have not yet been exposed to RFF, I highly recommend that you explore their website.

What do natural resource economists do?

This is an edited re-post from an earlier semester.

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As students begin to study the discipline of natural resource economics, there is often confusion about what the topic is really about. This is especially the case when students are coming from backgrounds with only limited exposure to economics (e.g. EVS, where you've only had one or two econ classes before this one).

Generally speaking, economists try to solve problems using a combination of theory, empirical analysis (data, statistics, math), and intuition. For example, macro economists try to address issues such as how to keep an economy growing without significant inflation.  Micro economists might try to find the best way to maximize profit for a particular firm or industry. Natural resource economists try to solve problems associated with scarce natural resources.

Some examples from my work include: How to maximize fishery value while balancing the competing needs of commercial and recreational fishers and maintaining a biologically sustainable stock?  How can Caribbean tourism grow without harming coral reef quality or marine turtle populations? What hunting regulations would maximize the net gains to society from white tailed deer populations? In the face of depleted stocks, will a nation's supply of seafood increase or decrease with financial incentives to curtail fishing effort?

Obviously, these are complex issues that require interdisciplinary effort. One of the things that I really love about what I do is that I work side-by-side with biologists, policy makers and resource users to address these problems.

Here are links to two excellent essays that provide a nice perspective on the economic view of the environment.

The second essay covers non-market valuation, which we will cover in detail later in the term. It makes a good read now however, as it sets the stage for much of what we're covering at the beginning of the class (e.g. the economic view of value).

How do Economists Really Think About the Environment (Fullerton and Stavins, RFF, 1998)

Economic Values without Prices (Loomis, Choices, 2005)

Welcome summer school students

Hi everyone.

Welcome to the ECN/EVS 330 blog.

The purpose of this blog is to facilitate discussion of class issues. I will post topics and links to readings as often as I can. I hope that you will find the resources useful and that you will contribute to the discussion. Please note that I am not interested in personal opinions or political rants. I am looking for objective, research-based contributions. Cite your sources when possible or provide links to further reading.  Posting questions is good too.  If you find topics, articles in the news or have a suggestion for a blog post, please send it to me via email.

Pigouvian taxes

Here is a short and sweet article on the merits of Pigouvian taxes by Robert Frank at the NYT.