Resource Economics at Towson

2012-01-03T09:42:00.001-08:00

NYT article on how organic agriculture often is not what it's talked up to be, and another about increased plantings in Iowa as crop prices have climbed.

Wingnuts on the march

2011-12-18T05:58:00.000-08:00

Things are a little different in Virginia, where a local plan to protect the low-lying area from intruding seawater is being hailed as an attempt by the UN to subvert local autonomy. The Tea Party has some pretty interesting beliefs: "'Environmentalists have always had an agenda to put nature above man,' said Donna Holt, leader of the Virginia Campaign for Liberty, a tea party affiliate with 7,000 members. 'If they can find an end to their means, they don’t care how it happens.'"

Quote of the day

2011-12-17T11:22:00.000-08:00

Final exam question: "What does a government marketing order do?"

Student answer: It encourages them to buy something that the government subsidizes. Example is, "Where's the Beef?" campaign.

For those of you who don't get it, I think the student meant the "Beef- It's what's for dinner" campaign....

Coping with Economic Pressure on popular species

2011-12-16T12:43:00.000-08:00

Garrett sent along this article that highlights an intelligent, market-based approach to saving a wild animal and its habitat from the pressure of the exotic pet market. Economics in action!

Here endeth the blog

2011-12-09T15:36:00.001-08:00

For now, at least: that's all you need to look at for the exam.

Ethanol: Is It Worth It?

2011-12-09T15:30:00.000-08:00

As gasoline becomes more and more unavailable society pushes to a new fuel. Scientists are working around the clock in order to produce this new fuel. The fuel that happens to be the next best thing is ethanol. Ethanol is made from corn (renewable resource) and then it is mixed with gasoline. The resulting mixture is called E85 for 85% Ethanol. This ethanol will help demand for gasoline go down and help bring in more money to local farms and our government. This ethanol happens to cost 10 to 30 cents less than gasoline. This sounds like a good thing. The down side is that the E85 mixture produces 72% the amount of energy that regular gasoline produces. This translates into a lower mpg for your vehicle if you use E85. If you have a 23 mpg of gasoline then using E85 you only will have 16mpg. The other draw backs are you must have a "flex fuel" vehicle in order to burn E85. The general public however is not aware that they are able to burn this new fuel even if they have a "flex fuel" vehicle. Out of the people that are aware they could burn the E85 only 10% actually do use E85.

I believe that this new fuel will be the answer. Even though it is more expensive to burn then gasoline, in the future it will be cheaper. As gasoline becomes more and more scarce the price will rise and this price will drive consumers for the cheaper E85. It is not the best thing but it is the better thing. Gasoline needs to be in the past and we must move to a new source of energy.

--Lee Single

Fracking Earthquakes

2011-12-09T15:26:00.000-08:00

This article is brief but explains that basically there are people that suspect earthquakes in Ohio have been caused by drilling for natural gas. They have gone as far as setting up four new seismographs in the area of Youngstown, Ohio. The new seismographs have seen eight minor earthquakes already this year. The last one on November 25 was a 2.1 magnitude quake. The latest quake was also just a few blocks from the brine injection well.

This source is much longer but pretty much suggests the same conclusion, that natural gas drilling is increasing the chance of an earthquake. The first quake at the drilling site near Lancashire, England on April 1st was a 2.3 tremor. The second one was recorded on May 27th was a 1.5 magnitude quake, which is lower than the first but caused all the drilling to be suspended. The drilling companies said it was a "freak event" that only happened when the process disturbed a fault line, want to start the drilling again. They are currently going through a process of deciding whether or not drilling will start again.

My opinion on the whole thing is that we can't ignore the earthquakes any longer and we have to come to the conclusion that fracking is directly associated with these reported quakes. The drilling companies should be responsible for any damages caused by these quakes and should have to research more into where to drill and where not to. However I think like most of the time, money and profits will win out and the process of drilling for natural gas will continue in England and Ohio. Unless there is a major earthquake that causes tremendous damage there isn't enough yet to scare these companies away. Also it is a lot better for the US and England to be producing energy on their own rather than having to import it. In this video, the CEO of Chesapeake Energy claims that we have twice as much shale gas in the US than they have oil in Saudi Arabia. The England article also claimed that they have discovered 200 trillion cubic feet of gas, which 10% of it could last the UK over six years.

So we have to make a judgment call on what's better for us right now and for the future, cheaper energy with the risk of earthquakes or importing energy for a much higher cost.

Question to the Class: At what point do you think we should say enough is enough? Say you were in placed in charge of deciding when to call it quits. Would you wait until a major earthquake, or you cut them off now knowing because the risks are higher than the rewards?

--Pratik Patel

Rainforest Deforestation in Uganda

2011-12-09T14:32:00.000-08:00

This article explained the issue of jobs lost by poor women on the Bugala Island in Lake Victoria of Uganda, to deforestation caused by new palm tree plantations which are used by the company Bidco to harvest palm oil.

Many women on the island are widows or have husbands that are fisherman who are gone for long periods at a time causing these women to find ways to make money. For some of these women, that means turning to commercial sex work or finding odd jobs like gathering and selling firewood. Deforestation of the island’s rainforests has made it very difficult for those women who gather firewood to earn enough money to feed their children. Other negative effects of the palm tree plantations are the fears of land used to grow crops being converted to palm trees, lack of wind buffers from deforestation causing dust to kick up affecting asthmatic residents, and soil erosion that could lead to the run-off of agrochemicals into Lake Victoria.

I can understand how officials can be too enthusiastic about the news jobs, activity, and revenue from the Bidco Company, to notice or care about the loss of jobs to the poor residents of the island. But they need to monitor the negative externalities of these palm tree plantations like the ones explained in the article. It seems like the palm trees could be placed in a way that minimizes the wind flow over the island, and proper buffers could be added to reduce the run-off of agrochemicals.

Though I feel bad for the woman who relied on gathering wood for a living, there are probably other ways of making a living on the island, possibly even on the plantations. They will just have to adapt to the changes brought by the palm tree plantations.

--Mike Hejduk

Fracking officially messes up the water

2011-12-08T19:19:00.000-08:00

After three years of study, the EPA's investigation into a watershed in Wyoming has linked fracking to filth in an aquifer. People have been making such claims for a long time (cf. the movie Gasland) but now they have the government making similar claims, so maybe industry will work a bit harder on preventing this, if that's even possible. There are a few caveats: the aquifer/ fracking link was found in a place in which fracking happened at different depths than it usually does, for example. Still, it's official.

***Class members: the first link is posted on Blackboard under Readings. I moved it up so it's the first item you see there.

Goodbye Solar Thermal energy production: we hardly knew you

2011-12-08T19:15:00.000-08:00

This article is about Google’s closure of a solar power project. Google started the program in 2007 and invested $168 million in Brightsource’s Ivanpah Solar Electric Generating System (ISEGS). Google abandoned the program citing that other institutions were better positioned to advance the research. The focal point of the ISEGS was a solar tower that stood in the middle of a field of heliostats. Heliostats are mirrors that are used to reflect sunlight to a specific point, in this case the top of the tower. Google’s abandonment of the heliostat technology illustrates a trend in the industry; photovoltaic (PV) cells are taking over the market. Lately the prices of PV cells have dropped, giving them an edge over heliostat technology.

Personally I see this as a last nail in the coffin for heliostat technology. Google is one of the largest and most profitable companies in the United States. If they cannot see an economic reason to continue to conduct research, then there is little hope for the technology. Overall I think it is a great idea for large companies to invest in solar power R&D. Private companies are usually better at sorting out the winners and losers when compared to the government. Hopefully investments like Google’s can lead to innovations that make solar power a more viable option in the near future.

--Alec Fields

Dumpster Diving

2011-12-04T12:20:00.001-08:00

Curious after hearing that a few Towson students have dumpster dived for groceries at the local Trader Joe’s, I thought this kind of activity must be pretty common in this economy and with rising food prices, so I did some research. First, I found a clever and entertaining documentary called “DIVE!” which confirmed that, yes, this is an increasingly common activity in the United States, but not just amongst college students. Jeremy Seifert, the creator of Dive!, and friends put food on the table by dumpster diving, and argue that doing so is helping to counteract the extreme amounts of food waste from grocery stores and by people who cling too tightly to expiration and sell-by dates. I also discovered through this assignment that our very own professor, James Manley, has dumpster dived for bread before.

Seifert is not the only one responding to rises in food prices that have lead to even more food waste. Pope Benedict XVI commented on food speculation in an address to the UN Food and Agriculture Organization that “poverty, underdevelopment and hunger are often the result of selfish attitudes which, coming from the heart of man, show themselves in social behavior and economic exchange.” According to The Wall Street Journal, the Pope’s views on food speculation are not aligned with the views of Ben Bernanke, who feels that increased demand in Asia is contributing more to the increase in food prices. For those who love data, corn prices have gone up by 61% in the past year. Coffee prices have risen by 46%. Investment in food has risen by 1900% in just five years (from $13 billion to $260 billion). I would argue that both the demand and heavy speculation can be attributed to rising prices; neither factor should be brushed off.

In preparation for World Food Day, 461 economists, according to National Public Radio, called for better regulation of speculation on food prices and other commodities, arguing that it has contributed to volatile price changes and global hunger. There is plenty of food out there, but the price is just too high, and the increasingly impoverished population of the United States and other nations are suffering because of the high prices. Who is benefiting? Obviously those making a profit from speculation, but some readers of NPR argued that speculation helps farmers feel more secure when producing and knowing that they will not be operating at a loss. Are the benefits to this small portion of the population worth the losses and hunger put upon the global population? Would you dumpster dive for food?

--Jade Clayton

Freeing Maryland of Nutria

2011-12-04T12:17:00.000-08:00

This article in the Baltimore Sun talks about how the invasive species, nutria has caused the eastern shore’s wetlands serious damage. Nutria is an orange toothed, web-footed beaver-like species that was brought to the United States from South America in the 1880s. They were brought over for the fur industry because they were cheap to feed. Unfortunately the industry later collapsed and the nutria were released into the wild, devouring the marshlands and reproducing rapidly.

In the past several years thousands of nutria have been hunted and killed to protect the wetlands. Blackwater National Wildlife Refuge, an area of 150,000 acres is where the nutria lived, and in the last three decades they destroyed over 5,000 acres of vegetation. Without the plant’s roots erosion occurs, which allows sediment s and pollution to flow into the Bay, as well as loss of habitat for many other species. An economic report was done, by Southwick Associates and they confirmed that Blackwater nutria cost Maryland $4 million annually and it will only keep increasing. The damage done by this animal costs more than removing it, so since 2000 Congress has provided a $1.5 million annually budget for its removal. Since 2002, almost 20,000 nutria have been killed in the Eastern shore, and so far this year Blackwater is nutria-free.

I personally hope Blackwater can stay this way, but I find it highly unlikely that they are completely gone forever. Nutria is an animal that burrows in the mud and hides extremely well like any other rodent. Also their rate of reproduction is very fast which is not good, and they will continue to destroy the marshlands and cause the Chesapeake Bay more damage than it already has.

--Kelsey Myers

CAFE standards

2011-12-04T11:53:00.000-08:00

An article in today's NYT by Thomas Friedman pointed me to this document published a few weeks ago by the National Highway Traffic Safety Administration. Apparently the auto industry sat down with the EPA and NHTSA and worked out a slow increase in required fuel efficiency to go into effect over the next 15 years. If all goes as planned, greenhouse gas emissions should be down significantly by 2025, reaching about 50 mpg as a fleet average for all cars and trucks on the road. That seems pretty huge to me, since the trends up until about 2008 were for more fuel consumption and not less. This more fuel efficient generation of vehicles will be more expensive, but they are expected to make up for those higher costs over time, saving the consumer an average of about $4000 (assuming gas prices stay constant over the next 10 years) by reducing the amount people are paying for gas. New standards allow for larger vehicles to still get lower mileage, so they aren't supposed to push everyone to drive a golf cart, but we'll see. The NHTSA document talks about both goals for the entire set of vehicles on US roads, but also sets goals for types of vehicles, such as 33 mpg for large pickup trucks like the Chevy Silverado.

Economists say that CAFE standards aren't the most efficient way to reduce fuel use- gas taxes are more likely to be effective partly because of the rebound effect. I also don't see much in the NHTSA document about safety: it's easy to make a highly fuel efficient vehicle if you build it out of fiberglass, for instance. You just don't want to be in a fiberglass car when you get hit by something more solid. It'll be interesting to see how manufacturers go about meeting the standards.

Inefficiency of Local Food

2011-12-01T09:22:00.000-08:00

Nice post over on the Freakonomics blog (by a guy in the program I graduated from!) about the true costs of the locavore movement. (That post is a short version of this 4-page description of a study he did.) While no one is opposed to people growing vegetables in their home gardens, Steve Sexton argues that a large scale shift to local food would be disastrous for several reasons. Here's why.

Right now, most crops are grown where conditions fit the crop the best. For example, conditions in Idaho suit potato production, so they have specialized in growing potatoes. If people were to shift to producing them locally, they wouldn't be as productive, because the conditions aren't as well suited. So if we want to eat anything near the same amount of potatoes that we eat now, we could, but it would be more expensive from many perspectives.

1) It would require more chemicals, such as fertilizers and pesticides, to get the potatoes to grow in places that aren't so suitable.

2) It would require more land, since almost all land outside of Idaho produces a smaller amount of potatoes per acre than in other places. (Potatoes are just an example: the 4-page version of the study talks about corn, soy, oats, and milk.) More land used for farming means:

3) Cutting into wilderness

4) More spread out housing, which means

5) More gas burned as people have to drive more.

6) Finally, getting rid of "big ag" means higher prices on food.

While higher prices of corn will discourage us from producing tons of high fructose corn syrup, which may have positive effects on health in this country, higher prices on corn are potentially a nightmare for people in poor countries.

Campus recycling

2011-12-01T08:17:00.000-08:00

Just wanted to make sure you had seen the university's "Go Green" web page, which features a recycling video (featuring one-time ResEcon student Malinda Ross) which, in turn, has (at the end) a link to this video of what goes on at a recycling plant.

Somehow, objectives of the green movement have become enshrined as goals of the administration. Instead of people camping out on campus with signs and sleeping bags, the banner has been taken up by the people in charge. That's less likely to make the news, but almost certainly more effective than the demonstrations.

Environmentally unfriendly jobs booming

2011-11-28T13:32:00.000-08:00

This article claims that the key to job creation in the U.S. is non-renewable domestic energy in the form of natural gas and oil. The industry has grown 80% more jobs and 20% of total new net private jobs since 2003 are in the domestic oil and gas industry. The author credits the boom in non-green jobs to new technologies like horizontal drilling and hydraulic fracturing that are renovating the harvesting processes in both oil and natural gas. Areas in the U.S. seeing the job boom are North Dakota with 200 oilrigs producing just under half a million barrels/ day and a subsequent 3.5% unemployment rate. Pennsylvania Marcellus shale formation is credited with creating 18,000 new jobs in the first half of this year. I understand where the author is coming from when he/she criticizes Obama administration and the political left for proposing a 5-year plan to ban drilling on outer shelf and delaying the Keystone pipe-laying project. However, I am hesitant to say that more jobs now is more important than a cleaner planet for future generations. All in all I do not agree. Although investing in renewable energy is not yet cost effective, I think is still an important option in terms of a healthy earth. Even though Obama’s green loan program has failed to create the 65,000 estimated jobs (only 3,500 have emerged from the $38.6 billion loan) I think it is important that the research continues hopefully resulting with a viable green energy option in our country’s future.

~Natalie Ciletti

Movies!

2011-11-24T05:01:00.000-08:00

In our class we just completed a movie assignment with some pretty amazing results. I'm impressed by the work students put in to (in most cases) get interviews and then edit them into short, attractive, often amusing short videos. Take a look!

Climate Change and the Chesapeake

Canary in a Wet Mine: Fish & the Chesapeake

Valuation of the Chesapeake Bay

Agricultural Effects on the Chesapeake Bay

Clean Energy and the Chesapeake Bay

Air Quality and the Chesapeake

Bayline: Boats on the Chesapeake

Fishing & regulations

2011-11-22T14:36:00.000-08:00

Interesting article on cod fishing in Gloucester, Mass. Regulations limiting catch hurt people trying to make a living by fishing, and it's really hard to hold people to limits. It can be done, but in this case doing so provoked a political backlash. In the end it seems that catch shares (ITQ's) are the way things are going to go, but systems don't change lightly.

Since there are externalities in this "commons" situation, using catch shares or taxes are the way to get to the social optimum. It's not easy to figure out what that social optimum is, though, and spreading the pain around so that it doesn't hit anyone disproportionately is virtually impossible. Clearly effective regulations are necessary, but also humane implementation of the regulations is something to strive for. There's already enough pepper spray in the air these days!

Sprawl is good

2011-11-22T12:16:00.000-08:00

So contends Marta Mossburg, op-ed writer for the Sun in this column blasting Gov. Martin O'Malley for his PlanMaryland scheme. She raises a few good points, and while I don't agree with her overall let me reiterate some of her points.

I don't doubt that people are moving away from Baltimore City, and I'll believe her that people are also leaving PG and Montgomery counties. Could this be because people prefer to live in rural areas? (She also says that more people have moved to rural areas, but this looks to be largely because of the growth of Aberdeen Proving Ground.)

She makes a valid point that O'Malley's shifting state money from rural to urban areas benefits him politically: Democrats tend to be concentrated in such areas, and this can be seen as an excuse to send money to his supporters. On the other hand, moving money from areas where there are few people to areas where there are more people could also be seen as simply efficient: investing in public goods that benefit the most people is generally a good idea, though some public goods such as wilderness area do not lend themselves to urban investment.

Her next contention is that high density is bad because it tends to produce highly concentrated pollution. I won't argue with that either, except to say that pollution abatement measures can alleviate some of that. For example, urban areas are more likely to impose more stringent air quality controls on vehicles. However, ultimately she's right: concentrated people produce concentrated pollution, and that is expensive to deal with. The question I'd ask is what her preferred alternative is. If everyone is commuting by car from a rural area to an urban job, the total amount of pollution is almost certainly more, though it's more distributed. And though she dismisses climate change as "subjective," I am not as sanguine about the issue.

Her dismissal of Maryland emissions and of mass transit in general don't impress me, but she is more convincing when she says that limiting growth will raise housing prices. That seems likely to me: any kind of an increase in restrictions is likely to raise prices. On the other hand, she ignores prices completely when she says that increased density means more pressure on existing systems. So, the implication is that it's cheaper to build new ones than to repair the old? That doesn't make much sense.

It's expensive to internalize externalities, no question. That doesn't mean that it isn't the right thing to do.

Tax on a Christmas Icon

2011-11-16T21:06:00.000-08:00

The Federal government is thinking of imposing a 15-cent tax on Christmas trees this year, in an attempt to improve “the image and marketing of Christmas trees.” The secretary of agriculture was going to appoint a Christmas Tree Promotion Board who was going to be in charge of researching and designing new strategies to strengthen the industry of Christmas trees in the market. The 15-cent tax was going to be levied on the sellers of fresh-cut Christmas trees, but only for sellers who met or exceeded the sale of 500 trees a year. But, the tax could be easily passed on to the consumers, who are already in a financial bind coming into the holiday season because of still high unemployment rates.

The Obama administration decided to delay their proposal for this tax the following day, as there was such a large outcry from the public. The public was upset and so was the Christmas tree industry, as many in the industry did not even want the tax. The industry has tried three prior times and after a period of time the revenue of the tax decline to the point that the programs were no longer effective to run.

This tax can be seen as another attempt by the Federal government to have a say in the market operations in the United States. The government is already extended itself further and further, while there is still an issue of a large national debt. The implementation of a tax on Christmas trees can also be seen as an infringement from the government on the ability of its citizens to choose their own religion freely. What is special about the Christmas tree to those who do not celebrate Christmas? Why should there be a tax to improve the image of the Christmas tree if not everyone cares about Christmas trees? These are the gray areas that the federal government needs to be cautious proceeding on, especially in an economically tight time where many are not happy with the government as it is.
--Meredith Springsteen

FUEL ECONOMY RULES TO COST $157 BILLION

2011-11-16T19:46:00.000-08:00

That's the headline of a Business Week article. You have to wait to the bottom of the second paragraph to find out that,"Benefits of $419 billion to $515 billion in fuel savings would offset the costs." Seems like a net benefit of around $300 billion would be a good thing, but maybe that's just me....

This article is the first for the last quiz. You don't need it or anything more recent for the 11/18 quiz #4.

US = Spain?

2011-11-12T05:29:00.000-08:00

An article in today's NYT looks at the large number of subsidies available for producers of solar and other alternative energy and concludes that the US will see real benefits from the major investments that have been made in these areas over the past few years. However, the glut of spending, mostly from the stimulus funds spent over the past few years, has been pretty inefficient: industry could have done more solar with less money if the incentives had been structured better. Let's just hope we're not building a house of cards like they did in Spain!

Storm-Water Fee Proposed in Arundel

2011-11-12T05:02:00.000-08:00

Politicians are trying to solve the issue of storm-water that runs off of streets and parking lots. Nearly 1/3 of the nitrogen pollution in the Chesapeake Bay that comes from Anne Arundel County is estimated to come from storm run-off that washes fertilizer, pet waste, and other organic debris into local water sources. County council member Chris Trumbauer is proposing a fee on all property owners to finance the pollution controls needed. This $35 annual fee on homeowner’s properties will hopefully help to reduce storm-water runoff. Nonresidential properties will receive a fee based on the amount of rooftops and pavements they have. The fees would go into a fund dedicated specifically to storm-water controls, and would not be used for any other purposes. The money would go towards retrofitting storm drains, replacing pavement, and creating roof gardens. Trumbauer believes that the profit made from this bill will create local jobs and clean up the waterways in this community. The state of Maryland is being pushed to comply with the EPA’s “pollution diet” and every county will experience some sort of funding challenge.
I think that it is a good idea for homeowners to pay a fee for the storm-water runoff from their property, but I’m not sure how well the residents are going to accept it. If the nitrogen waste is caused by their own fertilizers, pet wastes, and organic debris, then it is good that the homeowners will finally become aware of the negative externalities that their wastes have on the environment. It’s important that the Chesapeake Bay becomes less polluted, and Trumbauer has come up with a smart idea for dealing with the funds that are associated with improving water quality. Do you think that residents will agree to pay this $35 fine, or will they fight it?
--Kristen Eisemann

BCA on the EPA

2011-11-12T05:00:00.000-08:00

The House Republicans plan to cut more than $3 billion dollars from EPA funding (about one third of their budget) would have a major impact on the agency's plans to reduce carbon emissions and limit water pollution. EPA administrator Lisa Jackson said that, “Big polluters would flout legal restrictions on dumping contaminants into the air, into rivers, and onto the ground, […] There would be no EPA grant money to fix or replace broken water treatment systems. And the standards that EPA is set to establish for harmful air pollutants from smokestacks and tailpipes would remain missing." Without the regulations to control pollution and money to fix these plants, people are at a greater risk to contaminated drinking water. Many Republicans feel that the EPA regulations go to far and make it very difficult for people to make a living. However, the regulations are in place to help protect people. The cost-benefit of enacting the 1990 Clean Air Act would be about $2 trillion by 2020 but it would save about 230,000 lives. So I guess the question is: Is the cut to the EPA’s budget worth it to save that money if there is a greater risk to public health? I personally do not think it is. I realize that the country is in a great deal of debt, but citizens lives should not be put in greater danger in order to save some money.
--Sara Poe

Big Action Down Under

2011-11-10T10:39:00.001-08:00

In addition to implementing a carbon tax, Australia is proposing a law that would force cigarettes to be packaged in plain boxes. About 75% of the new boxes would be covered with graphic warnings about the effects of smoking, leaving much less space for trademarks and such. Unsurprisingly, the tobacco industry intends to sue.

Nearly 100 years ago US law established a doctrine of "clear and present danger" to describe the situations in which the right to free speech might be abrogated. My best reading of Wikipedia tells me that in 1969 the standard was changed to ban only incitements to "imminent lawless action." Obviously Australian legal proceedings will proceed from a different background, but the question is intriguing: if tobacco consumption is legal but expensive to the state, can governments limit advertising?

Dirty Deeds Done Dirt Cheap

2011-11-10T08:06:00.000-08:00

Business Week seems to have forgotten the second half of the title of the iconic AC/DC song in this long but interesting article on the changing face of the American work force. The new heavy-handed restrictions on immigrants in Alabama have a variety of problems, but one of them is that the Alabama economy still relies to a large extent on cheap labor. They aren't the only ones- agriculture and aquaculture operations all over the US, including crab pickers on the Eastern Shore of our home state- will take advantage of the availability of Latin American workers who are able to come north to work for low wages as "guest workers" doing jobs the natives don't want.

I confess that I stopped reading the article when they started talking to a sociologist about the stigma associated with doing dirty job, and how once a job goes to immigrants it doesn't go back. No doubt I'm blinded by my training as an economist, but the issue here isn't that the job is "dirty," whether by association with dirt itself or by a despised group of people. The issue is that the jobs don't pay enough for people to put up with the physical punishment associated with doing the job. Americans do some nasty, nasty jobs, and they do them because they pay. The aquaculturist in the article complains that he "can't pay people $13 an hour" because of overseas competition.

I hate to be cold-hearted, but if you can't stand the heat, stay out of the kitchen. Find a niche, dude- try raising your catfish on organic meal and then charge a premium price when you sell them. Then maybe you could afford to pay your workers a decent wage, and you wouldn't have to go try to convince people to come work for you out of the goodness of their hearts. (The employer hasn't bothered to learn the language of his workers, but that's another story.) Try switching to shrimp, which is also a product with heavy international competition, but one that still goes for a good price.

I can't say I like the means by which this end was achieved: the racially-tinged regulations make me sick to my stomach. But if it brings an end to the economy of serfdom, that would be a lotus flower: a beautiful thing rooted in muck.

Menhaden Restrictions... for real!

2011-11-10T08:01:00.001-08:00

The headline has it as, "Menhaden harvest limit sharply cut," but is 5% really a "sharp" cut? I'd call it more of a trim, but I'm not that up on the science behind this one. Anyway, people seem pretty happy about this, so I guess I'll take it for what it's worth. Hopefully this will mean more, healthier stripers and osprey up and down the coast, and maybe even less algae clogging up the Bay, creating fewer dead zones. It could also cost some Virginians their jobs, if Omega Protein needs fewer employees. Time will tell.

Sharing the costs

2011-11-05T18:12:00.000-07:00

In 1995 and 1996, conservationists' lawsuits to bring back wolves in the Yellowstone Park area (in Idaho, Montana, and Wyoming) succeeded: wolves were reintroduced after having been poisoned and trapped almost out of existence. The species thrived, paring back excessive growth in elk and coyote populations, but also paring back growth in nearby ranchers' herds. Today, ranchers contend that, "People who want it here should share the costs" and are in some cases taking money from conservation groups to pay for measures like electric fences and mounted riders. However, such measures are often inadequate, and other times, ranchers have taken conservationists' money and put it to other uses, such as hiring helicopter-riding wolf hunters.

A complicated problem with no easy solution; at least sharing the costs seems like a good way to start.

Menhaden Restrictions Again Considered

2011-11-02T19:28:00.000-07:00

Nice story in the Sun over the weekend on some restrictions being suggested for menhaden. Everyone who has studied the subject is in favor of restricting catches, except for basically one group: industry. Shocker, I know. Actually, Omega Protein continues to surprise me. That one firm harvests 80% of the menhaden catch, and they don't have any competitors, so you'd think that they would be interested in maximizing their long-term return by getting the population to a level that would allow them to have a large, sustained catch. Instead, they seem determined to drive themselves out of business by sucking up all the fish as quickly as possible. The only way this approach makes sense is if they're strategically competing against someone else- say, environmentalists- and they sense that their true best outcome will be achieved in a balance when they are inevitably forced to compromise. If they can pull that off, then they get the best of both worlds! I just don't know why they have to get to their optimal outcome that way- why not just accept reality (i.e. the work of these scientists) and go to that best place sooner?

Fracking Water in Niagara Falls

2011-11-01T09:03:00.000-07:00

With New York State looking into potentially allowing hydraulic fracturing, or fracking, as a means of obtaining natural gas, Niagara Falls is attempting to position itself as a town on the cutting edge of this new industry. Fracking involves pushing millions of gallons of water deep into the bed rock where there is shale. This water fractures the shale, allowing the natural gas that is trapped underneath to exit via the well. The water that was used comes out extremely salty and laced with poisonous elements including barium, strontium, and radium. This water needs to meet EPA standards, which are currently being reworked, before it can be sent to municipal water treatment plants to be released back into regular water supplies. Niagara Falls has a water treatment plant, which was originally designed for the area’s chemical industry, that can handle the waste water, and clean it to where it meets EPA standards. Since the chemical industry has pulled out of Niagara Falls, the plant has been operating at a fraction of what it can handle, prompting the plant owner and local government to look into the economic possibility of using the plant as a site to clean fracking water.

Currently Niagara Falls is a city of only 50,000 residents, which has been, and is continuing to decline. Also, the current per capita income of the city is only $19,000 compared to the rest of New York's average of $30,000 income. These factors have led to a push for the use of Niagara Falls’s plant. Opponents point to the Love Canal incident of the 1970s, when the Hooker Chemicals and Plastics Corp. dumped waste chemicals into the abandoned Love Canal. These chemicals were found seeping into backyards and basements throughout Niagara Falls. The situation got so bad that President Jimmy Carter declared the area a federal emergency in 1978, and the Superfund Cleanup Act was passed in 1980. This recent environmental disaster is the reason why many are uneasy about bringing in more potentially dangerous waste products.

The problem in Niagara Falls is an interesting one. On one side we have a city that was once a popular destination for honeymoons and family vacations declining at a staggering rate. And on the other side, we have the potential for another environmental disaster that could rock a town already struck by one in recent memory. Personally, I too have mixed feelings about it for the same reasons that are listed above; however, I do believe that the situation is much safer now than it was with the Hooker Corp. The EPA has already begun legislation to prevent toxic waste water from re-entering the water supply. The major downfall of this proposal that I see is the current condition of the Niagara Falls plant. It does not say how new the plant is and how much, if any, retrofitting the plant will cost. This is the major unknown. If the plant is up to code, or perhaps even above standards, I think that this would be a good idea; though, if the plant needed extensive retrofitting, or if the plant just barely met standards, I would think that the plan should be scrapped.
--Colin Alban

The Questionable Economics of Desalination

2011-10-30T12:25:00.000-07:00

As climate change destabilizes weather patterns, many foresee shifts in the availability of water. Floods like this year's horrific deluge in Thailand may become more common, while other places like Central Asia may lose access to what little water they currently have, perhaps leading to wars over water. If all this comes to pass, water pipelines may take their place next to oil pipelines- using the same corridors, just running the other way- if the technology behind desalination becomes economic. China is investing a large amount of money here just as they have done in solar panels. Right now it's far from being worth the cost, but if technology ratchets up a few times, who knows? China could have another Next Big Thing on their hands.

Yergin on the future of oil in the West

2011-10-29T05:49:00.000-07:00

The "Go oil!" guy has an article in the Washington Post this morning about how deep sea oil in Brazil, oil in shale formations in the US, and the Canadian oil sands are increasing in prominence as providers for US oil. While increased dependence on more stable producers is a good thing for us, the less dependable sources produced in unstable and/ or highly autocratic regimes in the Middle East are still going to have plenty of customers as Asian demand picks up.

While his cavalier attitude toward CO2 emissions seems misplaced, he's pointing to a lot of very real recent developments. The market is indeed moving this way, and effective planning needs to accept these realities.

Guess what? Taxes are going up!

2011-10-27T08:22:00.000-07:00

O'Malley and the legislature are looking to raise fees for transportation, from a 15-cent increase in gas taxes to higher charges for bus and rail passengers. Car registration fees would also go up.

If that's the cost of maintaining and improving our infrastructure, I don't see much of an alternative: better to pay now and not when there's a bridge collapse. We used to get a good-sized chunk of money from the Federal Government, but that's drying up and we have some serious needs that even this package may not address. The "Purple Line" in the DC area is on us here in Maryland, and that looks to be a few billion dollars, which is in fact far more than this new fee would raise.

Stuff is expensive!

Externalities of aquaculture

2011-10-27T07:59:00.000-07:00

Aquaculture has been targeted as the "next big thing" for awhile, since it lets us produce a lot of protein without pillaging the oceans for wild fish. People need protein, and cheap sources like this are rare.

Of course, everything has its costs, and another one may be just becoming apparent. A virus that became common in Atlantic salmon aquaculture may have migrated to the Pacific. That would be bad.

I'm otherwise in favor of aquaculture, though: people need protein, and particularly if fish can fed on grains (see this previous post) then it could potentially be pretty important, particularly in places like southeast Asia which rely on fishing. As always, trying to recognize the costs and maximize the net benefits, and the costs just went up a bit.

"Organic" Means Less than you Think

2011-10-25T10:13:00.001-07:00

A blogger for Scientific American has written this amply-footnoted article debunking much of the mythology that's grown up about organics. It's an eye-opener! The author claims that the point is not to be anti-organic, but just to clear up some widespread myths.

Myth #1: Organic farmers don't use pesticides. Most do, in fact, use pesticides: they just are only allowed to use "natural" pesticides, which may be just as nasty.

Myth #2: Organics are healthier. Conventional crops have more nitrogen while organic crops have more phosphorus and acidity, but nutrient content is identical.

Myth #3: Organics are better for the environment. I personally never believed the health claims, but I thought the environment was where the benefits were. The author grants that using fewer synthetic pesticides is a good thing, for sure. However, she argues 1) that by blasting plants with Bt and other "organic" pesticides, organic producers are still dumping nasty stuff into the environment; 2) that ignoring GMO's means we end up using more pesticides and other resources in the long run, and 3) organics are 20% less productive, yielding less per acre than conventional crops, so buying organics means voting to dedicated more land to agriculture instead of leaving it wild.

Myth #4: It's all or none. She notes that both organic and conventional farmers have positives, and that open-minded environmentalists will work toward improving both.

For a (non-specific) response, I went over to nutritionists Marion Nestle's web page, where she has a FAQ that addresses the issue. She says only that her personal investigations conclude that the USDA Organic label is a good thing to look for. "When you choose organics, you are voting with your fork for a planet with fewer pesticides, richer soil, and cleaner water supplies—all better in the long run." I think the author of the first piece would agree for the most part, but more information is definitely useful.

Green Conservatism

2011-10-24T18:18:00.000-07:00

Here's an interesting article pointed to me by a friend: it's about the overlaps between environmentalism and conservatism. I like parts of it, but other parts are curious.

They rightly note that the market solution to pollution isn't to try to pick winners, a process that failed with Solyndra. However, the second half of that equation is that the "right" answer according to these criteria is to impose a carbon tax, since incentives matter and the goal of decreasing pollution is more important than the means we use to get there.
The EPA is over-funded? Hm. No doubt some portions of that bureaucracy could be streamlined, but this article says that their worst work has benefit to cost ratios of 10:1. (h/t Environmental Economics) Sounds like these two commentators need to have a powwow. I'm sure both agree that in the end what matters most is growth in the economy- nothing's better for the environment than a recession. What matters second most is the private sector's implementation of better technology, and that's usually encouraged via... taxes and/ or subsidies. Could there be a theme here?
I fully support the conservatives on the costs of water and tradable fishing shares. People should face the true costs of their actions and should benefit when they do the right thing, like cutting back on fishing.
On air quality, this conservative site supports cap and trade. I don't know why more people don't.

It's always seemed clear to me that someone "conservative" should be for "conservation." Am I wrong?

Fat Tax on Danish

2011-10-24T13:44:00.001-07:00

Marion Nestle calls attention to the new fat tax promulgated in Denmark, which is designed to raise money but also to discourage consumption of unhealthy foods. Her analysis is by and large pretty good, with one exception. She says, "Leaving aside the usual criticisms, such as the impact on poorer people, I have a different reason for being troubled by tax interventions. They aim to change individual behaviour, but do little to change the behaviour of corporations that make and market unhealthful products, spending vast fortunes to make them available, desirable and socially acceptable."

Taxes, by raising prices, discourage consumption, it's true, but you know what? Consumption makes a difference for producers, too: if they aren't selling anything, profits go down. That's hitting corporations where it matters most.

Solar Panel Prices

2011-10-24T12:38:00.000-07:00

Speaking of backstops: "In Hawaii, Italy, and other places with abundant sunshine and high electricity rates, it’s already cheaper for consumers to install rooftop solar panels than to buy power from their local utility. By 2015 panels will have reached that point of so-called grid parity in much of the U.S., Europe, and Japan, Bloomberg New Energy Finance predicts. Over the past two years, BNEF says, solar thermal plants have trimmed the price of their power by 3 percent, to about 27¢ per kilowatt hour, while electricity from photovoltaic installations has plunged 41 percent, to 17¢." --from Business Week

***This is the first blog entry for quiz #4. You don't need it for quiz 3.***

Electric Slide

2011-10-21T08:48:00.000-07:00

Many utilities in the U.S. have been operating as monopolies. Aspiring electricity providers have been barred, first by federal regulations, and then by certain states. There are only 15 states in the U.S. that provide customers with any form of choice when it comes to the provider. Texas is the largest electricity generating state in the country. In addition the state ranks number one in providing a choice when it comes to electricity. Half of all customers in Texas are eligible to switch electricity providers, and nearly 4 million, or 60%, have already done so. By allowing the customer to choose their provider the state has given rise to innovation and efficiency. In 2005 Texas achieved their goal of producing 2,000 MW (megawatts) of new renewable energy, four years ahead of their scheduled date, 2009. Continuing on the path of triumph Texas has raised the goal to 10,000 MW by 2025. Deregulation encouraged companies to invest in this new beneficial energy, and thus new companies such as Green Mountain Energy have emerged. Rates in Texas have trended downward, and are today at 11.28 cents/kWh, below the national average of 11.58 cents/kWh.
So with all of these benefits and savings why are the majority of U.S. utility markets regulated and monopolized? There are a few potential draw backs to a competitive market. Other than certain companies losing their power of monopoly the biggest factor is the direction that the market would go. As renewable energy becomes more reliable and efficient the cost will decrease. In the meantime it is still a very expensive energy to invest in. New companies that are rising in the renewable energy field require a large input of private capital. Government subsidies help to enable and encourage these companies to continue. If these subsidies were lost or decreased the market for renewable energy would take a large hit and slow the growth of the sector significantly. If this happens many companies in a free market would still strive to provide the cheapest energy source, and that resource would not be renewable in the case of a loss of government subsidies. Without the subsidies many companies take gracious financial offers from other countries such as China to relocate in an effort to attract more clean energy. If the budget is revised or changed and there is a loss of funds for subsidies not only will the private companies have wasted significant amounts of money, management time, and focus, the market could also take a fall back into non-renewable energy.
With that in mind does the U.S. stand to benefit from a competitive utility market with the current economy, or would that drive the country further into a reliance on coal and oil, and distrust of renewable energies.
--Caleb DeMario

Why Congestion Pricing is Always Unpopular

2011-10-20T13:24:00.001-07:00

Nice exposition by Felix Salmon on traffic. Since people get used to paying tolls, car licensing fees, etc., the idea is that to get people to pay attention to a fee enough to change their behavior, it has to hurt just a little more than usual. So to make "congestion fees" actually work, leaving easily jammed places comparatively free of traffic, the fee needs to be constantly shifting, not just another cost of daily driving. Since it's basically designed to annoy, it annoys people, and has a tough time becoming law. Too bad, since they do work!

Economics of Cleaning the Chesapeake

2011-10-20T09:05:00.000-07:00

A nice little summary of the issues associated with improving water quality in the Chesapeake is posted here. Below are some quotes about the problem; the article also presents several possible solutions. (If you're in Resources class, please read the whole article.)

"Two basic issues must be addressed if water quality goals are to be achieved. First, the regional nutrient budget is out of balance: more nutrients, primarily in the form of animal feed, are being brought into the watershed than can be assimilated, in the form of manure, by the crops grown. Second, not enough farmers are using the most effective—best—nutrient management practices. The persistence of these problems is not entirely due to a lack of resources. In the Bay, as elsewhere in the United States, water quality protection in agriculture has largely been pursued through voluntary strategies, supported by government financial and technical assistance. Only recently have large animal intensive enterprises been subjected to National Pollutant Discharge Elimination System (NPDES) permit requirements..."

"For a voluntary program to be efficient, it must enroll farmers who can provide abatement at least cost. Current USDA cost-share programs are not designed to do this."

Approaching Climate Change

2011-10-20T09:02:00.000-07:00

This article by Elinor Ostrom, the 2009 winner of the Nobel Price in Economics argues that we need to confront climate change on many different levels, all at once. I'm really not versed in behavioral or political economics, but these areas are fascinating and make important contributions to policy issues like this one.

Perspectives on Soda Taxation

2011-10-20T08:48:00.001-07:00

An interesting issue of Choices magazine came out on the subject of soda taxes. Choices is a very user-friendly publication of the Agricultural and Applied Economics Association. An introduction to the special issue is located here. The first article, written by public health professionals, is cautiously supportive of an increased tax, though they note that taxing soda may encourage shifts to other types of high calorie beverages. The next, written by some health economists, looks to the parallel with tobacco taxes for inspiration. The third article, written by a public health specialist, notes that effects on obesity are likely to be small, again in part because of substitution effects. The fourth article takes aim at the substitution effects, arguing that they are not likely to cut effectiveness of the tax, which should still generate a lot of tax revenue and cut calories consumed. A fifth (by an agricultural economist) looks at the large role advertising plays in soda consumption, and the last is written by an industry advocate, arguing that the problem is one of personal choice and responsibility, and that it's wrong to use taxes to push people one direction or another.

Dumping Solar Panels

2011-10-20T04:27:00.000-07:00

Some solar panel manufacturers in the US are suing China through the World Trade Organization, complaining that the price of solar panels being sold in the US by Chinese exporters is below the cost of production. It's illegal to sell goods for below the cost of production because that's a practice used to drive other companies out of business, after which companies can run up prices and make a huge profit as monopolists.

The tremendous drops in solar panel prices have been a wind at the back of those who would increase solar energy's share of the energy market, but they may prove to be short-lived. If this suit goes through, prices will surely rise, helping those companies who produce solar panels in this country but hurting consumers in the short run. In the long run, prices should still drop, but not as quickly. Sorry, solar panel installers, consumers, and solar energy advocates!

Living Buildings?

2011-10-19T20:05:00.000-07:00

One potential technological solution to CO2 accumulation: coral-like "living paint" that could transform atmospheric carbon into solid matter to "heal" cracks in buildings. It's not yet economic, but it's fun to think about!

Climate Change: The Ultimate Impact

2011-10-18T10:10:00.000-07:00

An article over at BBC News discusses the effects of climate change, including:

Higher rates of malnutrition, as agriculture struggles to cope with changing conditions
Higher rates of disease, as new geographic areas become accessible to bacteria and viruses
Higher likelihood of conflict, as dwindling water and other resources force people to look to new sources and/ or take from their neighbors
Energy prices should jump, as resource scarcity and associated conflict makes things worse in places like the Middle East, where tensions are already high
Most devastating of all, Starbucks warns that climate change is expected to threaten the earth's coffee supplies in 20-30 years time.

Now THERE'S a catastrophe waiting to happen.

Banning Water Bottles?

2011-10-15T14:02:00.000-07:00

Not quite yet, but the O’Malley administration has made a big step forward in cutting back on the bottled liquid. They have decided to no longer supply bottled water to any state facility where tap water would be available. Maryland is now the 6th state to join the movement of lessening the supply of water bottles within the government. The move has been supported by environmentalists as well as economists and especially by the group Corporate Accountability International who argue that bottled water is wasteful and undermines support for municipal drinking-water systems. So far there is no really clear understanding of just how much money this will save for Maryland but DNR representative Richard Norling has stated that Maryland paid $200,000 to Deer Park in 2010. In buildings or sites where taps or water fountains are not available to people, bottled water will still be supplied as well in emergencies. It will be up to agency heads to decide whether or not bottled water will be available in vending machines. This is definitely a positive move for the environment and hopefully an equally good move for the economy. I guess we’ll have to see what this extra money will go towards.
--Emily Beckhardt

Baltimore County leak leaves Exxon with bill for $1 billion

2011-10-15T13:55:00.000-07:00

In 2006 a gas leak in the community of Jacksonville, Baltimore County Maryland, resulted in 26,000 gallons of fuel entering the ground underneath one of Exxon Mobil’s local stations. The gas eventually ended up in the community’s water supply resulting in significant contamination. Jacksonville does not have a source of public water and extracts all of its water from underground wells. This gas leak lasted for a total of 37 days. As a result of this leak, Exxon Mobil was sued by more than 160 homeowners. Exxon was eventually ordered to pay more than $1 billion in punitive damages and $495 million in compensatory damages. This gas leak had a very big impact on residents and small business owners of Jacksonville. For weeks they were unsure whether or not the water was contaminated or if it was safe to once again drink. Residents and business owners both had to spend a great deal of money on other sources of water during this period. This gas leak not only damaged the environment but it really disrupted the community of Jacksonville in many ways. People were forced to find alternatives and do whatever was necessary in order to obtain the water they needed for their everyday activities and businesses’. There was also a stigma from neighboring areas about Jacksonville after this and people did not trust that the water was safe for a long time. Exxon’s punitive damages payment is the 21st largest in history. This verdict will hopefully remind other companies similar to Exxon to ensure the necessary safety precautions are in place to prevent a catastrophe similar to this from happening again. This gas leak clearly affected all different types of people and hopefully it will lead as an example of what can be prevented in the future by ensuring proper safety regulations.
--David Dierking

Australian Carbon Tax

2011-10-15T13:52:00.000-07:00

Australia is getting ready to pass a national carbon tax that would start in July 2012 with a cap and trade program starting in 2015. Right now Australia is the biggest carbon emitter per capita in the world because 80% of its electricity is produced by coal. To start, polluters would be taxed about $23 per ton of carbon emitted. However, some of the highest carbon emitters like aluminum and steel manufacturers would receive free carbon permits. Industries like coal and steel would receive government subsidies to reduce their remissions and find cleaner technologies. A fund of $10 billion would be set up to encourage investment in renewable energies. Companies would be able to buy carbon permits from the Carbon Farming Initiative, which would give carbon permits to farmers that offset carbon emissions by doing things like planting trees, cutting methane emissions in livestock, and reducing fertilizer use.

I think that is unfair that some of the highest carbon emitting industries are receiving free carbon permits or being subsidized by the government. There is therefore less incentive for them to develop cleaner technologies because they are not paying the true cost of their carbon emissions. However with Australia relying so heavily on coal for power, the government has to start somewhere. I believe that they are off to a good start and because of initiatives like the Carbon Farming Initiative the government may be able to reduce the subsidies they provide to industry in the future.
--Lauren Davidson

European Airlines Taxes

2011-10-15T13:49:00.000-07:00

In an article found in the New York Times it was reported that an advisor for the European Court of Justice published an opinion that supported the proposed law to charge the airlines for their green house gas emissions. It was proposed that the airlines that fly in and out of Europe should be held responsible for their emissions and therefore charged for them. This would cause the true cost of air travel to be realized in that the airlines would be held responsible for the pollution that they are putting into the atmosphere which can be considered an externality. Airlines say that this would infringe on the sovereignty of the nations that they are based in and would go against the so called freedom of the high seas. However the law is not set in stone yet and would provide some room for negotiations such as only charging flights that leave Europe or not charging the airlines for the emissions that they produce outside of European Union air space. The article says that this would cause a price increase for trans-Atlantic one way airfare of only $2.70 to $16.15; however the airlines say that the price increase would be much higher than that.
I feel that this is a good way to make the airlines responsible for the emissions that they produce. However I think that a much bigger tax is going to be required before it would be advantageous for the airlines to make investments in a cleaner energy source. Such a small price increase would not deter enough people from trans-Atlantic flight for the airlines to lose enough profit and thereby force them to look into alternate forms of power. But if this system were enacted worldwide it might produce enough lost profit that the airlines would be pushed to develop a system for fueling their planes that had much less environmental impact and thus lower the external costs of operating and as a result the price of an airline ticket.
--Matt Timmons

Romney's environment/ business balance

2011-10-15T13:43:00.000-07:00

Mitt Romney, a GOP candidate for the Presidential Election of 2012, is under fire (class only link) for his wishy-washy environmental stance. After hiring Douglas Foy, a Democratic environmental activist, Romney seems to promote good environmental choices. However, as the 2012 election draws nearer and Romney is under more pressure from rival candidates, he seems to change his tune. Mr. Foy was hired to supervise environmental initiatives under Governor Mitt Romney. "He said that Mr. Romney's environmental record fits 'the Republican tradition in Massachusetts'' of 'fiscal conservatism and good governance, doing more with less'." His opponents, however seem to disagree. During his term as governor of Massachusetts, Romney made strides against CO2 emissions by making Massachusetts the first state to set CO2 emissions limits on power plants. According to the article, "Mr. Foy said that as he was negotiating a cap-and-trade regime with other states, Mr. Romney made it clear he believed in human-caused global warming and wanted a policy response. At the time, many conservatives were open to a cap-and-trade system, seeing it as a market-driven solution to limiting emissions." It seems however, that the governor was unsure of how the carbon-trading system would impact the local economy. Instead of pushing for radical environmental regulation, Romney pushed negotiators to build business-oriented provisions -- "such as triggers to cut off trading if the price of energy rose to certain levels." It seems Romney was not happy with this still, because after instructing Mr. Foy to negotiate an agreement to promote business, "Romney ultimately backed out, saying the deal lacked a "safety valve'' to cap plant payments if they exceeded emission limits."
--Ashley Anthony

Disappearing Beaches

2011-10-15T13:37:00.001-07:00

This article talks about how climate change is increasing water levels as well as the severity of storms. This may seem bad enough without taking the economic facet into account. Rising water levels in the Pacific Ocean are not only threatening the natural ecosystem of the Californian coastline but are also threatening the fiscal wellbeing of the coastal community. A study released by San Francisco State University warns that as stronger coastal storms and beach erosion batter the coast of California, communities of people and natural species will be displaced. As the beaches get destroyed, so does the local economy. If the Pacific Ocean rises the projected 55 inches by 2100, Venice Beach will lose around $440 million in tourism and tax revenue. This sea level rise would also cause $52 million in flood damage to Venice Beach area homes along with $39 million in habitat loss. Malibu beaches would lose $500 million in tourism, $28.5 million in damaged homes, and $102 million in habitat loss. The study estimates that sea levels will rise 4 to 5 feet and cause $100 billion in damages by 2100. My first thought when I hear that coastlines will be swallowed up by rising sea levels is for the natural environment. Coastal habitats contain great biodiversity and losing this type of environment would be very detrimental. I did not even realize the blow that the economy would take when sea levels rise. There would be fewer jobs available in California due to the fact that any job along the coast or involving the beach would be out of the picture. I would assume that many people would then become jobless and try to look for a job further inland. Right now 80% of Californians live in coastal communities and rely on beaches to support the local economy so it will be interesting to see how they can adjust to shrinking land and income.
--Annie Sekerak

Too Much Parking in New York City

2011-10-15T13:32:00.001-07:00

In downtown Brooklyn, surrounded by mass transit, a forty two story luxury building houses 256 parking spaces, taking up two stories. This may not seem like a lot of spaces for the 40 stories worth of residents, but only half of the spaces are being used. The problem is that the building’s residents have chosen this location because it is close to mass transit. If the majority of residents do not drive a car, why did developers create so many parking spaces? The reason is zoning regulations, and very out of date regulations at that. Zoning regulations set in 1951, in Brooklyn and surrounding areas state that for every ten rental units of public housing there should be four parking spots (with some variation). Because of this rule several buildings have parking garages where half of the spaces are empty. Not many New Yorkers have cars in mass transit areas and those who do take advantage of free street parking. With so many people parking on the street they are circling looking for a spot and creating a lot of emissions. This does not see eye to eye with the Mayor’s hopes of a sustainable city.

Even developers know the demand for parking is very low in garages so they choose to build the minimum number of spaces that the rules require. The Clean Air Act set a cap on the number of spots per building; too bad this doesn’t change anything since the maximum number of spots were never built. The Mayor has tried to change these mandates before but City Hall said that “people are emotional about parking," so no changes were made. There has been recent talk about reforms. One option is to allow residential garages in Manhattan to rent spaces out to the public and another option is to reduce the number of required spots in mass transit areas. Even with these changes, it is hard to compete with free street parking.

In my opinion these zoning regulations should have been changed years ago. The number of spaces required for public housing needs to be reduced, especially in transit areas. People who have a car are going to continue to drive and continue to park on the street. This may change if spaces can be rented out, but only in areas of great interest and for a low enough cost. Even so, there needs to be a drastic change to not only zoning regulations but street parking before there is any significant move towards a sustainable city.

--Sam Bowman

New EPA regulations on powerplants

2011-10-15T12:59:00.001-07:00

The EPA is attempting to finalize a plan designed to reduce emissions of mercury and acid gases from power plants fired by coal and oil. The plan, called "maximum achievable control technology," was set to be completed by November 16th of this year. These improved regulations and standards would cause a loss of somewhere between 30,000 and 70,000 megawatts of electricity made by coal fired power plants. Outdated and ill maintained plants could be shut down due to these new rules. Opponents of the plan say these rules will kill jobs and cost companies billions of dollars at the worst possible time. The EPA fired back saying the plan will save more in health costs and hospital visits than it will cost in utilities. Twenty five states are asking a federal court to delay this measure at least a year. This is due to both a poor economy and to the loss of jobs and energy they anticipate. The EPA also said that these regulations will create jobs for those to inspect plants and enforce these rules.
While I agree with the EPA’s attempted effort to reduce the emission of these materials into the atmosphere, I also see the state’s argument. This is a down economy and people may not be able to afford increased energy costs. I am also not sure if this plan will create as many jobs as the EPA anticipates, however, jobs could be created in both the inspection field and new energy sources. If states find a new and improved way to produce electricity, it will have to be maintained, built and inspected as well. I believe the measures taken by the EPA are a good idea, just not at this time.

--Nick Freese

Transportation Infrastructure Investment Needed

2011-10-15T05:44:00.000-07:00

While it's not easy to envision the kind of work that needs to be done, like repairing and improving subway track and water pipes, a great deal of work is necessary for our infrastructure to keep functioning. An article in today's Post gives some figures about how much is necessary: "Last year, a report by 80 experts led by former transportation secretaries Norman Y. Mineta and Samuel K. Skinner called for an annual investment of $262 billion." That's about 5-6 times the current level of funding, and nothing close to what anyone is projecting, whether Democrats or Republicans control Congress over the next few years. Advocates note that the more we put these costs off, the more we pay in the long run. Just sayin'.

Transmitting

2011-10-12T08:30:00.000-07:00

Earlier this year I had a post on the importance of Europe's grid to the viability of alternative energy sources there. Now there's an article on Ezra Klein's blog about the same subject in the U.S., and the folks over there conclude that it might not matter so much: maybe decentralized technology like solar will win out over large plants needed for technologies like wind. While I understand the temptation to write off problems like this, I don't think it's that safe to assume that solar alone will get us there. Wind power also has associated challenges, but I'm not ready to put all my eggs in the solar basket yet.

Rewarding Hybrids

2011-10-12T08:01:00.000-07:00

If hybrids provide benefits to society, it's appropriate to reward people for choosing hybrids. In addition to some tax benefits, for a long time Californians owning hybrids also had access to the car pool lane even if they weren't carpooling. That changed recently, and hybrids were pushed out onto the rest of the road. The resulting increase in the number of cars on the (rest of the) road has slowed traffic down by about 10 mph during rush hour.

So what's the optimal policy? It turns out that having people going slow on the rest of the road also slows down the folks in the carpool lane- you don't want to be driving 65 when someone going 20 moves into your lane to avoid a suddenly stopping vehicle. These researchers argue that more people need to be let into the carpool lane for the lane to continue to be as effective as possible. Optimization- it's what economists do!

Shrimp Harvest Plummets

2011-10-12T04:07:00.000-07:00

The vagaries of ecology make it hard to pinpoint one single cause, but after the BP oil spill last summer, this year's shrimp crop in the Gulf of Mexico has been extremely bad. Other issues, such as the drought in the US and spring flooding transported by the Mississippi River to the Gulf, make identifying the culprit tricky. And guess what? BP says that the harvest this year is "within the historical range of variability." In other words, stuff happens. It sure does!

Killer cantaloupe

2011-10-04T08:42:00.001-07:00

In the past few weeks there have been 15 deaths (link to Google News)and 72 illnesses caused by the listeria virus that has been found in cantaloupes that are grown in the Jensen’s Farm in Colorado. The listeria virus can be spread by water or soil contamination. Animals can carry the virus unharmed with no symptoms, but when their feces are used as manure or contaminate the local groundwater it can harm the local farms’ crops. Colorado is the fifth largest producer of cantaloupe and reportedly 2010’s harvest was worth $8 million. Fortunately for the farmers at least, the outbreak has occurred at the end of their season; but it has stigmatized the “Colorado Cantaloupe.” Local farmers in Colorado are still selling some cantaloupe mostly because their local buyers know them and know what farms have the bad cantaloupe. As for the rest of Americans that love the sweet melon, well, they are less fortunate. The Jensen farm did not label their cantaloupe to separate them from the rest; instead they labeled them “Rocky Farm cantaloupe” making them even harder to distinguish the good from the bad. There is also a problem clearly identifying what states were sold tainted cantaloupe. The Jensen Farm has released a list of states that they sold directly to, but there are also distributers that have sold them to other states. Now most people will just refuse to eat them at all, fearing that they could get sick or even die.

I think that this is a huge externality of animal farming. It is a shame that we house these animals in such a way that it causes someone’s whole way of life to collapse. Plus it’s actually causing people bodily harm and killing people in some cases. Why would anyone want that to happen to them or to their family if it could be prevented. Listeria is only caused by a bacterium called monocytogene. The problem with these bacteria is that they can grow in almost any environment; but if better care was taken of these domesticated animals then no one would have had to die. I know that this is not an extremely common virus; but with the potential for them to be carriers, I would think that someone would at least try to test their livestock at some point in their life. What if the cattle that just donated manure to the Jensen’s Farm, had been sent to the butcher or if it was a sow and was milked? There could be an even bigger epidemic!

--Amanda Meade

Update: USA Today describes the results of an FDA investigation into possible causes of the outbreak, which has now claimed at least 25 lives and caused at least 125 illnesses.

Culture of Junk Food

2011-10-04T07:57:00.000-07:00

Rather long but intriguing piece about the problems with food culture in the US. Some quotes:

"The real challenge is not 'I’m too busy to cook.' In 2010 the average American, regardless of weekly earnings, watched no less than an hour and a half of television per day. The time is there." I'm not sure I buy that logic 100%: that's an average, not even a median, and no doubt some people are watching a lot while others watch very little.

"[T]here are five fast-food restaurants for every supermarket in the United States; in recent decades the adjusted for inflation price of fresh produce has increased by 40 percent while the price of soda and processed food has decreased by as much as 30 percent; and nearly inconceivable resources go into encouraging consumption in restaurants: fast-food companies spent $4.2 billion on marketing in 2009. "

A long string of links starting with this article finally led me to this article on how Federal subsidies compare to what that same government recommends we eat. Pretty damning!

Smaller Fish are Better

2011-10-04T07:39:00.001-07:00

If we want to maximize the amount of fish produced per unit of feed, smaller fish are better. Also, of course the types of fish make a big difference: some, like trout and catfish, are more sustainably farmed. Finally, a lot of meat goes to waste because it's not in the large, easy to serve fillets. Smaller pieces are found in the collar, belly, and tail, but it's not as easy to extract and serve. As the first article points out, the key is that much of aquaculture relies on feeding wild fish to farmed fish, which is of course ultimately unsustainable. Recently some aquaculture has succeeding while feeding pellets of corn and soy to tilapia, which seems a step in the right direction.

The magic of markets

2011-09-30T11:15:00.000-07:00

Great post today by Econ blogger Mark Thoma, explaining how the "magic of markets" is limited- we can get the miracle of socially optimal production and consumption only when a variety of prerequisites are met. Along the way, it also explains how the government loan program that led to the Solyndra debacle is even now, after Solyndra's collapse, still not much of a risk to taxpayers, and in fact the program has also done some good along the way by effecting hiring during poor economic times. Take a look!

Shifting demand

2011-09-29T07:18:00.001-07:00

Right on the heels of my post about the FDA comes the most lethal bout of food poisoning in some time: the cantaloupes of Rocky Ford. 13 deaths and at least 72 illnesses are truly a tragedy. I haven't seen any reporting about the source of the contamination, but hopefully someone is looking into that. A sad time for consumers and a sadder time for Colorado, where the pain is sure to linger as their good name is tarnished. For Marion Nestle, the issue this raises is why we don't have one central food safety organization: the second link above is to the CDC web page, and of course the FDA and even the USDA are involved with agricultural products. Many of my colleagues would see this as a good reason to cut back wasteful government spending: I agree, but I think this also points out the need for effective, not absent, government.

Energy green as cash

2011-09-28T12:42:00.000-07:00

Nice post on Marginal Revolution today by Alex Tabarrok on the crazy subsidies for green energy. Recognizing the externalities, it makes good sense to support wind farms and other green sources of energy, but it's entirely possible to go too far, as Spain did a few years ago. The current programs supporting energy make it possible for someone to build a wind farm by putting up only about 10% of the costs, since the government will fund the rest to the tune of billions of dollars. That just can't be the best use of government money! How about some feed-in tariffs like we heard about earlier? It's one thing to be supporting green energy, but it's another to be building wind farms for people and giving them the profits from operating the farms. This process needs to be improved. I'll see if I can talk to a friend who works down at the DOE to see if she or a colleague can come talk to us about it.

No Winter Crabs

2011-09-28T12:34:00.000-07:00

One of our class presenters asked how we'd feel if crabbing in the Bay was banned for awhile to restore crab populations. In fact, that's already the policy and it has been for a few years- during the winter. Virginia has voted to continue the ban on winter crabbing and Maryland will likely follow suit. With all the damage that the Bay sustained this year, including the aftereffects of Irene dumping huge amounts of sediment, this seems inevitable. While the resurgence in the population observed in the spring was good news, there is still a long way to go before we can look at our crabs with as much comfort and confidence as we look at our rockfish population.

When waste is efficient

2011-09-27T14:11:00.000-07:00

It's "efficient" from the perspective of oil producers to burn off natural gas coming from their oil wells because it would cost more to set up the infrastructure to use the gas than they expect to get from producing and selling the gas. Some believe it can be economic to capture the gas and are setting up facilities, but for now, burning it is the way to go. If the true costs of this were imposed on the producers, no doubt they'd change their tune, but until the externalities get internalized, it's efficient to be wasteful.

Maathai, Nobel Laureate, dies

2011-09-27T13:59:00.000-07:00

Her life's work was economic in nature: she taught women to plant trees in part to provide for their own future, as environmental stability helps the watershed, saving women from the difficult task of walking long distances to bring water for their families. Also, trees provide wood, used in fires that provide heat and the opportunity to cook. Non-market benefits, to be sure, but very real nonetheless.

“When our resources become scarce, we fight over them,” she told a Norwegian television station near the time of her award. “In managing our resources and in sustainable development, we plant the seeds of peace.”

Amen!

This is the first post of material for Quiz #3.

Cutting back on energy in Japan

2011-09-27T04:49:00.000-07:00

For obvious reasons the Japanese didn't have as much access to power this summer as they usually do, so they did what they do best: work together to overcome difficulty. In February earthquake and tsunami survivors were orderly in the chaos, and now too the country banded together to turn off the AC's and even lights, working under unpleasant conditions. And let me add that summers can be pretty unpleasant: for most of Japan, June means the rainy season, and August is an inferno. I'll never forget the day I arrived in Japan for the first time: for some reason our jet stopped a short distance from the terminal and we walked down a stairway onto buses to get inside, and when the door to the aircraft opened up, a cloud of hot humidity swallowed me, leaving me feeling like I was swaddled in blankets. Bottom line: I tip my cap to the Japanese for making the tough choice to push through a sweltering summer with limited power.

Hybrids: the good, the fat, and the ugly

2011-09-26T17:34:00.000-07:00

The first thing that comes up to people’s mind when they think of hybrid cars is a Toyota Prius. It is because Prius is considered one of the best hybrid cars in the market. However I find it a bit ugly. It looks like a four door Lamborghini that eats McDonalds everyday. Hybrids work in a very simple way. They all have one or more batteries that are bigger than the ones that we use in our cars. When you apply the brakes, Kinetic Energy Recovery System (KERS) takes the energy and charges the battery. These cars have 70% lower emissions, meaning that they are 70% cleaner than gasoline powered cars. In addition, they emit fewer greenhouse gases that contribute to global warming and reduce our dependence on foreign oil. The government has been trying to increase the demand for these vehicles by offering tax incentives. For example, the government is willing to give a rebate for those who buy new hybrids. Also they are willing to pay for a home charging unit and install it as well. For people who convert from regular gasoline powered cars to hybrids the government is willing to give a rebate of 10% of the car’s value. I think that is a pretty good deal. You save 10% on the new car you are buying, and the car has good mpg and is better for the environment. Plus, people from the government are going to come to your house to install that “free” home charging unit. However there are a few disadvantages. These cars are expensive because it is all new technology. They are also very ugly in my opinion. If I were to buy a hybrid, I would get a Tesla, which I am assuming is very expensive.

--Osman Darcan

Using Taxes to 'Green' Buildings

2011-09-25T16:59:00.000-07:00

The Ygrene Energy Fund of Santa Rosa, California is investing $650 million into commercial building retrofits to reduce energy consumption and cut utility costs. The consortium aims to implement a new system that would allow businesses to avoid startup costs and pay-off retrofits over five to twenty years. Total savings from renovations are greater than the surcharges added on to property-tax bills, and estimates show the investment will pay for itself within five years. These retrofits, which will cut consumption and costs by one third, include replacing building structures such as doors and windows and installing more efficient mechanical systems. James D. Martin of the Environmental Defense Fund claims that if this approach is proven successful, the country would be able to shut down one third of its coal plants. The Empire State Building has reduced energy consumption by almost 40% through sustainable renovations.
In comparison to the CAP’s proposal that the government should finance retrofits, Ygrene Energy Fund’s tax plan seems pretty great. It has the potential to decrease commercial footprints without relying on the federal government. With Barclays’ financial support and Lockheed Martin’s technical support, companies can increase efficiency and profit in the long-term without bottoming out with start-up costs. However, companies similar to Ygrene Energy Fund have experienced issues with financing qualified businesses. If Barclays Bank fails to supply sufficient funds for the amount of loans demanded, the program could face the same fate. Another potential drawback to the program is that contractors may aim to capitalize on retrofits through exaggerated upgrades and fabricated improvements. The chairman of Ygrene Energy Fund, Dennis Hunter, stated that, “Contractors are cowboys.” However, Hunter claimed that hired partners would be thoroughly inspected.
--Gia Parmer

How can governments promote renewables?

2011-09-25T14:36:00.000-07:00

This article brought up questions that I tried to understand more fully with information gathered from other articles. From what I could gather from a quick bit of research, Germany has had in place for more than a decade an economic system of “feed-in tariffs” which over time help to subsidize the costs of implementing new renewable energy production over time. The feed in tariffs are contracts made with energy utilities that guarantee a fixed rate of compensation to start-up renewable energy companies over a 15-25 year time period. These feed-in tariffs are made possible with loans from the state run bank and paid for by the consumer with a small hike to their energy bill. What I found most interesting about these articles was the conclusions that could be drawn from the statistics presented. While Germany has a renewable energy sector that has grown to produce over 20% of total energy consumption in Germany, the U.S. has only 8% of its energy needs fulfilled by renewable sources. Another interesting point was that a poll taken in 2008 stated that Germans were even more reluctant to pay more for renewable energy than U.S. Citizens, 50% and 40% respectively were unwilling to pay more. It is interesting that now 79% of Germans polled that they were willing to pay the increased prices. This question was posed to the class. My other question was, what is keeping the U.S. from taking measures to implement similar policies, thus subsidizing the startup costs of renewable energies and, in the long run, making our national energy production cleaner and cheaper? Is there something special about the German system that makes this type of policy more easily implemented? The conclusive statement made here, “until people are forced to do so, or the price for renewable energy comes down considerably, people will not make the choice to go with renewables” resonated with me on this topic. This is a prime example of what we have been learning so far in class, mainly that the market dictates consumer spending and consumers are also vulnerable to the hidden nature of externalities in market cost. In this case we see that even though the German consumers were originally unwilling to accept the burden of increased costs, they had no choice: the government decided that it was best to subsidize renewable energies because of hidden costs involved in continuing use of, what has become increasingly apparent as of late, potentially dangerous nuclear power generation.

--Sean Doherty

Subsidies for Twinkies

2011-09-24T08:56:00.000-07:00

Ever wonder how people came to invent the Twinkie? I can't say I know for sure, but I can say that there's a lot more incentive to create them when 14 of the 37 ingredients listed on the bag are government-subsidized. The paper overall comes across as having been written with the conclusion firmly in mind before they began looking at data, but some of the information accumulated is nonetheless interesting.

h/t Marion Nestle

Red Tide Impacts California Abalone Supply

2011-09-22T18:12:00.000-07:00

John Upton’s article, “Abalone and a Rite Fall Victim to Red Tide,” describes a recent virulent red tide along the Sonoma Coast in California. Red tides are blooms of plankton, which feed on nutrients and material dumped into the ocean. The plankton release natural toxins as well as deplete the oxygen supply, so they kill slow-moving oceanic wildlife by poison or suffocation. They occur annually, but the California Department of Fish and Game had to close abalone fishing ten weeks early this year because it was especially harmful. Abalone are considered a luxury item, so their demand is elastic. A ban on them will increase the cost suppliers pay to obtain them and how much consumers must pay for them. Demand will decrease because of a rise in price and people will switch to alternative food choices. What I am trying to picture though, is the overall effect a shortage will have on the local economy as a whole. The article describes abalone fishing as “a way of life on the north coast”. If this way of life is in jeopardy, how will it overall affect the economy? Especially with a dangerous red tide such as this one, other sources of food from the ocean will be affected as well. Seafood restaurants will be lacking a menu, people will not want to eat there- nor swim or walk along a coast scattered with abalone remains- and the summer season will not bring nearly as much revenue to the area. Even though abalone are a luxury item, they are connected to the overall well-being of the economy and can be used to predict the big changes that will occur when natural resources are damaged.
--Sara Chetelat

Those Dam Externalities

2011-09-22T06:48:00.000-07:00

A California river, dammed since 1909, is slated to be opened sometime in the next 10 years. Studies are now reporting on what effects that should have, and the responses are up in the hundreds of millions of dollars, not counting the existence values. While dams help cities and agricultural areas get water, they also provide recreational opportunities as they create lakes. If and when the series of dams is taken down, people who bought lakefront property are going to be left with something much less desirable. Economists need environmental scientists to figure out all the ramifications of damming up rivers so that we can assess all the costs and benefits: as the science has progressed, so have the economics, and the accounting at this point doesn't look good for the dams.

Externalities: sex noise edition

2011-09-21T11:24:00.000-07:00

People making too much noise during sex is a problem that people altogether would pay at least $1 billion to get rid of. Quite an externality! This guy goes through quite an analysis, which would be more convincing with a better sample but is pretty neat as is.

Hooray for taxes

2011-09-21T11:18:00.000-07:00

Almost all economists are in favor of a tax on carbon to correct the massive externality that is climate change. Why? Hopefully it's clear from class, but if not, here's how The Economist puts it: "We expect normal economic activity to maximise social good because each individual balances costs and benefits when making economic decisions. Carbon emissions represent a negative externality. When an individual takes an economic action with some fossil-fuel energy content—whether running a petrol-powered lawnmower, turning on a light, or buying bunch of grapes—that person balances their personal benefits against the costs of the action. The cost to them of the climate change resulting from the carbon content of that decisions, however, is effectively zero and is rationally ignored. The decision to ignore carbon content, when aggregated over the whole of humanity, generates huge carbon dioxide emissions and rising global temperatures." If we tax carbon, the cost to them goes up, and when they weigh the costs and benefits of doing something, they'll choose the right thing. Too bad politics makes this essentially infeasible.

Kids ride free!

2011-09-21T11:01:00.001-07:00

Great economic discussion in the SF Chronicle today about whether to let kids ride the local bus & train system for free. The pro's include educate kids about using the system, get them used to mass transit, get cars off the streets, help kids get jobs outside of their home neighborhoods.... The cons are also considerable, including loss of the $6-7 million that kids now pay in fares every year and the additional cost of around 11,000 extra daily riders who would hop on if rides were free. Total bill: around $13 billion. Are you willing to pay that much to cut back air pollution and congestion by some unclear amount? That's a high price tag. What else could you do with $13 billion?

Blue Carbon

2011-09-20T09:12:00.001-07:00

Coastal marine habitats such as mangroves, salt marshes and sea grasses are best known for their natural aesthetics, filtering pollution, and housing many plants and marine life. Mangroves are especially important because they protect coastal lands from tsunamis and hurricanes. However, many people are not aware that these coastal habitats are one of the most important carbon sinks in the world. According to environmental writer Robynne Boyd, these carbon sinks absorb five times as much carbon as tropical rainforests, which absorb only 18% of carbon dioxide released by carbon fuels. This absorbed carbon is called blue carbon and represents the 55% of green carbon that is absorbed by marine life; the other 45% is stored in terrestrial ecosystems.

Just like any other natural habitat, coastal wetlands are subject to harmful manipulation by man. Over 100 years ago 1800 square kilometers of wetlands of the San Joaquin River Delta were drained causing two gigatons of CO₂ to be released into the atmosphere. As a result, up to 15 million tons of carbon dioxide continues to be emitted yearly. Due to the large amounts of carbon held by these coastal habitats it is vital that they are kept protected from human encroachment in order to prevent further CO₂ emissions and climate change. Since coastal ecosystems are the preferred foundations for rice paddies and shrimp farms, many farmers and land developers see mangroves as a great financial opportunity. However, with carbon credits costing between $15- $20 per ton of carbon dioxide emitted, an assessed tax might cause many farmers to opt for cheaper alternatives. These economic incentives can persuade communities to save their local marshes and mangroves in order to manage their countries’ greenhouse gas emissions. While blue carbon might decrease jobs in aquaculture in the future, it can create jobs in mitigating climate change and conservation of these coastal habitats.

--Skyla Steele

FDA: crucial or redundant?

2011-09-17T07:05:00.000-07:00

One of our biggest natural resources is agriculture: our capacity to produce food. In today's world, in which we combine "hundreds of thousands of ingredients from over 200 countries," food safety has increasingly become a concern. However, even as the complexity of the food industry has sharply increased, the government's response to it (on the food safety front) has not kept pace. Laws enacted to improve the FDA have been rendered moot by Congress's lack of interest in adequately funding the organization.

Here's a look at one recent failure: the Peanut Corporation of America's production of contaminated peanut butter. That led to 714 illnesses, 166 hospitalizations, and 9 deaths. How much would it have cost to prevent that? The charge Nocera cites as having been approved by Congress in 2009, right after the incident, was $500 per food facility, totaling $300 million nationwide. Fortunately we haven't had any incidents that major since then (that I'm aware of, anyway) so maybe now's not a bad time to be underfunding those agencies. Still, my personal preference would be for adequate monitoring....

Green Jobs

2011-09-17T06:13:00.000-07:00

Nancy Folbre, an Economics Professor at University of Massachusetts Amherst, is one of the many people talking about the green jobs market. There has been a great deal of discourse lately as to whether or not Green Jobs really have potential, are affordable, or if the benefits even compensate for the costs. The Obama administration has tried to facilitate the creation of green jobs, and it seemed at times they presented it as a panacea to solve all of our unemployment and energy problems. While there have been recent, obvious failures, there are other programs in this direction expected to create a significant number of jobs. Renewable energies are still rapidly growing sectors of the green/clean economy. Though clean energies and technologies currently represent only a small slice of the economy, this industry is largely immature because companies can’t market to the consumers that would benefit most. The people who are going to have the real need for cleaner, and more efficient energy are the generations to come.

Nancy suggests that public policies could be a potential solution, such as taxing carbon emissions and adopting clean-energy standards. These policies would be used to better account for the hidden social costs of fossil fuel use and increase the demand for cleaner production, providing more incentive for private investors. While both of these proposals are good, neither of these ideas are novel, as similar policies have been successful in Germany. Others have suggested that the economy is suffering because businesses aren’t spending, and that regulations requiring businesses to invest in cleaner production would help the economy. However, to be realistic, Republicans in congress could hardly be more resistant to any proposal entailing stricter environmental regulations. The Republicans have been quick to say that these regulations would only kill jobs by increasing costs of production, but can we afford to keep sacrificing our natural heritage and public health for the sake of job creation? There’s no easy answer because while jobs have monetary value, the true value of the environment, cannot so easily be appraised. Likewise, nor do we yet understand the full ramifications of our environmental procrastination.
--Garrett Sisson

Energy use at home

2011-09-17T06:11:00.000-07:00

Did you know that 3/4 the energy use and greenhouse gas emissions of doing laundry come from heating the water? All you have to do is use cold- perhaps with a detergent designed for cold water- and you can save that energy. Unfortunately people don't care- they're used to using hot and they won't be told differently.

It also reminds me of a story. A student last year told about when her parents bought a new, energy-efficient washing machine. She wanted to save energy, so she drove out to her parents' house to use the machine. She hadn't thought about the fact that driving out there would use up at least as much energy as she saved by using the efficient machine. That's what economics is about: recognizing how all the pieces fit together and using that information to make better decisions.

Pro Crab Pickers & Wage Growth

2011-09-16T13:50:00.000-07:00

Pretty good piece in the Sun that covers both sides of the debate on whether it's appropriate to force crab packers to pay their pickers a higher wage. Andy Harris, who represents a district that's mostly the Eastern Shore, argues that employers need to continue to pay a low wage to imported foreign workers to protect jobs for Americans. He says watermen, truck drivers, and others depend on having cheap pickers. Follow that logic? It does make sense, although not in an immediately obvious way. Still, I'm always skeptical of claims that businesses will be forced to shut down if they actually pay their workers a living wage. On the other hand, a 24% jump in labor costs is indeed considerable, and canned picked crab is certainly a global market: people will buy Vietnamese canned crab if it's cheaper.

What is definitely NOT cool is the negative attitude of employers toward employees. In California I heard firsthand some farmers complaining about how the immigrants they hire to do the harvesting would "clog up the hospitals" because none of them have insurance. Employers then end up paying hospital bills via their taxes, since the harvesters are too poor to pay much themselves. Again, though, on the other hand, the immigrants (be they harvesters or crab pickers) are there because they want to be: they're happy to have jobs. I just wish there was more mutual respect there.

Rare earths

2011-09-16T05:32:00.000-07:00

A bit of a storm has been brewing over the past few years. "Rare earths" are elements used in a variety of products and though deposits can be found all over the world, recently it's been cheapest for China to mine and process them, so the world has become dependent on their production to such an extent that it could take years to develop new sources, even though they have been produced domestically before. Now it seems as though China intends to use that dominance to start squeezing consumers of rare earths. They making excuses about the environment but the bottom line is that they are restricting the supply just like any monopolist would. This is making people nervous, since products from mobile phones to wind technology rely on the materials. Lots of prices are rising and more will soon as China shows pretty good familiarity with capitalism after all.

Bay takes a pounding

2011-09-15T09:29:00.001-07:00

4 million tons of sediment, hundreds of millions of gallons of sewage, and enough freshwater to completely refill it flowed into the Bay after the most recent storm. Algae feeding on the nutrients found in sewage and other pollutants produced probably the largest Bay dead zone since scientists have been keeping track, and to have all of this new organic matter on top of this summer's damage is, as the Japanese would say, "Oni ni Kanabou"- overkill. (Literally, not just a monster, but a monster with a huge club.) Here's another (short, clearer) description of the process.

Efficient use of resources in South Sudan

2011-09-15T09:22:00.001-07:00

If you had a bunch of cassava production, what would you do with it? For one answer, see this link.

h/t to Marginal Revolution.

Deep Sea Fishing

2011-09-14T04:26:00.000-07:00

I missed this nicely balanced article in the Post a few weeks ago. Some decry deep sea fishing as akin to clearcutting old-growth forest, but some say that we clearcut old forest for a long time to do farming, so why shouldn't we do it for fishing? A more germane point is that fishers are being subsidized to do this clearcutting. At the very least we should be able to agree that's unnecessary.

Greening Nascar

2011-09-13T05:59:00.000-07:00

Article in the NYT today on efforts to limit the ecological footprint of NASCAR. While that sound kind of silly, a $15 million solar farm on one track is at least something. Buying solar is something a lot more than purchasing "American Ethanol," which some studies show actually increases greenhouse gas production. Can't say I expect environmentalism to have a high marginal impact on NASCAR fans, but the use of patriotism as a marketing scheme might help. If only it was dedicated toward a more widely accepted goal....

My favorite quote: "[W]e race cars that burn a fossil fuel that get four to five miles per gallon, and we can’t change that,” said Ian Prince, the chief sustainability officer at Roush Fenway. “But we can change the other 99 percent of it.”

US Cotton: an endangered species?

2011-09-12T19:01:00.000-07:00

Last year there was some uproar about the US government's decision to send $150 million to Brazil for the privilege of continuing the US's own cotton subsidy. Turns out that you and I have contributed about $50 billion to the cotton industry over the past 20 years.

Although uneconomical farming doesn't seem to have fazed them, something else finally has: superweeds. Years of use of Monsanto's Roundup Ready and other GMO cottons has bred weeds that are resistant to the herbicide Roundup, and now some of those weeds grow seven feet tall, outcompeting cotton in planted fields. Costs of production are soaring as farmers deploy extraordinary measures to assure themselves a harvest. Maybe, finally, we can take a break from farming cotton and let other parts of the world produce cotton. They might even be able to do turn a profit on their own without much direct government support! Wouldn't that be something.

EDIT: Maybe cotton isn't so endangered after all: the farm subsidy database shows that Maud farms, the location described at the "superweeds" link above, has pulled down $7 million in subsidies over the past 15 years. Even if they're losing money, they still win!

Marion Nestle on Food Resources

2011-09-12T17:49:00.000-07:00

If we could list our demand curves for calories or nutrients and match those with industry's supply curves, we could theoretically find a optimal level. However, with externalities galore as the consumption good comes in inconvenient (nutrition-wise) but often tasty bundles called "food," it's pretty hard for us to find that optimal point. It's harder still when our body is easily confused: our taste buds want fats, salts, and sugar, but our body needs vitamins and other nutrients to grow. Further, when we try to do our best and choose wisely, we can still be confounded by a number of other factors such as advertising and the persuasive power of friends and family.

Outspoken nutritionist Marion Nestle has had a couple of recent posts on food and government. She derides an apparently failing program in the UK that aims to take on the externalities imposed by food corporations by encouraging firms to voluntarily reduce salt, improve labeling, etc. She's not very impressed by this showing of corporate responsibility....

*************
Class members: this post is the first for material on Quiz 2.

Your little steps are taking you nowhere

2011-09-08T05:04:00.000-07:00

"Every ton of carbon dioxide pollution causes around $20 worth of damage to economies, ecosystems, and human health.... That's not damage you're going to do in the distant future; that's damage each of us is doing right now." Little steps don't amount to a hill of beans, says the author: we need a big policy that "internalizes the externality," as we economists say. If we don't pay the full price of our actions, there's no way we'll really solve the problem. Quite a clarion call in today's New York Times. What do you think of this 1 page article?

Update: A class member pointed me to this follow-up article answering such questions as, "Where does the $20 estimate come from?" and noting that one of the most socialist of economies, in Sweden, is one of the only to impose a carbon tax. Thanks for the tip!

CAP's "jobs speech"

2011-09-07T13:04:00.000-07:00

As Obama gets ready for his "jobs" speech tonight, the left-leaning Center for American Progress has come up with their own proposal. They argue that the government should hire a bunch of people to do energy efficient retrofits on homes and buildings. It's an interesting idea, but it suffers from a big problem: the beneficiaries won't be paying for the the repairs they get made. With all the political pressure to cut the budget, sending workers into thousands or millions of American homes to make improvements and cut people's energy bills doesn't seem likely to garner much support. As an economist, I support policies for which beneficiaries can compensate those taking the hit, and if the CAP's numbers are right, there is plenty of achievable surplus that would allow beneficiaries to compensate taxpayers. However, unless there is a scheme by which the taxpayers could be repaid, I doubt this garners much support.

The End of the Chesapeake Bay Oyster (for awhile)?

2011-09-06T16:13:00.000-07:00

Oyster harvests declined by 95% between 1980 and 2008, and by a much larger percentage over time. "In the late 1800s, 15 million bushels of oysters were harvested. In 1994, the total dropped below 79,000." In spite of repeated efforts, the University of Maryland Center for Environmental Science says that the only way we can continue to have oysters in the long run is to ban harvesting for now. Talk about shifting the supply curve!

South Africa & mining

2011-09-05T13:16:00.001-07:00

Here's a gated link to an article in the Financial Times on their mining industry- class members, link here. In addition to some useful ideas for class such as the rising marginal costs of mining South Africa's deepening mines and weak infrastructure, the article features a thoughtful reflection on the balance between industry and economic development. The question, as put by
the country's minerals and energy minister, is "how to make use of our vast mineral wealth to eliminate the evil triplets"- poverty, inequality, and unemployment.

If the mines are nationalized, the companies that made investments to get the mines where they are today will lose, and suddenly the government will be running the place. Usually that's not a good thing for productivity: being a nationally owned industry means basically one's budget decided every year by John Boehner and Nancy Pelosi: in other words, since everything's always up in the air, it's hard to do planning, and the most skilled managers usually aren't interested in participating, since higher paying jobs are available in the private sector. Further, if the government starts taking people's investments for its own, that really chills the climate for others considering investing in the country.

So nationalization has serious costs, but if mine owners are dragging their feet about making other required reforms, some such extreme action might be necessary. The minerals and energy minister isn't in favor of nationalization, and hopefully industry will feel safe enough to improve productivity by making some investments. The whole world, and the country in particular, need to get those economic engines roaring again.

h/t Marginal Revolution

New car batteries to save gas

2011-09-05T13:03:00.000-07:00

I don't remember hearing about the requirement for cars to get to "54.5 mpg, by 2025" but it's nice to see incremental steps like this one giving us hope of actually achieving that goal.

Health Costs of Fracking

2011-09-05T06:54:00.000-07:00

Speaking of Michael Greenstone, he's also been charged with investigating the health effects of fracking. That's an interesting question, and hopefully he gets thorough data and can write a good paper, but I wasn't impressed by his prior analysis of Superfund. He claims that program was pretty much a waste since property values didn't immediately jump after the land was cleaned up. Seems to me that 1) environmental damage is usual initially sited in pretty poor areas to begin with (hence the environmental justice movement); 2) perception counts for a lot and being near a cleaned-up toxic site still doesn't sound like a very attractive place to live, whether or not the "cleaned-up" label applies.

Prices rising on pasta

2011-09-04T09:01:00.000-07:00

Pasta, ooh la la.... All those floods in the northern midwest are paving the way for some higher prices for pasta. I didn't realize semolina flour was from a different type of wheat than is used in bread, but it looks like we'll all see the impacts of weather on agriculture. With stocks stalled or falling, banks paying zero percent interest, and even real estate prices falling, it looks like the most prudent investment this year may be to stock the cupboard before prices rise.

Obama joins the anti-government crowd

2011-09-03T09:19:00.001-07:00

Fewer regulations are a good thing, apparently, as Obama agrees with the complaints of business and pulls back EPA regulations described as "life-saving." It's common for business to complain about regulations, but I wonder how many businesses were unable to grow because of the regulations on ozone. I'm pretty skeptical that this was a binding constraint on economic growth, but I admit I'm far from knowledgeable about business. (The Washington Post article gives more details about alleged impacts, and they do sound reasonable.) The New York Times today weighs in, arguing that the complaints of business have been frequently based on little or no evidence and proclaiming the act a political one designed to help out Obama in the election. These days, every politician's acts seem to fit into that category, so it's hard to argue that point.

Update: NYT columnist Paul Krugman adds that in this economic climate, forcing companies to spend (on pollution reduction equipment, in this case) is exactly what's needed. He claims that the reason the economy is stalled is that businesses just aren't spending, and so they don't need to hire, etc., etc., and so prompting them to spend could be key to getting things moving again. Another New York Times article paints a broader picture, claiming that 1) companies blame losses on regulations even when broader issues like the economy are actually to blame. 2) Company estimates have turned out to be much inflated in the past: a Resources for the Future economist pointed out that the Clean Air Act was predicted to cost as much as $7.5 billion for implementation, when in fact it turned out to be $1 billion. 3) Michael Greenstone, an environmental economist I've actually spent a bit of time with, argues that the same act has cost 600,000 jobs but has also led to a number of health and environmental benefits which should also be on the balance sheet. However, 4) current regulations are complicated and often confusing: one firm is claiming that they couldn't undertake a project because they couldn't figure out which of three regulations applied to it. The article concludes with a call to recognize that regulations need to be carefully analyzed, though they rarely are. Nice.

Chalk one up for the anti-government crowd

2011-09-01T13:46:00.000-07:00

The government's $535 million investment in solar technology firm Solyndra is for naught: the company has filed for bankruptcy. Republicans had long criticized the government funding and noted that one of the company's investors was an Obama contributor.

One reason for the company's failure was the drastic drop in the price of solar cells, noted earlier on this blog. The Chinese government has been subsidizing alternative energy, and firms there don't need to make as much as US firms to stay afloat, meaning that they can charge much less and still be fine. That low price has driven this US firm out of business, in spite of our own government's attempt to prop them up.

I'm chalking this one up to the Republicans, just like the battle over when Obama would present his jobs speech....

Update: the San Francisco Chronicle has an interesting follow-up piece talking about the industry as a whole. Although photo-voltaic cells are being cheaply mass-produced in China, some of the raw materials and machinery they use to do that come from the US, and the trade balance (according to this one source) still favors us here in the States. There's also an illustration of elasticity that my students might see again very soon....

Second update: the FBI is looking into Solyndra, as is Congress. Solyndra's President and CEO, Brian Harrison, apparently told two House members just a few months ago that all was well and he expected a doubling in revenue in 2011. As Rep. Waxman put it, that contrasts "rather starkly" with going belly-up!

Soccer Fields or an Organic Farm?

2011-08-31T12:25:00.000-07:00

Change.org is worked up over Montgomery County's decision to end a lease of some land to an organic farmer. The County wants to make money by leasing the land to a "private soccer organization" who will build soccer fields and charge kids to play there (presumably by enrolling them in leagues). One protester argues that the County already has over 500 soccer fields. Another asks, "Why not put the soccer fields on the roof of the new school? Why not build a parking garage under the school?"

I can see both sides of this: can you? Soccer fields on the roof? I don't think so. Parking garage under the school? You have a couple extra billion you're willing to chip in? Regardless of the number of extant soccer fields, if the County stands to make bank from leasing this out, then maybe they can provide better police protection to some of the scarier parts of their county. Maybe they can improve their Community Support Network for people with disabilities. Maybe they can invest more in training landscape contractors to build in Rainscapes, to limit the damage rainfall runoff does to the Bay, or restore and stabilize stream banks. On the other hand, organic fields including investments of 30 years of careful GMO-free farming deserve protection.

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The above is the first blog entry Econ 376 students are responsible for in the Fall 2011 semester.

Are food taxes the solution?

2011-07-28T08:54:00.001-07:00

This ground is pretty well-trodden, but a few new projects are calling attention to it once again. Gordon Rausser and Linda Thurstrom have written a working paper summarizing the published links between food taxes and health. They conclude that for a tax to have a significant effect, the tax would have to be large, since food consumption is inelastic. However, there may be distributional effects, so they call for studies looking at the effects of taxes on different subgroups, such as those in ill health, the poor, and different age groups. On the other hand, in Sunday's New York Times, Mark Bittman came to the opposite conclusion: he wants a little less conversation and a little more action. He calls for an increase in taxes to promote health. Michael Roberts has a nice reflection on the subject (can't find a permalink so you'll have to scroll down).

As an academic, I guess it's easy for me to side with the academics, but it really makes sense. A ton of studies on soda, for example (as cited in the first paper above) find that taxes accomplish little as far as discouraging consumption. Too many other factors (habits, convenience, lack of alternatives) affect the take-home price for a small increase to be effective. Further, soda companies are powerful: the city of Baltimore considered a tax last year, but a heavy blitz of anti-"grocery tax" ads hit the airwaves and the proposal died quickly. Economists certainly believe in getting things done by modifying incentives, which a tax would certainly do, but we also believe in doing reality checks to see what we could actually expect. Unfortunately these consumption habits are a tough nut to crack.