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Steven Black
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I have thought about this a lot lately and have narrowed it down to two things that I find most important/interesting from this class. They are related, so I will include them both. My biggest takeaway from this class is the severe environmental impact of both the coal and beef industries. The greenhouse gas emissions from these two industries are among the leading causes of climate change, and there are so many better alternatives to both industries. Lately, I have found myself telling everyone I know about how horrible these two industries are for the environment. I have also made the decision to no longer eat beef and primarily stick to chicken and fish. I have only eaten beef once in the past two months (because a friend cooked for us), and that is a direct result of what I learned this semester. I greatly enjoyed taking this class, and it is as opened my eyes to many new aspects of both the problems and potential solutions to climate change.
Toggle Commented Apr 21, 2020 on ECON 255 Final Exam at Jolly Green General
I think having people connect with nature and different species could do a tremendous amount in increasing conservation and actions to prevent climate change. While all the statistics we have learned throughout the year, such as air pollution affecting respiratory health or carbon emissions leading to higher sea levels and risks of forest fires, are important, it usually takes something more relatable and clearly present in one's life to motivate change. If you can get people to enjoy surfing or hiking or rock climbing, then they would be motivated to protect the environments that bring them joy. Similarly, when someone interacts with an endangered species, they tend to place a much higher value on the existence of that animal. Getting people to value animals and the environment more would naturally increase the costs of harming the environment, thus the market should produce less pollution or environmental damage. This cannot be the only step in our climate solution, but it could be effective when combined with several of the other potential solutions that we have discussed throughout this course. This ties back into our past discussions on nonmarket values. In economics, we tend to be drawn to something's utility as his sole source of value, but there are many nonmarket reasons that something could have value. We need to make sure that nonmarket values are taken into account during cost-benefit analysis when determining if we should drill for more oil or mine more coal. Additionally, as I mentioned above, this creates another channel for the climate change solution by working to raise people's nonmarket valuations of the environment and the species it supports.
The maps from the Solutions Project of projected energy sources in 2050 by state, city, and country were very interesting to look at. I was surprised to see that they had the Netherlands projected to obtain no energy from waves and tides. When I was in Amsterdam last year, it seemed like the Dutch were doing some really cool research with tidal and wave energy so I would have expected it to have some future in their energy portfolio. I chose to read the article "Getting to a Carbon-Free Economy" by Jeffrey Sachs because I have read some of his papers before in other classes and have generally enjoyed them. He brought up some interesting points about reaching net-zero carbon emissions in the United States that I had not thought about. The first was with electric vehicles. It seems like we have been making tremendous progress with making electric vehicles affordable and convenient, but I did not think about how long it would take to replace every car in the US with an electric vehicle. Examples like this justify in my mind why it would take the US a full 30 years to reach net-zero carbon emissions. It was a little surprising to see an economics paper get so politicals, but Sachs brought up some great points about the political feasibility of the Green New Deal. Last time, we talked about the bill's lack of a concrete plan to start a conversation, but Sach's example of the Interstate Highway Act makes it seem like the bill was destined to fail in Congress. It is understandable that a bill needs a specific plan so members of Congress can see exactly how it would benefit their districts, thus making it much easier to justify the costs. Additionally, it is beneficial to have concrete actions in place that the public can rally behind and motivate Congress to take action. Overall, Sachs made the need to take action against climate change sound very critical but also left a good bit of room for hope that this is a crisis that we can overcome, which I appreciated as many climate change authors make their paper rather depressing to read.
Similar to several of the above posts, I think the most important takeaway from the Green New Deal is how some people can twist the public's perception of the legislation to result in ideas that are so far from the original point of the bill. Politicians and media personalities say outrageous claims such as "They're trying to steal your hamburgers" or associating the Green New Deal with Joseph Stalin to manipulate the masses into opposes a bill that would benefit them. I agree with Rebecca's point that this all leads back to the three I's that we have discussed throughout the semester. Sadly, special interest groups are preying on people's ignorance over the legislation in order to turn public opinion against it and stop any meaningful solutions to climate change from occurring. I had not read much about the Green New Deal prior to this and was surprised to learn that not only was the bill quite short, but it also did not include any binding policies or regulations. While the bill did not pass through Congress, I believe that it was still a success. The purpose of the bill was to stimulate conversation about climate change and how to solve it, which has definitely been achieved without the bill passing. John Oliver made a good point about how often do we talk about a bill six weeks after it has been shot down in Congress (or even before). I think that this is proof that the bill has been successful in pushing the conversation forward, despite some people's best attempts to discredit it. The necessary next step is to turn the positive conversation into actual concrete actions that can be implemented to mitigate the effects of climate change. The segment about Canadian's outrage with taxes reminded me about Americans' strong opposition to the estate tax (death tax). Even though the estate tax would inherently benefit 99% of Americans, most people have a strong opposition to someone being taxed twice on their earnings. Studies have shown that even after you explain to people that the estate tax applies to estates worth over $11M, the vast majority of Americans are still opposed to it. This just shows that Americans have strong negative reactions to new taxes (we even revolted over British taxes). For a carbon tax solution to be put in place, I believe we would have to take an approach similar to Canada and can it a "price on pollution" or use a cap and trade approach.
Toggle Commented Apr 15, 2020 on ECON 255: The Green New Deal at Jolly Green General
There are a few interesting takeaways from this article. First, it is interesting and a little scary that a Norwegian company can have access to everyone's phone location data to see where people go and who they interact with. It is beneficial for situations like this but seems to have many potential risks. It was also interesting, although not surprising, to see the significant correlation between people who take climate change seriously and people who take social distancing seriously. I read a similar article this morning (I will link it if I can find it again) comparing people's desire to return to normal behavior based on their political party. There's been a lot of positive news with the rate of infection steadily decreasing and the overall curve flattening that many Republicans want to return to normal behavior by the end of the month while many Democrats want to extend the stay in place order through May. This is another example of divulgence in private and social costs. Many people are wanting to keep their lives as normal as possible (minimizing private cost), which is putting society as a whole at risk. Not the article I was looking for but interesting piece on racial disparities:
After reading both the Conservative and Progressive cases for a carbon tax, I am left thinking that there should be overwhelming bipartisan support for a carbon tax and carbon dividends. Since there does not appear to be significant progress towards a carbon dividend policy, that leaves one major question: Who is opposed to it? The vast majority of consumers would benefit from this policy, most Americans in the bottom 3/4 of the income bracket. Stereotypically, environmentalists tend to be wealthier and more educated, so it is reasonable to assume that many people in the top 1/4 would be supportive of it as well. Someone who would have taken a net loss could also alter their behaviors to benefit from the dividend as well. The carbon would predominately affect electricity and gasoline, which are relatively inelastic goods. Because of that and basic economic theory, it would be the consumers paying the brunt of that tax and not producers. Therefore, producers shouldn't be strongly opposed. A carbon tax would actually reduce the size of the government by cutting out the regulation bureaucracies, which would satisfy the small government people. We get cleaner air, reduced dependence on foreign energy and the vast majority of Americans would benefit financially as well, which is why I am confused that the idea has not gained more traction than it has thus far.
Toggle Commented Apr 13, 2020 on The Case(es) for a Carbon Tax at Jolly Green General
There are many different social and economic angles present in their article. We have spent much of the semester discussing the negative impacts of pollution on heart and respiratory health, so it makes sense that a severe respiratory illness would hit hardest in places with high levels of air pollution. As Sydney mentioned, it is a positive thing that environmental discussion has been receiving more attention as a result of the coronavirus. Hopefully, with the government more likely to take fast action than usual, drastic changes could be made to address the environmental issues, as well as the racial and socioeconomic disparities that result from them. It is sad to see that the administration has taken the opposite approach in loosening environmental restrictions that will speed up environmental damage, exacerbate existing inequities, and increasing the death toll from COVID-19. I understand the desire to support the nation's oil industry during the pandemic, but that seems like something that would have been better addressed in the $2.2T stimulus package than in reduced environmental standards. I recently read an interesting article in the NY Times about racial disparities in coronavirus infection rates (I believe it's the one mentioned in class on Wednesday, but I will link it below anyway). It is sad to see that during such a severe pandemic when all people should be united that there are still such significant racial and socioeconomic inequities with regards to the virus in this country. There are many factors leading to this, such as environmental pollution concentrated in lower-income neighborhoods of color, poor access to health care, and being less likely to be able to work from home. The article also goes on to mention about how false information circulating has allowed this disparity to occur. The White House has not done a great job with providing citizens with consistent and correct information about the virus, coupled with the administration's discrediting of the media, which has created an environment where false information can spread. There was an issue with fake news articles being spread around Facebook about how African Americans were immune to the virus. This was very apparent back home, as it was often on Facebook and there were drastic racial differences between who adhered to the quarantine early on and who did not. A lot of places are still segregated for the most part, and there was a big difference between which gyms, churches, etc. stayed open past being instructed to close by the governor. This circles back to Trevor Noah's point about how Trump's discrediting of the media can have dangerous consequences, and this is just one example of that coming true. NY Times article about racial inequity: Articles about Misinformation about the Virus
There were many interesting points raised in these two articles. One point is that while we often focus on the negatives of climate change, there are actually some countries that would benefit from a 3 to 5-degree celsius increase in global temperatures. Canada, Chile and most of Europe would see an increase in GDP greater than one percent. Additionally, these countries along with parts of the US, Central and South America, Asia, southern Africa, and Australia would see a significant number of lives saved as a direct result of climate change. This is where global equity concerns come into play since wealthier countries either have a positive effect or a much smaller negative effect from climate change than lower-income countries. The distribution of costs and benefits among countries makes it very difficult to obtain global cooperation to address climate change issues. It would be difficult to imagine a country like Russia to willingly bear a heavy cost to reduce greenhouse gas emissions when rising temperatures would both increase their GDP and save a large number of lives within Russia. Overall the Environmental Facts were a lot more comforting than most of the articles we read. The cost of wind and solar energy generation has declined drastically over the past decade, thus making them competitive with fossil fuels. Energy intensity in economic output has also fallen drastically in the US. While still low, the share of greenhouse gas emissions covered by carbon pricing initiatives has risen rapidly over the past decade as well. Evidence from carbon pricing structures has shown them to be effective, which would likely lead to their continued use in more areas. The abatement costs for different policy options were also interesting. Energy efficiency policies can have a negative cost, which you would expect firms to gladly implement without any push from the government.
It seems illogical to take action to reduce air quality during a time that air quality may matter the most. With everyone worried about hospitals being overwhelmed, intentionally increasing the at-risk population seems like a bad idea. I understand the desire to support the economy to mitigate the damage after the pandemic has passed; however, this could have been addressed in the $2T+ stimulus bill rather than reducing environmental regulation. Firms are not being asked to reduce their pollution output, simply maintain their current levels. We've discussed in class how their abatement costs were relatively low and these costs would have already been built into their budgets. If the costs really needed to be alleviated, a subsidy would be better than putting public health at risk. This seems to be a classic example of marginal private costs diverging from marginal social costs. Firms are doing what they can to cut costs during this shutdown, and the abatement cost of not polluting appears to be among those costs being cut. The marginal social cost of the additional pollution is much greater than the marginal private cost, but when the decision is being left to the private firms, they will likely choose to cut that cost at the cost of public health. This is a time when we would need government regulation to correct the market inefficiencies and instead we are getting deregulation. Layoffs in manufacturing are often cited as a reason for relaxing environmental regulations; however, that may be based on a false assumption. In the March jobs report (must be noted that it tracks the labor market through March 13), manufacturing was one of the few sectors of the economy that actually added jobs. The first couple weeks of the month were before the worst of the pandemic, but factories would not still be adding more jobs if they were so worried about cutting costs. Decreased demand in certain goods has been followed with increased demand for others, such as medical equipment, which has led many companies to begin producing medical equipment in their factories instead of their normal goods. With everything changing so much from day to day, it would be very interesting to see the next month's jobs report to see how this pandemic affected the manufacturing sector. March Jobs Report: NYTimes on Deregulation:
I agree that trust is essential to facing a problem like this. Going back to Trevor Noah's speech during Mock Con, the erosion of trust has been a large issue with the current administration. The widespread use of the term "Fake News" has led to an increasingly high distrust of the media. The administration has failed to fill the void of trust leaving the country fractured on who to trust. This has become evident during the current crisis with people discounting news about the virus and refusing to follow social distancing procedures. The Trump administration also failed to quickly build trust during the crisis by releasing false information in bumbled press conferences. This is the time when we need solidarity and levelheadedness in office to reestablish trust, which we are currently lacking. It will be very interesting to see what policies are created in response to the pandemic, how they affect trust, and which ones will remain in the aftermath.
Toggle Commented Apr 1, 2020 on ECON 100 at Jolly Green General
These papers continue to add to the list of negative externalities that are the result of pollution, which continues to raise the MSC well above the MPC for any of the goods and services contributing to the pollution. It is scary that pollution has a significant effect on mental health as shown in the China study. The results of the study on ambient ozone and children's lung health are also bad, but it seems to be more common sense that air pollution is bad for respiratory health than mental health. Despite being strongly negative, these results are more comforting than the ones related to climate change from recent readings. The effects of climate change are inevitable, long-lasting and will affect people across the globe. Looking through the WHO data on air quality, the high levels of air pollution and negative impacts seem to be more localized and focused in lower-income cities. Ideally, these air pollution levels would fall as their income continue to rise and developed cities can serve as a model for what low-income cities should strive for in terms of air quality. The presence of large cities with low levels of particulate matter in the air to serve as a model is comforting because there did not seem to be any equivalent models during the climate change section. Due to this, these problems appear to be much more manageable than the rising CO2 emissions and the negative effects on the global climate. It would likely be easier to pass legislation with the goal of improving public health, especially for children, than it would be to improve ecosystem health since human health issues are much more relatable and likely to motivate change.
Toggle Commented Mar 12, 2020 on 3 short papers for Friday at Jolly Green General
The extremely large size of negative externalities tied to the coal industry and its consumption are very concerning. On the surface, it seems like a very irrational decision for the US to be mining and burning such a high level of coal, especially since roughly 80% of our CO2 emission is the result of coal; however, it makes much more sense in the context of Monday's class. Historically, much of the US energy policy is driven by the fear of running out of a nonrenewable resource and being stuck without a source of energy. Our coal reserves have the potential to last us for roughly 200 years (questionable profitability), which does somewhat rationalize the decisions to stick with an energy source that has so many "bads" associated with it. Additionally, many policy decisions in the latter half of the 20th century were developed with the concern of US dependence on foreign oil in mind. The coal industry is something that is domestic and limits foreign influence over the US economy. While historical context can somewhat rationalize the abundance of coal, much of the context is outdated and it does not take any of the environmental/public health externalities into consideration. The US is no longer at the mercy of OPEC for oil and wind/solar energy production is much more efficient than it was in the past. Even if the we were to switch to oil or natural gas as the primary source of electricity while wind/solar infrastructure is further developed and put into place, we would be much better off than continually relying on coal. A simple solution would be to cut subsidies for the coal industry and even tax it to internalize the negative externalities associated with it. This would force innovation to accelerate and a switch to alternative forms of energy.
Toggle Commented Mar 5, 2020 on Discussion Paper for Friday at Jolly Green General
There are a lot of interesting things to unpack in this paper, but I'll start with a minor point from the conclusion. It was stated that this study confirms past research that "price elasticity of demand for high-end tourism to be highly inelastic". I think that this could be an important point when trying to determine how to fund the conservation efforts in Belize. If someone is traveling internationally, they are most likely fairly wealthy, and their vacation is most likely going to cost over $1,000 if not several thousand. If someone is already spending that much on a vacation, I think the exit fee is going to be inconsequential to tourists and they would likely pay it no matter where the money was going. If the goal is the maximize contributions to PACT upon exit, the best way to approach that goal would be to determine how much people value a trip to Belize itself rather than just the ecosystems. From what I can tell, it looks like the fee is automatically included in most airline tickets. If someone has made the decision to travel to Belize, I do not think that a $20 fee attached to their flight would deter them at all. I think that people expect fees with flights (many countries have an exit fee up to $240) and the amount is rather inconsequential given the cost of the entire trip. An example from behavioral economics was a set of car mats that a dealership was selling for $550. Very few people were willing to pay $550 for car mats, but after purchasing a car that was, for example, $25,000, many people were willing to spend $25,550 to get the "upgraded" car mats, because of the different reference point in their decision-making process (spending $0 vs $25k). If someone's reference point was just the fee for conservation, $3.75, I would expect their WTP to be much lower than someone who was thinking of the cost of the whole vacation or even just the cost of the flight as a reference point. That might not reflect how much people would value the ecosystem but it would reflect how much they reference their vacation and would likely be greater. Since different people entering the country would have different WTP for their trip, you could account for that with different fees for different entry methods. For example, you could charge $20 to people entering by land, $40 to people flying economy, and $70 to people flying first class. That seems like reasonable amounts to pay and tourists probably do not care that much where the tax money goes. To bring my discussion back to people's WTP for the ecosystem, I think understanding how to price park entrance fees are very important to the conservation effort. People visiting the ecosystems would likely be the ones to care about them more and would directly be benefitting from their existence. Therefore, these people would likely be willing to pay more than the average person. All in all, it is crucial to understand how people value the ecosystems and their experiences in them to be able to create an efficient market of taxes that raise money for their conservation.
The Krutilla paper elaborates further on several concepts that we have discussed throughout the past couple of weeks, such as the divergence of private and social benefits/costs, market inefficiencies due to this divulgence, and difficulties associated with intertemporal decision making. Krutilla also mentions a few new things that I found rather interesting. One is the evolution of conservation from purely conserving natural resources to avoid depleting our stocks to the current issue of degrading air, water, and ecosystem quality. Another was the idea of tradeable options for environmental preservation. It would help to incorporate the scientific and sentimental value into the rents that a private landowner could earn off his property. This is not something that I have ever considered before, but it may be able to help close the divergence between private benefits and social costs, which would result in higher levels of ecosystem conservation. While there may be uncertainty around the best method for conservation, it seems rather clear that certain ecosystems need to be conserved for scientific purposes, as well as recreational and sentimental reasons.
Coase utilizes many examples to illustrate different potential outcomes and possibilities for disputes over damages caused by neighbors. I have generally thought of it as the one who causes the damages should be the one to pay for them; however, it was interesting to compare those situations with the possibility of the victim paying the guilty party to reduce their damaging behavior. I am not sure if that will be the most practical. As mentioned in Adam's comment, many of the damages to the environment, such as carbon emissions, affect many people and negotiations involving everyone would be very costly. Additionally, paying firms to reduce environmental damage might incentivize them to take initial points with very high emissions levels to capitalize on their ability to profit from reducing them. However, I believe a government subsidy for firms that can meet certain specific emission standards would be better than no action at all. Additionally, Coase discusses how any action that reduces the initial deficiency is often seen as beneficial, but this may not necessarily be the case. We need to make sure that any corrective actions do not cause harm that is more damaging to society than the initial deficiency. As an extreme hypothetical example, if the solution to reducing fertilizer runoff into streams was to simply stop growing crops, then the new problem of food shortages would likely outweigh the gain of reduced fertilizer runoff.
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Jan 16, 2020