Lemurs: fierce, friendly, ninjas?

My favorite part of this article is the three lemur photos. You do not want to mess with that first lemur! But the second lemur looks like someone you might feel comfortable taking home to meet your mother. The third looks like a ninja jumping off a rooftop.

Madagascar’s lemurs – the world’s most threatened primate – could be saved from extinction by eco-tourism, conservationists say.

The big-eyed fluffy creatures are unique to the island but their numbers have declined dramatically in recent years.

Now researchers have unveiled a survival plan that combines tourism with increased conservation efforts.

Political turmoil has enveloped Madagascar following a coup in 2009. As a result of the instability, illegal logging has increased on the island, a source of valuable rosewood and ebony trees.

Due to a lack of environmental policing, the habitat of the lemurs has been under constant threat and the primates are now one of the most endangered groups of vertebrates on the planet.

The team propose that cashing in on Madagascar’s unique lemur “brand” would help the animals and poor rural communities.

Dr Christoph Schwitzer from the Bristol Zoological Society has been working in Madagascar for more than a decade. He said that tourists had still been flocking to the island, despite the political instability.

“There’s always a trade-off between the destruction caused by too many tourists and the money they bring to the country that can be used for wildlife conservation,” he told theBBC’s Science in Action programme.

“This balance for Madagascar is still very positive for conservation and it’s a long way until it may tip over.”

I don’t like that last quote. It sounds like it means something, but, when you think about it, its meaning is totally unclear. What does it mean for a balance to tip over? Anyway…

Conservationists point to eco-tourism in Rwanda and Uganda where visitors are willing to pay a premium to observe endangered mountain gorillas in their natural habitat.

Other aspects of a new three-year emergency action plan include increasing the number of long-term research field stations and building up conservation programmes.

These could help reduce another threat to lemurs, the illegal hunting of the primates for bushmeat.

Managing forests for multiple uses is an interesting problem studied by many environmental economists. This article mentions 3 benefits of Madagascar forests: it’s valuable (1) for its trees (rosewood and ebony), (2) for its habitat for lemurs for tourism, and (3) for its habitat for lemurs so they can be hunted for bushmeat. In general forests are often also valuable for things like nature tourism (people like to go for walks in forests, for example, even if there aren’t lemurs), their help in maintaining the health of aquifers, and for acting as a carbon sink.

In this case, the lemur is highly threatened. In economics we learn that people’s preferences tend to exhibit diminishing marginal utility. For example, that first slice of pizza you eat is really delicious, the third slice is good, but you don’t get as much enjoyment out of it as the first, and the sixth slice might even make you feel sick if you eat it. One implication of diminishing marginal utility is that we tend to value something more when we have less of it. Since lemurs are  highly threatened, we’d tend to assume that we are willing to incur a greater cost, for example in forgone profits from harvesting and selling timber, than if lemurs were more abundant.

I just recently saw a preview for a Disney movie (documentary narrated by Morgan Freeman) coming out later this year in IMAX theaters about lemurs. They look hilariously entertaining.

What valuation economists are up to these days…

Yesterday, a departmental research associate, Joonghyun Hwang, and I traveled to Orange Beach, AL for an annual meeting of economists who specialize in non-market valuation, which is the process of estimating the dollar value of environmental things that aren’t generally sold in markets (nice views, clean lakes, etc.). I really enjoy this meeting every year because there are a lot of good researchers there exchanging a lot of good ideas, which helps everyone improve his or her economic research.

The meeting has attendees from all over the U.S., so there are a wide variety of topics covered. Here are some of the applied topics:

  1. Invasive species
  2. Risk of wildfires
  3. Stormwater management
  4. Tillage practices and carbon offsets
  5. Valuation of ecosystem services
  6. Endangered species
  7. Algal blooms
  8. Public land management

Economic research is often conducted on two levels. On the first level, the researcher has to answer a real-world question on a particular topic (e.g. from the list above). This research question generally might be of interest to non-economists like the general public or policy makers. On the second level, the researcher tries to answer a research question that will actually improve our ability to conduct the research itself. This research is generally of interest only to other economists who conduct similar types of research. For example, a researcher might conduct a study in which she uses variability in housing prices and proximity to a brownfield site (a place where urban development has led to environmental contamination) in order to estimate the value of cleaning up the brownfield site. This is called hedonic pricing analysis. In the same study though, the researcher might also investigate a detail of hedonic pricing analysis that’s of interest only to others who use that research approach.  Here’s some examples of topics on this “second level” of research from the conference:

  1. Spatial issues, and how they affect value estimates.
  2. Objective risk versus subjective risk perceptions and their effect on value estimates.
  3. Survey question format and how it affects responses.
  4. Peoples’ tradeoffs between making voluntary money donations and voluntary donations of their time and effort.
  5. The effect of choice experiment design on people’s propensity to support public goods provision.
  6. How people make tradeoffs over time (i.e. discounting).

Overall it was a very good meeting, as usual, and I learned a lot. Joonghyun and I made presentations on our own research, in which Dr. Dan Petrolia is also involved. You can see the full agenda here.

Saving the Natural Monopoly on Water

From the Texas Tribune: Witchita Falls, TX, along with other Texas cities, imposed an outdoor watering ban in order to conserve water during recent drought conditions. The result? Not enough revenue to cover the costs of operating and maintaining the city’s water infrastructure.

Even though the 100,000 residents of this northwest Texas city have substantially cut their water use, their dry lawns may no longer continue to save them money on their water bills. Instead, they will be asked to pay more; the city lost $4.5 million in water sales last year because of the conservation efforts.

Water utilities are what’s known as a natural monopoly in economics jargon.  This means that it’s more economically efficient to have a single provider of the good (here, water) than to have many providers of the good, which is normally more economically efficient. On the other hand, most people know that monopolies tend to charge high prices which lead to high profits and low consumer surplus (i.e. monopolies tend to be bad for consumers). Because of this problem, water utilities are regulated so that they cannot charge prices that are “too high” and thereby restricting their profits to be relatively small. Why is this? Because water is considered a necessity, so most policy-makers agree that everyone should have access to a reasonable amount of safe water.

When a drought occurs, a common policy is to implement a restriction on outdoor water usage because, of all uses of water by typical households, it’s considered the least necessary (relative to bathing, cooking, cleaning, etc.). In the case of Witchita Falls, the restriction resulted in insufficient revenue to support the water utility so it is now considering raising water rates.

Fort Worth’s goal, like that of many other cities in Texas, is to change its rate structure to avoid such ups and downs. Today, about 17 percent of the utility’s revenue comes from fixed monthly charges that all water customers pay regardless of how much they use; by 2018, Gugliuzza said, 25 percent of its revenue will come from such charges. Dockery said Wichita Falls is considering a similar transition.

Still, the changes will be hard to swallow politically. Consumers have underpaid for water for decades, said Sharlene Leurig, a program director at Ceres, a nonprofit sustainability advocacy group with which many Texas cities have consulted on water rate structures.

One pricing policy that is often suggested by economists but which isn’t always adopted is known as a two-tier pricing strategy. Under this strategy, all water consumers are guaranteed a certain amount of water for free or at a very low cost so that they can meet their basic human needs such as cooking and bathing.  Water consumed beyond that level is charged at a much higher rate (closer to or even above the true marginal cost of providing the water).  The idea is that this water is more likely to be used for less necessary purposes such as watering the lawn or washing the car. The water utility earns a profit on water consumed at the higher rate in order to make up for losses earned on providing water for basic human needs.

Drugs and Deforestation

What happens when it becomes more costly to conduct narcotics-trafficking operations in Mexico due to a government crackdown?

A new report says that drug smuggling in Central America is rapidly increasing rates of deforestation.

Remote forests in Honduras and Guatemala are being cut down to facilitate landing strips for the transportation of narcotics.

The scientists believe the influx of drug cash encourages ranchers, timber traffickers and oil palm growers to expand their activities.

But according to the researchers, the importance of the area as a route for trafficking has increased significantly over the past seven years after acrackdown on the narcotics trade in Mexico.

This prompted drug traders to move their operations into more remote areas in countries like Honduras, Guatemala and Nicaragua.

Source: BBC News

Answer: You move operations elsewhere. Unfortunate but true.

The Cheapest Way to Skin a Cat

BBC News reports on a study arguing that pollution targets in the European Union are not strict enough:

A study confirming a link between atmospheric pollution and heart-attack risk strengthens the EU case for tougher clean-air targets, experts say.

Research in the BMJ looking at long-term data for 100,000 people in five European countries found evidence of harm, even at permitted concentrations.

Experts stressed that the risk to an individual was still relatively small.

And some argued the results were not conclusive as they did not take account of previous exposure to higher levels.

All this seems fine, but the next paragraph struck me:

Other factors, such as smoking or having high blood pressure, contribute more to a person’s risk of heart attack than pollution from traffic fumes and industry, they say.

It may well be that smoking and high blood pressure contribute more to the risk of a heart attack than local pollution, but this paragraph seems to imply that the “some experts” are saying we shouldn’t work on cutting down pollution and instead should be more concerned about battling smoking and high blood pressure. (And I’m not saying this is what the experts are saying, it’s just the impression that the paragraph gives the reader.)

In environmental economics we learn about cost-effectiveness analysis.  Cost-effectiveness analysis is used to determine the least-cost way to achieve some goal.  So, for example, if we want to reduce the risk of heart attack, we might put resources into discouraging smoking (anti-smoking campaigns), battling high blood pressure (anti-salt campaigns?), lowering local pollution (emissions taxes), or other strategies. We then try to determine how much we should invest in each strategy to reach a given goal (e.g. lowering the risk of heart disease by 10%) in the cheapest – that is, most cost-effective – way.

So, even though smoking and high blood pressure lead to a greater risk of heart attack than local pollution, it may yet be that, for a given reduction in the risk of a heart attack, it is more cost-effective to put our efforts into battling local pollution. Whether it is actually more or less cost-effective is another issue – I don’t know the answer because I haven’t studied the issue.  But unfortunately, while the article cites experts from environmental and respiratory medicine, it does not cite the views of any economists who have studied the issue.

That’s how an environmental economist would think about this issue…






Economic development through the lens of an environmental economist

From the NY Times, a natural gas company in New Jersey that proposed constructing a pipeline through the protected Pinelands, has had its proposal rejected.

The decision dealt a defeat to Gov.Chris Christie, whose administration vigorously lobbied for the pipeline, saying it was an important economic development tool for southern New Jersey. The Pinelands sit atop a shallow, trillions-of-gallons-large aquifer that serves millions of residents. There are 17 species of plants that are found there but nowhere else, said Jeff Tittel, director of the New Jersey Sierra Club, an environmental group.

Dan Lockwood, a spokesman for the gas company, told The A.P. on Friday that it was studying its options.

“We’re disappointed, particularly for our customers in Cape May County,” Mr. Lockwood said.

The gas company said that, in addition to providing a cleaner fuel source to the power plant, the new pipeline would provide a second transmission vehicle for natural gas to thousands of customers in Atlantic and Cape May Counties.

The article doesn’t mention whether any environmental economists provided input for either party.  Here, the benefits of the pipeline are presumably the increased producer and consumer surplus in the natural gas market. The costs of the pipeline include the disruption to the Pinelands, which are valued for their role in aquifer regeneration and rare plant species (among other benefits not mentioned in the article).

In environmental economics, we would carefully compare the benefits of the proposed pipeline to the costs of the proposed pipeline to determine whether it is a good idea (from an economic point of view).  Environmental economists specialize in estimating benefits of those hard-to-value environmental services (like aquifer regeneration and rare species support) we get from Pinelands and other natural habits.

People not trained to think like an (environmental) economist might consider the surplus generated in the natural gas market but might fail to consider the costs of the environmental disruption when deciding whether to support the pipeline.

Deep Freeze Kills Off Invasive Species

From the New York Times, entomologists think the deep freeze may help kill off invasive species in the northeast.  Here in the southern US, we have invasive species too, such as cotton bollworms and tarnished plant bugs (insects) and kudzu (a plant) that cause damage to crops, forests, and water resources.  Dealing with invasive species is a common topic for environmental and ecological economists.

While some people were cursing a canceled flight or wishing they had donned an extra layer on Tuesday, when temperatures in the region took a deep dive, entomologists, foresters and naturalists were rooting for the mercury to drop even lower. That is because the extreme cold has the potential to beat back some of the invasive insects threatening treasured local tree and plant species.

“You do think, ‘Oh great, maybe some of those nasty insects are going to get zapped today,’ ” said Mark Fisher, director of conservatories and horticultural programs at Brooklyn Botanic Garden. “It’s Mother Nature’s way of dealing with this issue.”

The insects, whether introduced pests like the hemlock woolly adelgid or native ones like the southern pine beetle, have weakened forests from Cape May, N.J., to Litchfield County in Connecticut. They are uncannily adept at surviving the winter, but most have a breaking point. And this week, that point was nigh.

… Read the full story.

Ronald Coase, of Coase Theorem fame, Dies.

From the New York Times: (Ronald H. Coase, ‘Accidental’ Economist Who Won a Nobel Prize, Dies at 102)

Ronald H. Coase, whose insights about why companies work and when government regulation is unnecessary earned him a Nobel Memorial Prize in Economic Science in 1991, died on Monday in Chicago. He was 102.

He introduced the concept of transaction costs — the costs each party incurs in the course of buying or selling things — and showed that companies made economic sense when they were able to reduce or eliminate those costs by performing some functions in-house rather than dealing in the marketplace.

In the second of his groundbreaking papers, “The Problem of Social Cost,” published in 1960, Professor Coase challenged the idea that the only way to restrain people and companies from behaving in ways that harmed others was through government intervention. He argued that if there were no transaction costs, the affected parties could negotiate and settle conflicts privately to their mutual benefit, and that fostering such settlements might make more economic sense than pre-empting them with regulations.

The paper made the idea of property rights fundamental to understanding the role of regulation in the economy.

The Coase Theorem is a central theorem in environmental economics.  It states that, in the presence of an externality (e.g. I’m yelling loudly in the Junction and you’re annoyed), if there is (1) low transactions costs (we can speak to each other easily), (2) perfect information (we both know the benefits and costs to each other of my yelling), (3) and clear property rights (either I have the right to yell or you have the right to not hear my yelling), the two parties can bargain and an economically efficient outcome will result.  An economically efficient outcome is one in which the benefits to society (in this silly example, that’s just you and me) minus the costs to society are greatest.

If the conditions for the Coase Theorem hold, it means that, theoretically, there’s no need for government regulation or intervention to resolve the issue (assuming all we care about is economic efficiency, that is).  The question is always whether or not the conditions hold.