Yields of organic agriculture

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

Oligopolies in the news

1) Infant formula: apparently the FTC is already investigating

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

3) Ice cream cones

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

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

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

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

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

Resource Economics videos, Spring 2022

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

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

Costs and benefits of tourism in Bali

Wasteland 

Effects of livestock production on the Chesapeake

Benefits of composting 

Benefits of recycling

Impact of varroa mites on bees and beekeepers 

Recycling on campus at Towson

Energy & climate

 

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

Offshore wind update

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

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

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

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

In other words, things keep moving...

A holiday for gas taxes?

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

Food prices jumping

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

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

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

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

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