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Adam Harter
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I think what I learned in this course boils down to the point that Paul Krugman made in the Earth in Balance Sheet reading. He wrote, "but won't protecting the environment reduce the gross domestic product? Not necessarily--and anyway, so what?" This resonates with me because the most common argument I hear against action to protect the environment is that the costs are going to be too high. Especially growing up in Houston, there is a strong attachment for what the oil industry does for city economically. The adults I knew working in the industry obviously did not want to destroy the earth but suggesting change to discourage oil and encourage green energy seemed out of the question. Houston needed its oil, and there is no feasible alternative. As I got older, I began noticing flaws in this argument, but it wasn't until this class I truly felt that real change needs to be made (or knew about how to go about that change). The reason I feel this way now lies in the second sentence of Krugman's quote. First off, in this class, we learned a myriad of the potential economic benefits of committing to protecting the environment. And looking back now, it makes such distinct sense. A cared-for climate can produce a strong, sustainable economy better than one reliant on destruction and non-renewables. Secondly, I learned more than about the economic benefits. So what if the GDP goes down or firms are not as profitable? Our discussions of the social costs of damaging the environment on society illustrated to me that there are more important things than the balance sheet, even when it comes to economics. This class helped me become a better citizen because it influences my decision-making process. Rather than focusing on the financial return on where I spend my dollar or cast my vote, it is more important to think about the costs or benefits that decision has on the planet.
Toggle Commented Apr 22, 2020 on ECON 255 Final Exam at Jolly Green General
Wallace J. Nichols discusses in his research how nature has many positive health benefits. Particularly, people connection with the ocean and how it impacts their view of conservation. When the ocean has a higher sentimental value on it, it become harder for people to destroy it and makes them want to do something about it being destroyed. This approach is different from moral suasion. Which would typically focus on media related to how beautiful/destroyed the ocean is. Instead, people realize the true benefits of the ocean when they are directly interacting with it. Sadly, we do not live in a world with decision-makers who value the environment at the same level as Nichols. And this essentially is what allows climate change to continue to occur. The individual can do as much as they possibly can to prevent disaster, but it’s hard for this to have visible benefit. There needs to be people at the top that can make serious change before we will see serious change. And using Nichols science of showing people the power of nature maybe a tool in the toolkit. Unlike many other techniques, such as a tax or a command and control policy, this approach creates positive pathways in the brain. Even the staunchest conservative, who has never supported raising a tax in their career, could potentially see the positives in nature by just being shown it. Perhaps if the green new deal wants to be passed, the congress needs to go on a vacation first.
What I like about the Green New deal is that it gets me excited to see what clean energy infrastructure the United States will build. When infrastructure is talked about now, it’s about how it is declining all over the nation. The roads, bridges, highways, etc. no longer are a point of pride like they used to be. And when change is attempted, large-scale public projects tend to be “overbudget” and “beyond schedule.” People are getting frustrated with the highway that’s been adding a third lane for five years. Or an example this article gives is a subway station that started renovation and the 70s and did not finish until 2007. And these inefficiencies have real economic effects as the government spends more money than necessary, and the workforce who would use the bridge is not able to get to work as fast. The leading cause of these costs and delays is the inconsistent funding from the government. This lack of funding leads to projects to stopping and starting, and general confusion on what truly needs to be done. In the article, it says the Green New Deal solves this problem with consistent, predictable funding. And this is what gets me excited. Because with consistent funding that is spent in the right places, the U.S. could transform itself in just a few years while providing jobs along the way.
Toggle Commented Apr 17, 2020 on ECON 255: The Green New Deal at Jolly Green General
Reading the conservative case for carbon dividends, I imagined a world companies were held directly responsible for the carbon they emit. In this scenario, companies have an incentive to reduce emissions as much as possible in order to save money. Sounds pretty nice. But what if the carbon tax isn’t high enough? I spent a lot more time imagining this world. In this world, the companies can pay the carbon tax easily and will still pollute the same amount. The American people will be loving the extra money that they have coming in. In fact, companies start to become celebrated for how much money they put into the pockets of the American people. An Exxon Mobil ad runs that excitedly tells the audience that their efforts gave every single person $400 last year. The people love this and don’t want the policy to be changed. It becomes the most important issue for them at the polls. Whole campaigns run about going to Washington and putting down their foot to the talk about raising the price per ton. The policy initially for good creates an adverse incentive so strong it creates a whole new wave of politics. A generation of progress in climate change ideology is suddenly reverted. People run the calculation in their head and prefer the few thousand dollars per month over the health of their planet. And for a lot of those people, who can blame them? They are struggling to make ends meet, but Chevron opening another refinery may make the car bill payable this month. While I don’t think this scenario is all that likely it is important to consider the possible pitfalls of any policy. The carbon dividend could start with the best of intentions, but later become a problem if the price per carbon isn’t high enough or the energy lobby gets a little too involved. Energy companies may be able to continue about their business mostly, but with added positive PR for them.
Toggle Commented Apr 13, 2020 on The Case(es) for a Carbon Tax at Jolly Green General
Looking at the figure “Average Abatement Costs for Select Policy Options” in the "Ten facts about the economics of climate change and climate policy," I became interested in what were considered to be the worst policy options and to see why they were still used. As far as energy efficiency goes, the worst of the bunch is the Weatherization Assistance Program (WAP) with a score of 359. What WAP does is go into low-income houses and make them more efficient. The direct effect of this is lowering the energy bills of the household, and it provides jobs to the people who do the installation. Neither of these benefits mentioned in the article or the article that was the source of the figure. Instead, WAP shown as being not energy efficient. They argue that to reduce a ton of carbon through this method has a very high cost. And they are not wrong with this conclusion. The point I want to make is that there is more to this policy than just energy efficiency. There are struggling households that are receiving real benefits and putting more money in their pocket because of this program. It was easy for me to write off this program as the worst of them all because it was at the bottom of the list. Easy to say, well, we should only implement policies that have the lowest abatement cost, so I’m happy I took a more in-depth look. I truly do not know if it is a worthwhile policy in the grand scheme of things because of my still limited knowledge. But I did find it interesting that none of these articles pointed out the possible upside argument that goes beyond the environment. Gillingham, Kenneth, and James H. Stock. 2018. “The Cost of Reducing Greenhouse Gas Emissions.” Journal of Economic Perspectives 32 (4): 53–72.
Ideally, the goal of the EPA would be trying to push the private cost as close as possible to the social cost. In the past, they have made this push by introducing command and control policies to reduce activities such as air pollution. The EPA, in this recent move, has abandoned this push in the positive direction and the result will be the private cost to shift out as companies are able to act in their selfish interests. Everyone, including the EPA, knows that this will be the effect, but they believe it is in the best interest of stopping the spread of COVID-19. Stepping into the EPAs shoes, they have created a strange version of the trolley problem in which they justify there reasoning. On one hand, the EPA could not relax the regulations and the trolley continues on straight. The results of this are potentially employees at polluting firms do not social distancing, get sick. Of course, this is a result no one wants to happen, but it remains unclear how letting companies pollute and social distancing go hand and hand. Another reason cited in a New York Times article is that facilities cannot “concentrate on ensuring that their pollution-control equipment remains safe and operational.” Couldn’t this argument be made for every piece of equipment pollution-control or not? If they divert the trolley, they can feel good about these more “direct” changes and the potential live saving measures they have made completely disregarding that the track that they put the trolley onto has a lot more bodies tied onto it. According to the World Health organization, in 2012, “one out of every nine deaths was the result of air pollution-related conditions. Of those deaths, around 3 million are attributable solely to ambient (outdoor) air pollution.” The difference is that these deaths are more hidden then a death from COVID-19. An availability bias is created that throws out all reasoning of the potential lives that might be saved by not changing the regulations. Instead, the fear causes illogical changes like the EPA one to be made. Of course, what I have written above is assuming that the EPA truly believes what justification they have provided to the media outlets. In reality, it is likely the continuation of the belief that high environmental quality does not equal economic prosperity. As wrong as this may be, the EPA is giving firms a free pass in a time of economic hardship to forget about the social cost and pollute for profit. A direct effect of this I can think about is in oil and gas. With the price per barrel so low, oil companies may be more than willing to cut costs to remain competitive. World Health Organization Assesment on Ambient Air Pollution (2016)
What’s great about these two research papers is that they use longitudinal data. This allows for the researchers to get rid of problems with omitted variables. When you have one person changing over time, you don’t have to worry about them taking two completely different life paths that would skew your data. Instead, researchers can bring together the data over time and create clear correlations between two factors. Longitudinal data seems really solid to me, but a flaw I thought of was people dropping out over time. While investigating the differences between the longitudinal data collection withdrawal rates in the cognitive performance and Australian PEFR papers, I noticed something odd. In the Australian study it gives the following numbers in the “Composition of the cohort” paragraph: • 148 Children Enrolled • 40 withdrew (25 in first three months and 23 excluded because they had less than thirty observations) • Remaining 125 Children comprised three groups Looking at the numbers listed out in this way, I started to notice some pretty obvious things. If 40 withdrew, then why is 25 because of dropping out in the first three months and 23 having less than thirty observations add up to 48. The most reasonable explanation is that there was some overlap, and they failed/didn’t feel the need to mention. Which sounds good to me, so moving on. Next, however, I could not get over why if 148 children enrolled and 40 withdrew, why are there 125 remaining children. Shouldn’t the number of remaining children be 108? I don’t feel qualified to call Jalaludin and co. out on bad science or claim I know enough about longitudinal survey data to know if occurrences like this are common, but I do feel confused. And I would have appreciated an explanation, so I won’t be kept at night wondering where in the world did those 17 kids come from.
Toggle Commented Mar 12, 2020 on 3 short papers for Friday at Jolly Green General
When researching this blog post, I had an idea: I was going to find out what the total cost of externalities for wind power was and compare it to the numbers from the Epstein paper. In my search, I came across a paper called “Comparative life cycle assessment of 2.0 Mw wind turbines by two Oregon State professors Haapala and Preempreeda. In it, they said there would be looking at the manufacturing, transport, installation, and end of life negative externalities associated with a wind turbine. So I had my plan, I would discover how much damage a 2.0 MW wind turbine makes and then extrapolate that out into the 2.03 billion Kwh that coal produces every year and compare the two. The problem came with the assessment method used by the paper. They employ a method called the ReCipe, which looks at 18 midpoints such as fossil depletion, natural land transformation, and climate change-human health. But, instead of assigning a monetary estimate of damage or an estimate of total CO2 produced (which then I could use the $10/ton of carbon method), the method assigns an Environmental impact score to the turbines. The environmental impact score of a 2.0 MW turbine averages around 170. I don’t really know what this number means, and looking around the internet there has not been a ReCiPe assessment of coal to compare it to. While this didn’t turn out how I grandly envisioned, I did learn some things from this paper worth mentioning. This paper did confirm the idea that virtually all the negative externalities associated with turbines come from the manufacturing, transportation, maintenance, and end of life. Interestingly, these externalities are entirely paid back in 3 months. Meaning, all damages from turbines are recovered from using a turbine for energy rather than a carbon-emitting fossil fuel. As far as end of life goes, 90% of all turbine materials are recyclable which creates a cycle of manufacturing to recycling back to manufacturing. Although, it would be ignorant to say there are no negative externalities of a wind turbine while it is in use. I looked back at the Epstein paper and applied the listed damages of coal that would also be relevant to turbine. In this, I reasoned that turbines could potentially cause economic damages of loss of value for homeowners and loss of mining jobs, human health damage of workplace injuries, and environmental damage of birds and bats getting killed by the blades. In my back of a napkin assessment of these damages, the conclusion is what we all know: coal is way more damaging.
Toggle Commented Mar 5, 2020 on Discussion Paper for Friday at Jolly Green General
I decided to look at the Maya Riviera paper mentioned in the paper and compare the differences in WTP to protect marine resources from this reading. Both of these papers used the same equations to determine WTP which makes them great for comparison. To me, someone’s who has never been to either Belize or Maya Riviera, they look quite similar on paper. Both attractive, Central American, vacation locations especially for those with interest in snorkeling and SCUBA. What caught my interest was that these two locations have significant difference in their WTP. In Belize, the mean WTP was determined to be $34.60 and in Maya Riviera the mean was $57.03. Before looking at the other paper I began theorizing about reasons why these numbers have a gap. My first thought was that people who visit Maya Riviera, for whatever reason, have a higher income and therefore more willing to spend more of their income. Unfortunately, the Maya Riviera survey did not include an income question so a comparison could not be made. If level of education is an indicator of income in anyway, respondents had similar levels of college education in both studies. Next, I thought perhaps the visitors to Maya Riviera are more likely to be repeat visitors, for whatever reason, and more likely to spend more their income because of the emotional connection to the place. Once again, these points were very similar with 41% for Belize and 34.7% for Maya Riviera. Another thought I had was maybe a larger percentage of people were in Maya Riviera directly appreciating the marine resources. But, the snorkeling and SCUBA percentages for the two were similar. After looking through both, I cannot say a found a true cause for the difference between the two. Perhaps, Maya Riviera has certain non-use values that are just difficult to quantify. Regardless, I realize there is a lot of complexities to these and I don’t want oversimplify the justification. One thing that I did think that could have an impact was how the survey questions were asked. First off, I am confused whether the question for the Maya Riviera was a write-in or multiple choice with options 5, 10, 25, 50, 100. If it is a write in, there might be some sort of bias to write more than they want to that I don’t know about. If it is a multiple choice, this survey provides far less options than the Belize survey. This might end up with people selecting more than they would want to because they feel constricted by the options. Regardless, there is something that is for certain. Governments are consistently undercharging tourists and losing out on a lot of revenue that would provide a lot of help to the marine resources.
In Krutilla’s piece, he discusses why private firms coming in and destroying natural phenomena to operate their business of natural resource collection is not a good idea. This insensible extraction does not happen because even if a firm has an extremely high willingness to pay, the benefits for conserving a beautiful scenic are priceless to the people and the environment. The supply of natural phenomena is fixed, and I would argue impossible to create again. While reading this, it’s easy to think that it is obvious that any firm that is willing to destroy a natural phenomenon is a) very terrible and b) should be stopped. Krutilla paints a clear picture of a firm that would come into Arizona and ruin the Grand Canyon. This vision of destruction causes a strong emotional response from me, and probably the rest of the readers as it sounds like a nightmare to destroy a global sight of significance. In this scenario, we are easily able to identify who is the antagonist that should get out of this area. But unlike in the 60s, we now know the damages that carbon emissions and pollution can do to beautiful scenic landscapes. Because of the disconnect, it becomes hard to blame Saudi Aramco (the number one polluting firm in the world with 4.50% of all greenhouse gas emissions) for the receding glaciers in Alaska. Nevertheless, these firms are still responsible for the damage. A recent study concluded that 100 companies are responsible for 71% of global emissions in the world. Not surprisingly, most of these companies are in the fossil fuel industry. No matter how much the individual feels that they can make a difference by behaving environmentally responsibly, no real change will happen until these firms are under stricter restrictions. Once we treat firms like building that new, heavily polluting oil refinery in Saudi Arabia, is like they are building it in plain view, next to the glacier, then real change will be made. Study:
While reading this, I kept coming back to the difference between the abundant examples of nuisance Coase lays out and carbon emissions. Chiefly, the difference between a factory emitting smoke onto a nearby population and all of the factories of the world emitting greenhouse gases and contributing to climate change. In Coase’s example, it would be entirely up to the factory to decide how much smoke it wanted to release into the air. From there, the households directly affected by the smoke would be able to negotiate and receive compensation for having to deal with the nuisance. Coase believed that the government should only ever play two roles in this system: not allow certain methods of production and confine business to a particular area of operation. If the factory was taxed in the Pigouvian manner, then it would be reasonable for the factory to place a fee on the nearby households to pay it. He argues and believes in this method, all in the idea of maximizing the production in the economy. Published in 1960, I do not fault Coase on not knowing the damages of carbon emissions on a global scale, but since this is now common knowledge, it introduces several flaws in his ideology. When a factory emits greenhouse gases, it does not just affect the neighboring households and contributes to the global problem of climate change. No firm in the world is equipped to be able to negotiate with every person in the world on the proper payment for the damage it causes. From there, it could be argued that the firm simply pays their national government the adequate amount for the damage they caused. But, the emission of greenhouse gases is not like the corn farmer that will still get paid the same amount no matter how much of his corn gets destroyed. The damage that the emission of these gases cause is incredibly difficult to reverse. So, in this case, there is no second party that is receiving compensation, but a whole planet that is being ravaged while firms can go about their business in the ways they see fit. Carbon emissions and polluting the oceans as another example I can think of turn the idea of a nuisance from a local problem to a global one and is why I do not see the economics put forth by Coase as adequate.
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Jan 16, 2020