Friday, June 21, 2013

Climate change or poverty?

I am kind of excited to see more work being done on the intersection of climate change and poverty. This paper looks to see how rainfall and temperatures affect GDP and then how GDP affects poverty. It's not a very finely detailed approach, but it gets at the big issues and shows that poverty can be expected to increase as climate change affects Mexico.

Another recent article talks about a place where the relationship is the reverse: the choice is either to contribute to climate change or to remain poor. The Crow Nation depends on coal mining for their livelihood, and as the US decreases its reliance on coal, they see a drop in demand for the product they depend upon. The article talks about finding ways to ship it overseas, but of course wherever it gets used it'll contribute to climate change.

No good solution there: I hope they can diversify their livelihood, for starters.

Value of a view (pretty nerdy)

Usually when economists try to put prices on non-market goods such as scenic views, we are forced to resort to the very difficult task of finding out how much people are willing to pay for something by asking them. This opens a Pandora's box of problems as such estimates are subject to a variety of biases. For example, the power of suggestion: if I ask, "Are you willing to pay $100 to restore this view?" I'm sort of implying that the value is, if not $100, sort of in the ballpark of $100. After all you would never ask, "Would you pay $100 for this 5000 square foot home in the penthouse of a building overlooking Central Park in Manhattan?" Another problem is the difference between "willingness to pay" and "willingness to accept payment"- a famous experiment found that the values people put on items suddenly increased if the item was theirs. Thus, when attempting to value a view, it matters if you're going to be giving or taking away. To sum up, here's an article on the objections one fairly prominent economist has to "contingent valuation," which is the process of trying to put a price tag on goods with no market values.

That's all a very long introduction to what I really wanted to say, which is that a recent struggle has put a price tag on a certain view without using this survey-based methodology. Consumer electronics maker LG wanted to build a $300 million development in New Jersey, and they had plans to build a complex with buildings 143 feet tall. However, the buildings would block the view of some scenic cliffs from New York City, and in particular from the Cloisters, an art museum. In the end the view won out, and LG is going to have to substantially revise their plan. That must mean that the value of the view exceeds the value of the development, though that doesn't mean that the view is worth $300 million, since LG will retool their plans and eventually end up with a building there, I imagine. Still the view can be valued in part by the cost of investments made by anti-development forces and any potential loss of business in the local area, such as the fact that the complex will no doubt be postponed for another year or two while plans are reconfigured. 

Sorry if that's esoteric, but it's pretty interesting to me as a researcher!

Wednesday, June 19, 2013

Fish prices climbing

Declining fish stocks and higher world incomes mean increased consumption of fish, and accompanying higher prices. According to this June 2013 FAO report

"Prices on a number of farmed species, including salmon, shrimp and selected bivalves, have risen sharply, due to supply problems and higher feed costs. Some capture fisheries species, including tuna, have also registered sharp increases. As a result, the Fish Price Index has risen to the record levels witnessed during the summer of 2011. In the coming months, supply constraints for several important species are likely to keep world fish prices on the rise." 

In particular, shrimp, salmon, and tuna prices are all expected to rise as demand remains solid and production isn't able to keep up. Could this mean increased demand for other meat products, and accompanying increased pollution? Seems likely....

Friday, June 14, 2013

Coffee prices affecting production levels

Coffee prices have dropped by 50% over the last few years and it's pushing farmers out of the game. Instead growers in Brazil and Colombia are raising cattle on their land or at least cutting back on fertilizer. Prices have consequences!

Monday, June 10, 2013

Water tables destroyed by subsidies

This year at Towson University we had zero applicants for a scholarship given in the Econ department. Respondents had to write all of three pages to bring home the prize, but that was too much to ask, I guess. The topic was about the negative effects of subsidies, which are many and easy to point out. Very disappointing, when all they needed to do was to look at something like this!

Another article on water, but I'm not sure exactly what this one is advocating. It seems to say something like, "Water quality is degrading, but centralized solutions aren't the answer," but then it's not clear what the answers are, other than being more environmental in general. I'm open to any alternate solutions they can come up with!