Eastern shore chicken plant fined

The MDE is on the job! Kudos to the Attorney General and to the MDE for holding Valley Proteins responsible. An efficient social outcome depends on internalizing externalities, and this seems like a great step toward achieving that end.

Climate Change and Food

First, and biggest, the good news: the Inflation Reduction Act, signed into law just days ago, is a big step in the fight against climate change. Witness this very excited video detailing the bill, including the many ways it is poised to make a difference and a few, strange ways that pork barrel politics got some wins for Manchin. But also note with this Vox article that this big new policy seems to gloss over agriculture, an industry with issues.

Although the Beyond Burger hasn't been doing super well as of late, apparently failing to convince McDonalds that they should be on menus worldwide, there is still some room to be optimistic about "alt-meat." Building meat from raw (plant) materials results in less waste (i.e. animal parts), a lot of saved time waiting for animals to mature, and potentially may allow the same equipment to produce different products. 

Bottom line: Big Meat is still boss, but this fight isn't over....

NYC Congestion pricing still "coming soon"

Any policy is going to have winners and losers, though it sounds like the South Bronx is pretty much a guaranteed loser. There are a lot of cats to try to herd, but I'm impressed they're still at least trying!

Chicken in Maryland

In 2021 the chicken industry on the Delmarva peninsula produced 567 million chickens, 3 million fewer than in 2020. Still, local industry profits hit $4.2 billion which doesn't sound too bad, especially given that had to pay higher wages to workers in processing plants and higher costs for feed. 

However, the Biden Administration has taken notice of the way the industry is run, and they are trying to keep the few huge processors from taking all of the profits, as has long been done via the tournament pricing system, which pits growers against each other. In the face of those large profits (remembering that Delmarva is less than 10% of US production) the Feds imposed fines of.. 85 MILLION dollars!

That's got to be maybe half a percent of industry profits, imposed one time. 

Anyway, suffice to say I'm not too impressed. Meanwhile, an environmental group continues to complain about the many externalities of the industry, noting that the Maryland Department of the Environment inspected just 134 farms per year out of the 500 or so statewide. Of those inspected, most had some infraction found, but mostly the issues were dealt after a follow-up visit. Farms can often do a better job keeping the manure out of local waterways, but fines are rarely levied. Should they be levied more? I'm not sure: I certainly hope that not every inspection results in a fine. I do think that MDE should hire more inspectors: maybe paid for by a small additional tax on farms?

Nuclear waste

Just a twitter thread, but some interesting thoughts here. The author says that there just isn't much nuclear waste to deal with, making it not much a problem. Too bad mostly people don't think very rationally about nuclear energy: although the damages are much worse from coal, they are more incremental while the nuclear meltdowns that have happened a few times really capture people's imaginations.

Beef or fish?

I'm cheating, I'll admit, combining two posts that are only tangentially related. However, what do we think can replace the giant beef industry? While it's not in any danger, one thing taking a few acres of land in a way that wasn't done before is aquaculture. This video is produced by a news organization in North Carolina and is somewhat propaganda-esque promoting local businesses, but I still think it's interesting. Much of NC is lowlands, and more of the state may be available for this kind of business going forward.

Meanwhile water is an issue in the arid southwest, where lots of land is devoted to cattle ranching. Flows down rivers are down about 17% (alternate source) and irrigation used to grow alfalfa for animal feed all over. Basically that's repackaging water, which is a tough sell in places like the southwest. 

While the land and water aren't comparable, the food produced might be....

Natural gas

For a long time, advocates have praised natural gas as being "better than coal." That's still true: no argument from me! However, that's a pretty low bar. Coal creates all kinds of pollution from mining and burning it, and the impact on climate change is also large. So gas is better, right? Well, maybe.

First, extraction. While coal mining has a pretty bad reputation, researchers have also tied natural gas extraction to deaths of people near drilling sites and downwind. 

Second, emissions. An eight year study of gas emissions in the Boston area found that emissions were much higher than predicted by known usage patterns. This suggests that gas might be seeping out around pipelines, but more ominously in homes. 

On a semi-related note, in addition to the climate change impacts of air pollution, a study in India finds that smog hurts children's cognitive and academic performance. While pollution in India is likely worse than it is here, all damage is cause for alarm... and consider that 30 minutes with a two stroke leaf blower emits more carbon than a trip from Texas to Alaska in a pickup truck. Another study in Chile finds that particulate matter (a kind of air pollution) is associated with a small but significant increase in emergency room visits.

Finally, an interesting chart shows the sources of greenhouse gas emissions: about 3/4 are from energy, at least as of 2016.

Again, gas is definitely better than coal, but hopefully that isn't the comparison we continue to make. Remember, renewable sources are more than economic in many places: bringing them in makes profits and helps the environment. 

Rethinking the importance of food miles

A new article in Nature claims that the supply chain is responsible for a fairly large share of the emissions associated with food- as much as 19%, but the figure is 36% for vegetables and fruits. This runs counter to the more established wisdom from writers like historian James McWilliams that food miles matter little. This 2010 NYT editorial by Stephen Budiansky says that transportation accounts for 14% of the total energy consumed by the American food system. Clearly one big factor is exactly what counts in each number: are we including processing? Are we including transportation for the inputs such as fertilizer? (Not sure, but it seems like the Nature article might be.) 

As usual, Hannah Ritchie at Our World in Data provides an array of helpful stats, concluding that "eating local only slightly reduces your emissions." For a more general summary, Tamar Haspel has some words of wisdom: think first about your diet and second about where food comes from, and keep in mind that salad is silly. Not many calories or nutrients there: just more of a crunch experience for the global rich like many of us here in Baltimore.

Crops & meat prices jumping

You would think that farmers would be excited about grain shortages: if Russia blocks Ukraine's exports, that raises the price for other exporters. Unfortunately shortages are all over input costs: fertilizer and gas are more costly than ever, and other factors are pushing the price of pork up, as shown in this BBC news article from today (June 29, 2022).

As the above chart shows, the trend is just gathering steam: in September 2021 Bloomberg reported on low inventories of beef, pork, and chicken. I don't have an update on inventories, but it seems the pressures are still strong.

Maryland crabs

Uh oh! Today's Baltimore Sun reports that the crab population is under threat, and that harvesters will be limited in how much they can harvest and sell. This apparently is linked to the winter dredge survey, which reported in mid-May that the crab population is at its lowest level in the past 30 years.

The DNR is at pains to avoid pointing fingers, but the obvious causes include nearby agriculture, including fertilizer runoff from horticulture (mostly corn & soy) and fertilizer runoff from chicken farming. Importantly, much of the runoff is from upstream states- Maryland deals with waste from the other five states in the watershed....

Lab-grown meat

Just saw this article, posted September 2021, on many reasons why we shouldn't expect to see lab-grown meat any time soon. Although venture capitalists continue to fund it, most likely it will take many years before anything is available at scale. 

This is a good example of why I discourage people in my Resources class from writing about new technologies. If the engineers are still trying to get the technology to work, or if it's not financially sustainable on its own yet, economists generally don't want to go there. We just can't analyze the economics of a technology that's not "economic" yet. Maybe the advances in technology will come fast and furious and it will be economic soon, which would be fantastic! Then again, that might never happen. Just save the economic analysis for technologies that are at least close to being economic. 

Gas taxes

Can you... Pigou?

The RFF's Daniel Raimi encourages states to take the windfall tax revenues and put them to good use. In Alaska and New Mexico, oil was taxed and the proceeds put into a rainy day fund. On the other hand, his counter-example is Appalachian states like West Virginia, where coal mining was never taxed, and where the economy continues to suffer. Maybe now, with the current high prices, Texas will finally be able to see its way clear to go ahead with the Medicaid expansion....

Yields of organic agriculture

Consumers are buying more and more organic produce. That's probably good for the environment, at least as far as improving biodiversity in the fields (as shown in a 2021 study in Switzerland and this 2022 meta-analysis) but that comes with losses in terms of yields. A 2021 study of growing grain in Sweden found that organic agriculture was 43%-72% as productive as conventional agriculture, and a 2021 meta-analysis concluded that on average, organic yields were about 75-80% of conventional plots. So maybe there are more bugs (good and bad both) in the fields, but it means that more fields will be required to produce the same amount of food. That also means higher prices for consumers, which will matter more for some consumers than others. Seems like the jury's still out. 

Oligopolies in the news

1) Infant formula: apparently the FTC is already investigating

2) Group Purchasing Organizations, intermediaries between drug manufacturers and hospitals. A quote: "Group purchasing organizations control more than $250 billion in hospital purchases annually.  The biggest three account for about 90% of the business.... If you refuse to sell through a group purchasing organization, or through drug wholesalers, you will not exist."

3) Ice cream cones

4) Florida Power & Light is ostensibly regulated by the Public Service Commission, but several commentators described their activity as "monopoly-like" with the PSC being little more than a "rubber stamp." 

5) I know I'm late to notice this, but Binyamin Appelbaum of the NY Times frequently posts on the anti-monopoly beat. He argues that consumers suffer, as in the case of chicken; that meatpacking represents monopoly gone bad; and that downward pressure on wages is one of monopoly's many sins. A recent piece (posted 6/1) is on the role of the judiciary in fighting monopoly.

6) An analysis of profit margins was just posted online at the Roosevelt Institute. One co-author is the "Director, Corporate Power" so you can kind of guess where the paper comes down, but the findings seem pretty damning. I can't imagine that market power explains a large share of inflation, but the extent of its complicity is not clear.

7) A monopoly is when there is only one seller. When there's only one buyer, it's called a "monopsony," but it can lead to the same type of outcome. Case in point: a new publication in the American Economic Review, which finds that a business owner is able to avoid paying people what they're worth. If there is only one employer, then anyone who wants a job has to apply there and take whatever pay is available. These researchers find that this is indeed the case... basically every employer has that power, as there is never enough competition for workers.

8) Uber & Lyft: while it seems like their business model is struggling, for a long time they've been the only game in town, partly because they have given up the chance to be profitable in favor of holding that leading spot. 

Resource Economics videos, Spring 2022

The semester is pretty much over and summer is on our doorstep. Thank goodness!

Thanks to my class for an engaging semester: I hope you enjoyed it. This semester I allowed people to choose whether they wanted to write a paper or make a movie. Both required an interview, and next time I will impose a penalty for those submitting papers. My goal is to have informative but engaging pieces that draw from a variety of sources, some of which are peer reviewed. Here are the class productions for Spring of 2022.

Costs and benefits of tourism in Bali

Wasteland 

Effects of livestock production on the Chesapeake

Benefits of composting 

Benefits of recycling

Impact of varroa mites on bees and beekeepers 

Recycling on campus at Towson

Energy & climate

 

Something for nothing... really? @gernotwagner sends along this image from the latest document by the IPCC (the Intergovernmental Panel on Climate Change), implying that there are some measure that we can take literally for free or better than free (i.e. they will yield profit as well as climate dividends). Top of the list? Solar energy and wind energy....

Offshore wind update

As I get ready to teach the energy unit, I'm catching up on the latest news about offshore wind energy production in Maryland. 

In December 2021, the Maryland Public Service Commission rewarded renewable energy credits to two companies for their plans to build offshore wind energy plants 15 miles out of Ocean City. Plants are expected to be operational by 2026, in time to meet the requirements of the Clean Energy Jobs Act of 2019, which requires that half of the energy used in Maryland come from sources like solar or wind.

February 2022: the groundwork is being laid in Sparrows Point for a large steel plant that will produce the turbines and "monopiles" which are the structures to which the turbines are attached. 

***

Update, August 2022: Virginia is getting in on the action. Two test turbines have been up and running since Fall 2020, and the full project will consist of 176 turbines, enough to power 660,000 homes, by 2026.

In other words, things keep moving...

A holiday for gas taxes?

Great thread by @GernotWagner detailing why the currently fashionable holiday for gas taxes (such as the one that recently went into effect in our home state, Maryland) is probably not the best idea. The basic idea (in his Bloomberg column): higher prices motivate people to use their cars less, and that's a good thing. Rather than making gas cheaper, we should just give people money to let them make up the difference in their own way. As he puts it, "Don't decrease energy prices. You'll encourage consumers to use more of it, and you'll send more $€¥£ to Putin." 

Food prices jumping

In part due to the Russian invasion of Ukraine, two countries normally responsible for 30% of global wheat production, global food prices are on the rise. (h/t @StellaNordhagen)

26 countries in the Russian orbit including some Pakistan and some African countries depend heavily on Russian commodities such as wheat. Vegetable oils are also seeing spiking prices. The bottom line is expected to be undernourishment for at least 8 million people and possibly as many as 13 million. 

Economist Nordhagen also notes that there will be other disruptions in markets such as fertilizers, and of course Russian exports of natural gas are well known. 

The good news is that we aren't fully there yet. Yes, food prices are already up, but how bad it all gets is really yet to be determined. Here's hoping that Putin can rein himself in sometime soon.

...or is that really true? Fascinating Twitter thread by Sarah Taber, who says that most of the shortfall is already being made up, as the instability was already factored into plantings. She says that the real issue is more of a localized shipping problem: the overall supply should be fine, though regional concerns continue to be serious in, for example, the Middle East and Northern Africa.

Vegetables & agricultural markets

In this Twitter thread, Tamar Haspel reminds us that all types of food come with tradeoffs. And yes, that even includes broccoli! She says that the best choices are staple crops like wheat.

In other agricultural news, it seems like the USDA is looking into anti-competitive practices in the prices of fertilizer and seeds. We will be learning about market power shortly after the break.

Electric vehicles: oh no!

So say the countries of OPEC. I'm curious what the elasticity of demand for EVs with respect to the price of gas is: do you think it's tiny or minuscule? Still, someone is worrying about it....

On the other side of the question is a twitter thread on how Zoom has done more to cut emissions than electric vehicles. I hadn't thought about that!

Potential for renewables is big in Texas

While many are worried about the intermittency of solar and wind power, this article (based on this research) contends that it's actually better at coping with shutdowns. The researchers note that mid range batteries, built to provide energy for lots of folks for just a few hours, are pretty good at coping with short term outages. And long-term outages are best avoided by having lots of sources around, and importing energy where possible. I do notice that there is some geothermal or hydroelectric in the background, though.

Of course the potential for renewables to improve human health and clean up the environment are huge. Seven million people die a year because of air pollution, and many asthma cases are tied to that as well. 

One curiosity: "Transitioning to all clean, renewable energy could also decrease energy demand in California by 60 percent." Apparently a lot of energy actually goes into producing more energy, and once we get through the transition to renewables (which will not be easy) overall demand should drop. Interesting...

US is (in some sense) energy independent

Wow, I didn't see this one coming. As of 2020, the USA is exporting more petroleum products than it imports. From Axios using the EIA's information.

I have to say, I do wish that translated to a decreased reliance on countries that are less than stellar global citizens (i.e. Saudi Arabia & Russia) but in today's news (Feb. 17th) it seems like we aren't really there yet. Surely what's imported and what's exported are not the same products, so the figure is somewhat misleading, but it still shows a promising trend. Maybe someday we won't be quite as reliant on those countries!

It's not you

 Today, in "it's not you," courtesy of NPR:

What's so special about this ice?

Beijing organizers switched from using ammonia to carbon dioxide refrigerants for the new venue's surface. The change is the same as planting upwards of 1.2 million trees, according to organizers.

Nordhagen on Bittman (and MLK)

 Nice Twitter thread on the book, "Animal, Vegetable, Junk" by Bittman. She writes that food workers are quite underpaid, to the benefit of folks higher up the "food chain" as it were. Gratuitous picture:

• 8 of the 10 worst-paying jobs in the US involve food. Of 20 million food system jobs, almost all earn near-poverty-line wages.
• Over 1/3 of US farmworkers earn less than the official poverty wage (20K USD / yr / family).
• Food workers use food stamps at > 1.5 times the rate of the rest of the US workforce

Addressing these issues require the market price of food to be much closer to the true cost of food, including a fair price for the labor that brings it to farm to fork (and beyond) -- while ensuring low-income households can still afford nutritious foods.

Update: yes, I'm back on Twitter, but check this out: Martin Luther King Junior on government spending on agricultural workers.

Food for thought

Not gonna lie, I wrote off vegans for a long time. I am not a big beef eater (motivated in part by graphs like this, showing the massive impacts of cattle on climate change) but when looking for protein I've mostly eaten fish, dairy, and eggs. However, graphics like this show just how large the impact of even dairy and eggs are. 

From the Economist

Future of Oil & Gas

Interesting opinion piece in the NYT by a couple of professors of policy and international affairs. They ask, "Assuming that renewable energy sources continue to make inroads, what does that mean for countries like Russia and Saudi Arabia who produce a lot of fossil fuels?" What it does NOT mean is that they will fade away: their products will be in demand for awhile, though of course the overall demand for them will drop. The authors conclude

1) Price volatility will continue: demand will rise and fall, and that will create winners and losers. Unfortunately Russia and Saudi Arabia can produce fossil fuels really cheaply, so through the ups and downs they are likely to continue to run the show. 

2) As pressure rises on Western companies such as BP and Shell, and those companies begin scaling back their use (and invest more into renewables) that will clear the way for Russia & the Saudis to have even more influence over the market. 

3) At least some amount of fossil fuels will be continue to be relied on for the foreseeable future, and those countries will be the providers. 

"OPEC and its partners will make up a growing share of a shrinking pie, giving them outsize influence until demand falls to much lower levels. The same is likely to be true for the share of Europe’s natural gas that comes from Russia, which is the lowest-cost supplier to the continent."

Followup, 2/2/22, from the boss himself: "'We have an OPEC+ agreement, and I have to honor my colleagues and my friends,' Saudi oil minister Prince Abdulaziz bin Salman told S&P Global Platts in January at a conference in Dubai."

Dairy wasteland

An interesting conundrum: in this Tweet, this Professor takes issues with a giant Chinese project that turns desert into a giant dairy yard. While advocates (linked in the tweet) talk about all of the positive environmental consequences, Prof. Hayek concludes the reverse, that it will have a huge and overwhelmingly negative impact on the environment.

While the particulars are different, California is more or less the same thing: they irrigated some tremendously fertile soil... that happens to be in a desert... and now it's really productive land. The California central valley averages 5-20 inches of rainfall a year in different parts, but uses that water (heavily supplemented by pumping out aquifers) to produce $17 billion worth of over 250 crops. 

As a fairly random aside, a large share of the world's supply of almonds is among these crops. Estimates for 2021 show that California was on track to produce over 3 billion pounds, On the other hand, the rest of the world's entire production capacity was about a tenth of that. See FAO and OWID for bits of data.

Coal is still kickin'

Strangely, the topic sentence for the article appears at the end of the seventh paragraph. :P "Despite its rapid decline, coal still generates about 20 percent of the nation’s electricity and has strong political backing in pockets of the country."

"[state's attorney Ladd] Erickson described Coal Creek Station as a “critical piece of national security infrastructure,” because it provides reliable power at a time of growing strain on the electricity grid.

Erickson also described himself as a “big believer” in climate change and said these anti-renewable ordinances would be temporary. He added that he has been meeting regularly with wind-power developers and working on revised rules so they can operate in this part of North Dakota once the power plant’s sale is final. But the prospect that wind energy would replace the area’s lignite industry wasn’t acceptable, he said.

“If the wind turbines were the one to replace the plant, that wasn’t something we wanted,” he said. “Our miners are very important.”

Welcome to 2022!

I teach my Resource Econ class in the spring, and when that happens my eyes are opened to the resource Econ issues all around me, including things I see on Reddit, Twitter, in the news, etc. Here are a few.

1) Twitter thread on the health impacts of gas stoves. Burning gas produces NO2 which contributes to asthma, particularly among children; electric stoves are cleaner. Of course, there are many other relevant issues, from the emissions associated with the extraction of natural gas to the % of coal that still keeps the lights on for many of us.... [Update Jan 27: a recent study has found that homes with stoves create lots of methane, contributing to climate change as well as the health issues.]

2) It turns out that to cut your carbon footprint by half, all you need to do is give up beef! If you eat chicken instead of beef, that cuts your emissions by 48%, or so says this link. Vox.com chimes in noting that over a billion chickens a year are wasted; they are raised but end up in the landfill. Ouch.

3) And as antidote to the tendency to assume the world depends on your dietary choices, here's a reminder of the role of giant systems. To preserve gate access at some airport, Lufthansa airlines recently made 18,000 flights... that were EMPTY. Basically no passengers or cargo: just keeping up appearances in hopes of future profit. 

4) While we're on the subject of externalities, just saw this tax being imposed in Quebec. If you don't get vaccinated, you will have to pay a fee. (!)

5) Someone else who is paying fees is Bayer (formerly known as Monsanto). The cost of lawsuits associated with the herbicide RoundUp is adding up, and they are taking their product off the market for home use. Interestingly, the RoundUp-Ready GMO is still so ultraprofitable both for the company and for agricultural producers that they don't seem worried about related lawsuits.

That's all for now!