Sustainability fee shot down by UNCW student government

It didn't even come close to passing.

Read about it at the Seahawk online.

Cash for clunkers was really expensive (on average)

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

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

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

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

This time from Target and CVS.

Yes, incentives matter.

The Nobel Prize in Economics

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

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

Equity and valuation

This subject came up in class today and was raised previously by Derek here on the blog:

When we measure value we use "willingness and ability to pay" as our metric. We can take issue with this definition of value because it is "unfair" to those who do not have as much ability to pay. Using this measure, a resource will appear more valuable to someone who has more money (and is willing to spend it). As unfair as it seems, we need a solid measure of value. Without this particular definition, we really have no way of measuring what something is worth.

How do we deal with the unfairness? Can we make adjustments in our measures of value that account for unequal income distributions?

Yes, using something called "equity weights" in cost-benefit analysis. This basically means adjusting value estimates upwards for individuals/nations with lower incomes. The level of adjustment can be based on tax rates (higher tax rate, lower weight) or some other measure.

The following passage discusses the issue nicely:

A key issue that has not been satisfactorily resolved in welfare economics (the branch of economics on which cost-benefit analysis is largely based) is Jeremy Bentham’s utilitarianist principle that actions should be evaluated on the basis of whether they generate the greatest amount of overall happiness for society. Aggregation of individual ‘happiness’ or utility is problematic because of the lack of a common numeraire for the fairly nebulous concept of utility. Utility is not measurable or comparable.

In practice, standard cost-benefit analysis tends to assume that a given change in costs or benefits (for example, $100) arising from a policy or project is valued equally by rich people and poor people and that individuals’ benefits and costs can therefore be aggregated to give an overall measure of net benefit to society. (In technical language, the marginal utility of money is assumed to be constant.) This approach (see, for example, Sugden & Williams 1978: ch. 16) implicitly accepts that the analyst’s role is principally that of an adviser on the efficiency aspects of a policy or project, and that value judgements about equity considerations should be the province of the political decision-maker.

Nevertheless, economists do sometimes advocate the use of income or other equity weights in cost-benefit analysis where it would be helpful to explore adjustments for poorer groups. But such calls are invariably tempered by a strict reminder that a non-weighted analysis should also be provided, to allow the decision-maker to easily determine the effect of including ‘equity’ weights.

Pearce & Nash (1981: 10–11), however, point out that even standard cost-benefit analyses make a value judgement by not using weights because they accept implicitly that the existing distribution of income is an equitable one. While this is true, the standard, unweighted approach is still generally preferable because the current distribution of income in a democratic society reflects (albeit imperfectly) existing social preferences. To introduce any other set of weights risks the adoption of a paternalistic or authoritarian approach by the individual analyst or decision-maker. And where weights are used, transparency requires that the same analysis be presented to the decision-maker without weights so the effect of weighting is clearly discernible.

If the distribution of income across society is considered to be inequitable, the correct solution is to rectify it directly through progressive taxation or other policies, not by distorting the analysis of highly specific projects that may in any case affect only a small section of the community.

In more recent times, the issue of effect on different socio-economic groups has also been addressed more directly by disaggregating the results of cost-benefit analysis to show the potential incidence of the costs and benefits of a government program on various sections of society. This approach is more transparent and allows the decision-maker to weigh equity and political considerations against the overall social benefit achieved.

Excerpted from "Multicriteria Analysis: 'Good Enough' for Government Work?"
by Leo Dobes and Jeff Bennett, Crawford School of Economics and Government at The Australian National University.

John Loomis on Non-Market Valuation

This article appeared in Choices a few years back.

It is well worth the read.

As someone who does valuation as part of my job, I often encounter opposition to the very idea of placing monetary values on environmental and natural resources. We've seen some of that right here on the blog, and no doubt there are others that share the viewpoints of those who are brave enough to be vocal in expressing their opinion. Loomis does a great job of pointing out the merits and shortcomings of non-market valuation.