Whither global warming?

I recently read an academic article with the word “whither” in the title and thought it sounded a bit hifalutin (but wait, the word hifalutin sounds hifalutin…) so let me know if you do to. Anyway…

There’s an interesting Wall Street Journal article about how global warming doesn’t really seem to be a thing anymore.

On Sept. 23 the United Nations will host a party for world leaders in New York to pledge urgent action against climate change. Yet leaders from China, India and Germany have already announced that they won’t attend the summit and others are likely to follow, leaving President Obama looking a bit lonely. Could it be that they no longer regard it as an urgent threat that some time later in this century the air may get a bit warmer?

In effect, this is all that’s left of the global-warming emergency the U.N. declared in its first report on the subject in 1990. The U.N. no longer claims that there will be dangerous or rapid climate change in the next two decades. Last September, between the second and final draft of its fifth assessment report, the U.N.’s Intergovernmental Panel on Climate Change quietly downgraded the warming it expected in the 30 years following 1995, to about 0.5 degrees Celsius from 0.7 (or, in Fahrenheit, to about 0.9 degrees, from 1.3).

Climate change has been a major area of research in agricultural and environmental research lately, so it will be interesting to see – if climate science continues to downgrade the threat of global warming – how quickly economic research will change.

Of course, this isn’t to say the matter is settled. The article mentions that it’s mainly the effects over the next two decades which have been adjusted, not necessarily beyond that. So stay tuned to this blog for climate change updates for the next 20 years.

 

What does your dog doo in the cemetery?

The Dispatch reports that the city of Starkville is struggling with how to handle dog waste in the city’s cemeteries.

Starkville aldermen will let the city’s informal cemetery board decide recommendations on how to curb a growing trend of irresponsible pet owners not cleaning up their animals’ waste after the board took no action on the matter Tuesday.

Several residents spoke out against an increasing amount of students that take their dogs to University Drive’s Oddfellows and Brush Arbor cemeteries and allow them to relieve themselves without properly disposing of the waste. A full list of cemetery board members was not available from city staff as the group is comprised of lot owners and is independent of Starkville’s bureaucracy, but aldermen Tuesday said the committee is split between banning pets from those areas or installing new waste receptacles and signage outlining park rules.

This is a great local example of how to handle a negative externality – when one person’s actions have an unintended negative effect on others. Other examples of actions that create negative externalities might be smoking in public, ringing cowbells at a football game, or a factory polluting the air or water. Here, dog waste is both unpleasant in and of itself for cemetery visitors, but many also believe it is disrespectful in the first place to relieve one’s dog in a cemetery.

In environmental economics, we often teach that a good way to deal with externalities is to make the externality-creating action more expensive. This discourages people from engaging in the action. For example, you could increase the tax on cigarettes, or impose a fine on polluting factories if you wanted to discourage smoking or pollution.

In this case, you could charge dog-owners who don’t pick up after their pet. But it would actually be very difficult to enforce such a policy because it would cost a lot to consistently monitor the cemeteries to see if people don’t pick up their pet’s waste. (Is that how we’d want police officers spending their time, for example?) This pet waste problem is actually a very similar problem to littering – you see signs on the highway about fines imposed for littering, right? But let me ask you: how many of you have ever been fined – or have known someone who has been fined – for littering? I’m going to guess not many of you.

In fact, the littering laws are more enforced by social norms than the threat of fines. That is, parents tell their children not to litter, or friends give their friends who litter scornful looks, or you see an anti-littering television ad or billboard, etc. Changing social norms can be a more efficient way of enforcing policies in which it is difficult or very costly to impose more traditional enforcement mechanisms such as fines or taxes.

So if our goal is to discourage people from not picking up their pet’s waste in the cemeteries, changing social norms might be the way to go. By putting up signs in the cemeteries, people become aware that not picking up pet waste is an undesirable behavior. Also, if pet owners see other pet owners properly disposing of pet waste, they get a signal about what is socially (un)acceptable. So I like the idea of putting up signs. There might also be a fine imposed for violators as well – but, like the littering example, this fine will be of more value as a signal about undesirable behavior than as an actual punishment imposed. But I also like the idea of putting in more trash receptacles in the area – this makes it cheaper to engage in the desired behavior (properly disposing of waste).

Economists teach that people respond to incentives and we usually focus on financial incentives. But social incentives have been shown to be effective in many situations as well. So the next time you see someone who doesn’t properly dispose of pet waste, you might try politely pointing them in the direction of the nearest trash can.

Renewable energy, birds, and Apple, inc.

I knew wind turbines kill birds, but it appears solar energy can as well. From NBC News:

Workers at a state-of-the-art solar plant in the Mojave Desert have a name for birds that fly through the plant’s concentrated sun rays — “streamers,” for the smoke plume from birds that ignite in midair. Federal wildlife investigators who visited the BrightSource Energy plant last year reported an average of one “streamer” every two minutes.They’re urging California officials to halt the operator’s application to build a still-bigger version until the extent of the deaths is assessed. Annual estimates range from a low of about a thousand by BrightSource to 28,000 by an expert for the Center for Biological Diversity environmental group.

Sheesh. You try to avoid one negative externality and another pops right up to take its place. 

The link to the article also contains a video about how Apple, Inc. is using 100% renewable energy. Now why do you think they’d try to do that???

Air quality scares Pascagoula residents

From the Sun Herald:

A neighborhood along Bayou Casotte, in the heart of the state’s most industrialized county, has been co-existing with industry for decades.

But in the last two years, things have changed.

A sticky dust blows in and there’s a strong acrid smell that lingers day and night. Residents with heart or immune problems are reporting breathing issues.

Neighbors say when they mow their lawns, the dust that’s kicked up burns eyes, noses and skin. There is silica, cadmium, aluminum and other metals in soil samples. Smells persist.

Unfortunately the article doesn’t suggest any ideas about why the problem has suddenly appeared, or become worse, in the past two years. This is a classic externality problem, where production by industry creates a negative effect (air pollution) on a third party (the nearby residents).

Apparently the nearby industries have met with neighborhood representatives and have undertaken some actions, but one woman says that no one is taking responsibility:

She said Mississippi Phosphates came to her house with an air monitor to tell her the problem wasn’t theirs.

VT Halter shipbuilding has met with her several times. It responded to a call on May 14 and determined a smell she reported was not coming from Halter.

All the industry say they’re meeting air-permit requirements.

 

So one problem is that the source of the pollution can’t be identified, at least not by residents, without additional help. This makes it harder for different parties (the residents) to unite their voices against the polluter because the specific polluter is unknown.
A second problem is that the industries are meeting their air-permit requirements so they have little incentive to cut emissions further because it is costly to do so.
The Coase Theorem states that, under certain conditions, parties (here, the residents and the industries) can get together and solve an externality problem without any government or policy intervention. But one of those conditions is that the people negatively affected by the externality can get together and bargain with the polluter. Because the polluter can’t be identified, and because there are many people negatively affected by the pollution (which makes coordination challenging), this condition is hard to meet in this case. Policy intervention may therefore indeed be the best course of action…although I’m not saying there is or isn’t a need for it in this case specifically.

 

China’s war on pollution

(NY Times) In the first 4 months of 2014, China has imposed more than $1.7 million in fines against polluters.

Zhong Chonglei, an environmental official, told the state-run China News Service that the amount of the fines was double from the same period in 2013. Mr. Zhong said that in March and April, inspections of 3,300 companies and business enterprises took place, and 171 violations were discovered. In March, the Ministry of Environmental Protection reported that 71 of 74 cities monitored by the central government failed to meet minimum air quality standards last year.

Last month, the National People’s Congress, largely a rubber-stamp legislature, approved revisions to China’s environmental protection law that gave officials more power in imposing fines on polluters. Li Keqiang, the Chinese prime minister, has said that China is ready to “declare war against pollution.”

Economists love well-designed economic incentives. Here, polluters have an incentive to not violate pollution standards because if they do, they face a fine. While this is an incentive, it wouldn’t be considered a well-designed one from an economic point of view. The reason is that the pollution standards almost certainly were not designed in the first place with a goal of economic efficiency.

Economists would probably prefer a policy where each polluter is taxed per unit of pollution emissions. That way, polluters who can cut down on emissions more easily (at a lower cost) will do so (because it’s cheaper than paying the emissions fee), and polluters who can’t cut emissions cheaply will pay the fee (because it’s cheaper to pay the fee than cut down on emissions). With this type of policy, emissions are reduced in the cheapest way. The “pollution standards” currently in place probably (I say this based on experience with such policies – I don’t know the details of China’s policy) do not consider the fact that costs of reducing pollution vary across different polluters.

To environmental economists, the fines that polluters face for violating a pollution standard wouldn’t really be considered an “economic incentive” because they are not designed for economic efficiency. Rather they are just a means of enforcing some existing pollution regulation which is probably relatively inefficient from an economic point of view.

I love a good Pareto improvement story

But then again, who doesn’t? In order to help migratory birds, rice farmers are being paid to keep their fields flooded for longer than they otherwise would:

The program, called BirdReturns, starts with data from eBird, the pioneering citizen science project that asks birders to record sightings on a smartphone app and send the information to the Cornell Lab of Ornithologyin upstate New York.

By crunching data from the Central Valley, eBird can generate maps showing where virtually every species congregates in the remaining wetlands. Then, by overlaying those maps on aerial views of existing surface water, it can determine where the birds’ need for habitat is greatest.

The BirdReturns program, financed by the Nature Conservancy, then pays rice farmers in the birds’ flight path to keep their fields flooded with irrigation water from the Sacramento River as migrating flocks arrive. The prices are determined by reverse auction, in which farmers bid for leases and the lowest bidder wins.

Farmers aren’t required to participate, so they’ll only do so if they think they’ll be better off accepting the payment and not drying their fields. Since prices are determined by reverse auction, the Nature Conservancy pays relatively less for the service. And presumably they are paying farmers only because “they” (that is, the people whose interests the Nature Conservancy represents) think it’s worth it. But does this program really have much affect? They’re still collecting and analyzing the data, but there are some promising initial results:

The project’s first season ended last month, as birds headed north from newly flooded fields. Researchers said all of the birds whose numbers they hoped to improve were seen on “pop up” wetlands — a temporary steppingstone for the birds’ journey north. This happened when the field would have ordinarily been drained, an indication that the approach was working. More analysis will be done this month.

What about effects on the market for rice?

In this first year, 10,000 acres (out of 500,000 devoted to rice farming in the Central Valley) owned by 40 farmers were flooded for four, six or eight weeks, at an average of 200 to 250 acres each. (Many farmers did not participate because of California’s drought.)

So only about 2% of acres participated in the program. And that’s just in the Central Valley, California. And generally, farmers still have time to dry out the fields for planting, so the effect on the rice market is probably negligible:

Even for farmers who have enough water, the program can require some careful calibration. “If we put our water on late, the fields might not dry out” in time for planting, said Doug Thomas, who grows sushi rice for Rue & Forsman Ranch near here and who took part in the program this year.

But he added that the compensation was better than adequate and that he liked the private-sector nature of the initiative.

And I like the way the program is described by a Nature Conservancy representative:

Dr. Hallstein, of the Nature Conservancy, said that at first it was a difficult to get farmers to make the shift, but that it helped when they thought of shorebird protection as just another crop, like rice.

NYTimes.

Makes sense. Just think of helping migratory birds as one thing people are willing to pay farmers to do with their land. Producing rice is another. Agritourism might be another. Etc.

Hey New York! We evaluated a similar idea here in MS…

John Whitehead of env-econ.net posted this on his blog today:

Beware when federal officials request innovative ideas

Here is another innovative idea, don’t subsidize risky living:

A string of artificial islands off the coast of New Jersey and New York could blunt the impact of storm surges that proved so deadly during Superstorm Sandy, according to a new proposal.

It’s a big proposal – one that would cost up to $12bn – but it’s also the kind of innovative idea that federal officials requested as they consider how best to protect the heavily populated east coast from future storms. …

The “Blue Dunes” proposal is part of a competition sponsored by the US Department of Housing and Urban Development to come up with novel ways to protect Americans against the next big storm. It is one of 10 projects that will be evaluated and voted on next week, but there’s no guarantee any of them will receive funding. Other ideas include building sea walls around cities, re-establishing oyster colonies in tidal flats to blunt waves and creating water-absorbent nature and recreational preserves.

The artificial islands plan was created by Stevens Institute, along with the WXY architectural firm and West 8 Urban Design and Landscape Architecture. It is designed to blunt the worst effect of Sandy: the storm surge that pounded the coast. From Maryland to New Hampshire, the storm was blamed for 159 deaths, and New Jersey and New York alone claimed a total of nearly $79bn in damage. …

The islands, 10 to 12 miles off the coast, would be uninhabited, although day trips for surfing or fishing might be allowed, Blumberg said. They would be built by pumping sand atop some hard base made of rock, concrete or other material.

Steve Sandberg, a spokesman for Senator Robert Menendez, a New Jersey Democrat, said funding for at least some of the proposals is already available as part of the $60bn in Sandy aid that Congress passed last year. Other money could come from disaster recovery grants as well as public and private-sector funding.

A gap would be left between the New York and New Jersey island groups to allow water from the Hudson River to flow out into the ocean.

Blumberg also said computer modeling has shown such islands would have produced vastly lesser damage during Sandy, Hurricane Donna in 1962 and the destructive December 1992 nor’easter.

Aside from the formidable cost, many other obstacles remain. …

via www.theguardian.com

The most awesome part of the plan is that the $12 billion is already there! And every taxpayer in the U.S. has contributed! Why am I exclaiming like Mark Trail!

This reminded me of some research on a similar topic – restoring barrier islands off the coast of Mississippi in order to protect the coast from storms – by some researchers in this department….

Kim, G., D. R. Petrolia, and M.G. Interis (Journal of Agricultural and Resource Economics, 2011): A Method for Improving Welfare Estimates from Multiple-Referendum Surveys.

In this paper, we estimate the economic value of a project to restore barrier islands off the coast of Mississippi for the purpose of protecting the coast from storms. Our estimate, based on a population of MS of about 3 million people, is a little under $700 million.

It would be cool if someone (or team) estimated the value of the “Blue Dunes” project in New York to see if it exceeds the $12 billion cost of implementation. (Well, they say it will be “evaluated” but who knows what that means!)

By the way, in our paper, we propose a way of estimating the value of the project which increases the confidence we have in our estimate of that value (through a lower variance…for the statistics nerds out there).

 

Externality watch: Air pollution leads to 7 million deaths

From BBC news, air pollution caused 7 million deaths in 2012:

Seven million people died as a result of air pollution in 2012, the World Health Organization estimates.

Its findings suggest a link between air pollution and heart disease, respiratory problems and cancer.

One in eight global deaths were linked with air pollution, making it “the world’s largest single environmental health risk”, the WHO said.

Nearly six million of the deaths had been in South East Asia and the WHO’s Western Pacific region, it found.

Largest single environmental health risk? I hadn’t hear that before but it makes sense because air pollution is a pretty much global phenomenon.

In general, environmental economists tend to think that pollution is not “internalized” meaning that the level of pollution is above the level which is economically efficient. Under economic efficiency there would definitely still be some air pollution because, although the pollution is costly, it would be even more costly to eliminate the pollution entirely.

Here’s how air pollution affects health:

Reducing air pollution could save millions of lives, said the WHO.

WHO family, woman and children’s health assistant director-general Dr Flavia Bustreo said: “Cleaning up the air we breathe prevents non-communicable diseases as well as reduces disease risks among women and vulnerable groups, including children and the elderly.

The WHO assessment found the majority of air pollution deaths were linked with cardiovascular diseases.

For deaths related to outdoor pollution, it found:

  • 40% – heart disease
  • 40% – stroke
  • 11% – chronic obstructive pulmonary disease (COPD)
  • 6% – lung cancer
  • 3% – acute lower respiratory infections in children

For deaths related to indoor pollution, it found:

  • 34% – stroke
  • 26% – heart disease
  • 22% – COPD
  • 12% – acute lower respiratory infections in children
  • 6% – lung cancer

IPCC: Crop yields to decline by 2% per decade

From BBC News, the Intergovernmental Panel on Climate Change (IPCC) will soon publish a new report on the anticipated effects of climate change over the next century. In an initial draft of the report, the IPCC states that we can expect world crop yields to decline by up to 2% per decade for the rest of the century.

A leaked draft of the summary, seen by the BBC, points to a range of negative effects that will, in some instances, be “irreversible”.

Millions of people living in coastal areas in Asia will be affected by flooding, and displaced due to land loss.

The draft says that crop yields around the world will decline by up to 2% per decade for the rest of the century.

If the world warms by 4C towards the end of this century, this will pose a “significant risk to food security even with adaptation”.

The summary says that in the near term, at levels of warming that scientists say we are already committed to, there is a very high risk to Arctic sea ice and coral reefs.

They warn that the oceans will become more acidic as they warm, and species will move towards the poles to escape the heat.

Last Thursday, super-famous (hey, at least in our world) environmental economist Richard Carson came and gave a lecture on the evolution of economic thought on climate change. One thing he pointed out was that most current climate change prediction models look at effects on agriculture in a still relatively broad manner and that there is a great need for analyses that are more crop-specific and region-specific.

New sulfur regulations to increase gas and automobile prices

From the New York Times, the EPA will soon force oil refiners to remove all sulfur from gasoline.

 The Environmental Protection Agency plans to unveil a major new regulation on Monday that forces oil refiners to strip out sulfur, a smog-forming pollutant linked to respiratory disease, from American gasoline blends, according to people familiar with the agency’s plans.

When burned in gasoline, sulfur blocks pollution-control equipment in vehicle engines, which increases tailpipe emissions linked to lung disease, asthma, emphysema, chronic bronchitis, aggravated heart disease and premature births and deaths.

The respiratory diseases and other health effects of pollution from automobile tailpipes are known as negative externalities in economics – bad (hence ‘negative’) effects on people who neither produced nor purchased the gasoline that’s being consumed (hence ‘externalities’ because the effects are on people external to the market transaction). The purpose of the regulation is obviously to try to decrease the negative externalities so that there are fewer negative effects on human health. The story continues…

The E.P.A. estimates that the new rule will drastically reduce soot and smog in the United States, and thus rates of diseases associated with those pollutants, while slightly raising the price of both gasoline and cars.

E.P.A. officials estimate that the new regulation will raise the cost of gasoline by about two-thirds of one cent per gallon and add about $75 to the sticker price of cars. But oil refiners say that it will cost their industry $10 billion and raise gasoline costs by up to 9 cents per gallon.

The E.P.A.’s studies conclude that by 2030, the cleaner-burning gasoline will yield between $6.7 billion and $19 billion annually in economic benefits by saving lives and preventing missed work and school days due to illness.

The new rule will have a significant impact on the health of low-income Americans who live near major highways…

But oil refiners say that the new rule will hurt their industry.

There are tradeoffs associated with this policy. It should reduce costs on human health, but will decrease consumer and producer surplus in the automobile and gasoline industries. This policy is said to pass the

One last tidbit from the article:

Mr. Drevna said it was easier to comply with the earlier regulations because removing the first 90 percent of sulfur molecules from gasoline can be done without difficulty. Wringing the last 10 percent of those molecules is harder.

“They’re tough little buggers that don’t want to come out,” Mr. Drevna said. “It’s like getting the last little bit of red wine stain out of a white blouse.”

In environmental economic theory, we learn that marginal cost of reducing pollution increases. That is, it’s relatively cheap to cut back on the first units of pollution but, as you cut back more and more, each additional unit becomes more costly to eliminate. Mr. Drevna’s statement here is consistent with the theory we propagate to our students!