Energy Externalities

Welcome to Economics 255

2012-01-09T06:12:00.000-08:00

Good morning everyone and welcome back to Lexington. We will be using this blog to conduct a conversation outside of class. Once or twice a week I will post an article (typically from the popular press) and you will be required to read and comment on the article. The best posts are usually critical of something in the article, draw on something discussed in class, or build on a previous comment by one of your classmates.

Your first assignment is to open an account (if you don't already have one), then introduce yourself to the class. Tell us a little about yourself, if you have any relevant experience in the area of resource economics/policy/management, and what you hope to learn throughout the semester.

Stay tuned.....

Drill Baby Drill!!!

2011-04-07T05:30:00.000-07:00

Whale and dolphin death toll during Deepwater disaster may have been greatly underestimated

So much for having solved the ozone hole problem

2011-04-07T05:26:00.000-07:00

Record-Low Arctic Ozone Leads to High UV Radiation in Finland

Are Humans Now Overwhelming the Great Forces of Nature?

2011-04-04T07:42:00.000-07:00

Please comment by Thursday morning - The Anthropocene

FOR THURSDAY

2011-03-28T09:26:00.001-07:00

Please comment before 8am Thursday morning. Try to focus on a particular policy or aspect you find most intriguing.

Toward a New National Energy Policy: Assessing the Options

Climate Economics

2011-03-15T07:32:00.000-07:00

Please leave your comments by 8AM Thursday morning.

The marginal damage costs of carbon dioxide emissions:an
assessment of the uncertainties

Get Serious

2011-03-09T11:04:00.000-08:00

If we want to get serious about Budget deficits then we need to look at energy subsidies.

Pleas read this short piece and comment by 8 am. See you tomorrow.

JC

People you should get to know

2011-03-03T05:52:00.000-08:00

Dan Schrag at Harvard

Mark Jacobson at Stanford

Dan Kammen at UC

The Energy Group at MIT

Remember, you don't have to read everything and understand everything these folks are working on - but I think its important to try.

JC

Gas Prices???

2011-03-02T10:45:00.000-08:00

If you think gas is expensive today, you would have hated 1918.

Inflation adjusted gas prices

2011-02-16T06:09:00.000-08:00

Here are two articles from resources for the future looking at the link between certification and environmental outcomes. We will not discuss them in class, as I would like to use tomorrow's class time to review for the midterm. However, if you would like to talk about these outside of class I am happy to do so anytime.

Enjoy.

Allen Blackman and Maria A. Naranjo 1

Allen Blackman and Maria A. Naranjo 2

Show Me the Money

2011-02-08T11:41:00.000-08:00

Please comment before 8 am (5am pst)Thursday morning - Article for thursday

What happens when a Socialist with a degree in Economics becomes President?

2011-02-07T11:02:00.000-08:00

The Answer: Rafael Correa.

Is it bad business to engage in environmentally poor practices?

2011-02-07T11:00:00.000-08:00

Here is an interesting article - Forests

A couple of CEOs on Energy

2011-02-02T10:38:00.000-08:00

Yesterday, in class, I mentioned Jeff Immelt. Here is a piece from a few years ago - Immelt.

Here is another one from today's Fortune online. This time it is Fred Smith of FedEx.

So what are we waiting for???????

Interesting FishTale

2011-02-02T08:32:00.000-08:00

This article is a great read for anyone interested in fisheries management.

Here's a loaded question (Just for fun)

2011-01-25T05:54:00.000-08:00

What kind of a Republican do you want to be?

Greg Mankiw

or

Sarah Palin

Absolute Must Reads

2011-01-24T18:16:00.000-08:00

There is no way anyone should teach a course on environmental economics and not assign these papers by Garrett Hardin and John Krutilla.

Enjoy!

The Problem of Social Cost

2011-01-16T12:23:00.001-08:00

There are lots of interpretations of Coase out there - including, but not limited to, Kahn (your textbook author) chapter 3, Haab, and Friedman.

I figure, let's read it ourselves - The Problem of Social Cost.

What do you think he was trying to say?

Stavins for Thursday

2011-01-11T06:20:00.000-08:00

Please read and comment by 8am Thursday.

The Myth of the Universal Market

The Myth of Simple Market Solutions

One last Myth

First blogging assignment

2011-01-11T05:37:00.000-08:00

Please answer these questions by 8am Thursday.

1) Why are you taking this course?
2) What do you bring to the class?
3) Is there something specific you hope to learn?

Welcome to Economics 255

2011-01-11T05:34:00.000-08:00

Good morning. This site will serve as the class blog. I will post articles from time to time and expect you to read them and comment before the next class meeting. Additionally, any outside readings will be posted here (also linked on the course homepage) - you are expected to comment on all outside readings before class.

Take a look at previous entries for examples.

More Co-Conspirators

2009-12-11T12:44:00.000-08:00

More evidence of the giant conspiracy (SARC). How much more can scientists do to convince the general public?

Tax or Cap?

2009-12-07T10:32:00.000-08:00

Here is some recent testimony by Ted Gayer

Consider the Source

2009-12-04T17:15:00.000-08:00

A lot has been made about the hacked emails fro East Anglia. This is a bad situation for science, but it in no way compromises or places in doubt the work of tens of thousands of good, ethical scientists and their work on global climate change. I have been assaulted by articles and commentaries from such reputable scientific publications as the wall street journal, fox news, rush limbaugh, and redstate.com (SARC). If you are truly interested in Science and not particularly impressed by and/or interested in ideological rantings - start here.

China to the rescue

2009-11-25T06:32:00.000-08:00

If the Chinese Government can do this - why can't the US?

Another Energy Externality

2009-11-25T06:22:00.001-08:00

This time it relates to water - from the SF Chronicle

Melting Glaciers and Freshwater Supply

2009-11-11T05:32:00.000-08:00

Yesterday, David asked an excellent question about melting glaciers and ice caps and the loss of freshwater. I didn't answer the question very well, but here is a more sufficient reply.

Aquacalypse Now

2009-11-09T14:31:00.000-08:00

Just how bad is the fishery situation? Take a look.

Mount Kilimanjaro

2009-11-02T18:43:00.000-08:00

Check out this photo and article from the Times.

Thank you Senators.

2009-10-12T11:00:00.000-07:00

Bipartisan climate policy - is it possible????

Not So Fast

2009-10-09T08:49:00.000-07:00

How hard will it be to negotiate binding restrictions in Copenhagen?

Paul Predicts the next "Debate"

2009-09-25T06:10:00.000-07:00

I agree with Krugman. We are in for a real treat when the Senate picks up on the Climate Bill. This is from the Times this morning.

Working Together

2009-09-23T10:37:00.000-07:00

I thought this was an interesting example of how Theologians and Scientists are working together. What do you think?

Believe it or not: What we need now is higher gas prices.

2009-08-28T08:34:00.000-07:00

“We are swilling oil faster than new fields are being discovered.” “Is oil at the tipping point?” Jane Bryant Quinn and Robert J. Samuelson ask these two questions in the latest issues of Newsweek. With gasoline prices hovering around three dollars a gallon the American public and press are rightly concerned and preoccupied with the effects of high gas prices – but they are missing the point. Yes – we do need comprehensive energy policy, but we do not need lower gas prices or to worry about the impending end of oil. In fact, running out of oil is not a problem. The real problem (as Joe Stiglitz was kind enough to point out in the last volume) is the pollution that comes from burning fossil fuels – mainly CO2.

The concerns about the price of gasoline are straightforward. Uncertainty in the Middle East is fueling fears of a reduction in the supply of crude oil. This potential supply constraint will have the effect of raising the price of gasoline (and all energy) in the United States. The fear is that rising energy costs will eventually burden the US economy and lead to recession. These may, in fact, be concerns and anyone who drives to work each day certainly feels the pain of $3.00 a gallon gasoline. So you may find my next statement a little strange – we need higher gas prices. In order to internalize the externalities associated with burning gasoline, the price of gas should be much higher than it currently is and in the end – higher gas prices will benefit not only the environment but also the US economy.

The argument for higher gas prices is not new. In fact, Gary Becker and others have made the argument many times in the past decade that what we really need are some steep increases in gas taxes. Increasing the price of gas will have several effects including (1) conservation of oil reserves, (2) increasing investment in alternative energy, (3) the transfer of wealth from oil exporting nations to the treasury department of the United States of America and (4) the reduction of greenhouse gases and other air and water polluting emissions. The first effect is straightforward in that when prices increase the quantity demanded falls. The recent rise in gas prices to over $3.00 per gallon has not had much of an impact on the amount of gas consumed. But, if we were to move from $3 to $5, I’ll bet we see a change in the amount of gasoline consumed. The second effect will take time, but it is one that needs to be told – that is – higher gas prices will eventually be good for the US economy. Alternative energy in the form of hydrogen, solar, wind, hydro, etc will all benefit from higher gas prices. Businesses will grow. Investment will increase. Jobs will be created and national security improved all through the development of the alternative energy sector. As for number 3, the current dollars flowing to Saudi Arabia, Canada, Venezuela, Mexico, Iraq, and Nigeria will begin to flow to Washington D.C. Lastly, the fourth effect comes directly from the first. If people drive less there will be less pollution in the form of reduced CO2, NOx, SO2, and O3.

The importance of number four cannot be overstated. The release of CO2 is the primary greenhouse gas responsible for climate change. Recent estimates from the impacts associated with increasing concentrations of CO2 in the atmosphere range from (Tol, 2005)…. NOx is the primary pollutant in the formation of smog and SO2 is the precursor pollutant for acid precipitation. Although we have made tremendous strides to reduce NOx and SO2 emissions, there is still more that can be done. The last pollutant O3 – low level ozone – forms when NOx from automobiles interacts with sunlight and the recent epidemiological literature is powerfully suggestive of the ability of low level ozone to not only exacerbate asthma and other bronchial ailments but to cause increases in the incidence of these breathing disorders. In order to reduce these costs – we need to increase the price of gasoline.

When are we going to recognize the full costs of our addiction to oil? To argue that the high price of gasoline will hurt the US economy is to ignore the true costs associated with “cheap” fuel. Global climate change, and the health of our children are at stake. Why are we willing to sacrifice the health of the planet and of our children in order to keep gas prices low? Clearly these are enormous costs and when we are willing to recognize these costs we will also be willing to see higher gas prices. But how?

My idea is to implement a $3.00 per gallon federal gas tax in phases over the next six years (50 cents a year). This will give firms and households time to change behavior. Additionally, in order to offset the financial burden to poorer households there will be an income tax refund available during the same time period. In order to be fair let’s set the income threshold for those eligible to receive the rebate at two times the median household income. So, any household with an annual income of less than 85k will be eligible. The refund will work in the opposite direction of the tax. In the first year households will be eligible for a 50% refund on fuel expenditures. In year two it falls to 40%, year three 30%, until it is fully phased out in year six. Any households falling below the poverty line would be eligible for full refunds for all six years. Households between the poverty line and 45k would be eligible for double the refunds proposed with the same phase out as the households between 45k and 85k. Now is the time to act and raise gas taxes in order to protect our children and the planet they will inherit.

The Candidates on Energy

2008-06-30T11:30:00.000-07:00

If we have time tomorrow we can talk about this article from today's CSMonitor.

Post comments and let me know what you think of these ideas.

JC

Assignment for Thursday

2008-06-30T11:02:00.000-07:00

The Myth of the Universal Market

The Myth of Simple Market Solutions

One last Myth

Welcome Summer Scholars

2008-06-27T14:30:00.001-07:00

Welcome to Lexington and welcome to the world of environmental economics - no its not an oxymoron. We will start Monday morning with some introductions and background material and then jump right into ENV-ECON 101.

I am looking forward to meeting each of you and working together during the month of July.

Jim

Gas prices are too Low

2008-05-25T20:27:00.000-07:00

Thanks to Bob Frank at Cornell for this one.

More from our Potential Leaders

2008-04-17T09:25:00.000-07:00

Here's a good read about energy policy and the three musketeers.

Can you say Double-Dividend!!!!!!

Final Policy Readings

2008-04-16T12:30:00.000-07:00

Here are the last four papers for the semester. Please have them read by tuesday.

Pollution Policy Papers

Tuesday's readings

2008-04-14T05:30:00.000-07:00

Wind v. Coal

Hydrogen Fuel Cells

E85

The Power Problem

2008-04-09T09:59:00.000-07:00

Please read this short article for Thursday.

We will most likely have another short quiz.

Jim

Stabilization Wedges

2008-04-07T06:28:00.000-07:00

Please read this article for tomorrow. We have not had a quiz in some time........

Environment Virginia 2008

2008-04-01T10:28:00.000-07:00

I am off to Lexington today for the 19th annual Environment VA conference.

I will be talking about some economics of biofuels Wednesday at 3:30.

See you next week.

Sea Level Rise

2008-03-19T09:00:00.000-07:00

Yesterday in class we discussed how climate change might hurt the economy. One of the issues we focused on was a rise in sea level and what that might mean for Miami or Wilmington. Here is an article from yesterday's NYTimes with more details.

Climate Change reading

2008-03-16T16:11:00.000-07:00

Please read this paper for Tuesday.

Jim

Immelt on Hell

2008-03-13T07:20:00.000-07:00

Very interesting comments from GEs leading man. Since we are talking about energy policy I thought this might interest all of you.

All you ever wanted to know about US energy

2008-03-11T09:08:00.000-07:00

This is a very cool site for learning about the production, transport and consumption of enery in the US.

The Price of Gasoline

2008-03-11T08:31:00.000-07:00

What do you make of the following? Chart

Can you form any testable hypotheses by looking at this data?

Welcome Back

2008-03-11T05:37:00.000-07:00

Hope you all had a nice break. We will spend this week finishing the acquisition-dissipation model and focusing on chapters 8,9, and 7. This should give us a solid foundation for reading the primary literature beginning next week. See you this afternoon.

jim

As Promised: Candidate Positions

2008-02-26T13:49:00.000-08:00

Which one of the leading Presidential candidates thinks ethanol is a complete boondoggle? Let's put it this way - it cost him Iowa in 2000.

More Wind from Texas

2008-02-23T12:42:00.000-08:00

I realize there has been a lot of hot air blowing from Texas the past seven years - but this breeze is very cool.

Once Again its MIT

2008-02-21T08:09:00.000-08:00

Improving the world - one randomized trial at a time.

Obama Mania Continues

2008-02-20T05:35:00.000-08:00

It looks like we will have climate policy coming from the White House no matter who wins the general election in November. The only remaining question is whether we get a tax on energy or a cap and trade system. Here is a quick look at some current proposals floating around congress.

Interesting News from Oregon

2008-02-14T18:15:00.000-08:00

This looks promising.

It also looks like something we could do here in the Southeast with NCState's College of Natural Resources leading the way.

Cap 'n Trade or Tax?

2008-02-14T08:50:00.000-08:00

Here is a post from the Director of the CBO - reducing carbon emissions.

Back from Orlando

2008-02-14T08:35:00.000-08:00

Sorry for the lag in posting - I've been in Orlando Florida at the World Aquaculture Society Annual Meeting. Today we will begin our discussion of Macroeconomics and the Environment. Most Environmental Economists are applied Micro types, but there is much for Macro to teach us as well. I think the fundamental question here is whether or not the Economy and Environmental Policy are complements or substitutes. The typical story is that environmental policy will hurt the economy. That is, there is a trade-off between growing the economy and protecting the environment. The first thing we will do in class today is develop a simple model to look at how the environment and the economy interact. Then we will talk about the Porter Hypothesis, The Environmental Kuznet's curve, and sustainability. I would like to finish the day with an introduction to the revenue neutral gas tax.

Is everything subject to the market?

2008-02-01T14:30:00.000-08:00

Yesterday in class there seemed to be some discomfort with nonmarket valuation. The idea of placing dollar signs on environmental goods and services just didn't sit well with some of you. Might I say it made you feel yucky?? Here is an interesting article from yesterday's NYTimes looking into the Yuck factor. Enjoy.....

Another Example of Bad Policy

2008-01-29T08:26:00.000-08:00

In an election year what politician is going to tell farmers the truth about corn-based ethanol.

And who reads Popular Science?

MITEI

2008-01-29T07:58:00.000-08:00

Here is the first newsletter of 2008 from the MIT Energy Initiative.

My Alma Mater

2008-01-28T12:13:00.000-08:00

This is the Year of Energy at NC State. Having received my M.S. from the College of Agricultural and Life Sciences and my Ph.D. from the College of Natural Resources, I must admit to being quite proud of the Wolfpack family.

The General

What to do with $57 billion?

2008-01-24T10:13:00.000-08:00

Today's NYTimes reports a tentative deal on a fiscal stimulus package. Apparently, the Federal government is going to cut every family in America a check for between $300 and $1,200. There are approximately 77 million households and let's assume we split the difference on those payments for an average check of $750. Now do the math - that's over 57 billion dollars. The hope is that Americans will rush out and purchase new goods and services. In other words - pump up the aggregate demand curve with a boost to C (recall: Y = C+I+G+X-M). Now recall that any attempt to boost aggregate demand in the short run is inflationary in the long run. So, instead of attempting to boost C, why not go after I (Investment). The government could actually spend the 57 billion on (1) alternative energy, (2) fixing bridges, (3) insuring all Americans, so firms don't have to!!! (4) fixing schools, or (5) alternative energy - oops - that was number one. Or, if you don't like government spending - we could provide 57 billion in tax breaks for private firms that do all of the above. If you target Investment - you get the short run demand side stimulus followed by long run productivity gains. So let's forget going to the mall and start pushing out that Aggregate Supply Curve. Anyone, Anyone, Buehler, Buehler!!!!!

More on the Cost of Biofuels

2008-01-23T10:46:00.000-08:00

My friend and colleague, Dr. Bill Hamilton from Washington and Lee sent me this article from last week's NYTimes.

Can The President Lower Gasoline Prices?

2008-01-15T10:41:00.000-08:00

It's an election year, as if you were not aware. So, it becomes even more important to understand the powers of the President. He has the power to declare war, but can he lower gas prices? Take a look at this article in the NYTimes.

What is the President attempting to do? And will it work?

People You Should Get To Know

2008-01-13T18:59:00.000-08:00

Thursday, in class, I mentioned that I thought it was important for Environmental Economists to have (at least) a decent grasp of the natural and physical science behind much of what we talk about in the social science of environmental economics. So, I thought I would provide you with a list of the people I try to read in order to keep abreast of what the best "scientists" are up to these days.

Dan Schrag at Harvard

Mark Jacobson at Stanford

Dan Kammen at UC

The Energy Group at MIT

Remember, you don't have to read everything and understand everything these folks are working on - but I think its important to try.

JC

Welcome Back

2008-01-07T11:03:00.000-08:00

Hello UNCW students. Welcome back. I hope you all had a relaxing, refreshing break and are ready to get back to work. This blog will serve as the official homepage for our course. I expect you to read it daily and to post comments weekly. Invite your friends to read and comment. Heck - invite your mom and dad, the more the merrier. I am looking forward to Thursday's class - please have chapter one read beforehand.

ECN 325
ENVIRONMENTAL ECONOMICS
UNCW Spring 2008

INSTRUCTOR: Dr. James F. Casey
OFFICE: 220-I CSB

Phone: 962-3513

Office Hours: By Appointment
E-MAIL: caseyj@uncw.edu
TEXT: James R. Kahn, The Economic Approach to Environmental and Natural Resources, 3^rded. Dryden Press, 2004.

COURSE WEBSITE: http://energyexternalities.blogspot.com

PREREQUISITES MAT 111, ECN 125 (Survey of Economics) or ECN 221 (Principles of Economics - Micro) or consent of instructor.

COURSE DESCRIPTION An introduction to the application of economic concepts to environmental problem solving.

COURSE POLICIES

GRADING:

Your grade in this course will be based on performance on three exams, several surprise quizzes, and blog participation. The 10 point scale applies: 90-100 = A, 80-89 = B, 70-79 = C, 60-69 = D, <60>

3 exams = 75% of final grade (20%, 20% and 35%), random quizzes = 10% of final grade, blog participation = 15% of final grade

EXAMS:

The exams will be composed of essay-type questions, short answers and graphing. Each exam will test your knowledge of material covered since the previous exam, so these exams are not explicitly comprehensive. However, as much of what we will learn in this class builds on previously attained knowledge, all of the material is in effect cumulative.

ATTENDANCE POLICY:

Attendance is not a formal component of your grade in this class. You will be held responsible for everything that goes on in class including all material (some of which is not in the text) and the consequences of any important announcements. My advice, which you may choose to ignore, is to never miss class, because class is easy (show up, listen, and participate), its fun, and we’re going to learn to some really interesting stuff.

MAKE-UP POLICY:

Make-ups will only be given in the event of a valid and approved University emergency. The exam dates are set. Please schedule your semester accordingly.

TIPS FOR SUCCESS:

This class is about learning some of the fundamental issues in economics, and applying an economic way of thinking to environmental problems encountered by society. As we develop a methodology for examining these problems, I hope you will also continue to develop a more general sense of intuition about economic problems and issues. I am not terribly interested in formalism and memorization. I am interested in intuition and understanding. To accurately test your knowledge, I will ask you some questions that may be perceived as requiring memorization, but most importantly I want you to show that you have truly learned the material and understand why it is important. As you study, you should always ask yourself questions that begin with the word “Why” to gauge your comprehension (“How” questions are pretty important too).

To be successful students of economics, we need to be inquisitive. I will ask a lot of questions during class, and I hope you will respond. Reading chapters ahead of time will greatly contribute to your success in class. I cannot stress this strongly enough. Please do not hesitate to ask me questions either during or after class. While I cannot promise to have all the answers, I can assure you that issues you feel are important will be addressed.

This is your course. You will find that I am pretty flexible with regard to many aspects of this class. I value your input and will use it to make the class better for you, so if there is anything that you feel will enhance your learning experience, please let me know.

Finally, if you feel that you are having difficulty with a topic or issue, please let me know as soon as possible. Do not wait until it’s too late. Use the office hours or make an appointment to see me at another time (or send me your questions via e-mail).

POLICY ON ACADEMIC HONESTY: The UNCW Academic Honesty Policy, as documented in the Undergraduate Catalogue and in the Student Handbook, will be followed in this course.

Class Schedule Spring 2008

Thursday 1/10/08 – introduction, chapter 1

I. Introduction to Environmental Economics: Theory and Methods

1. Tuesday 1/15/08 – review of microeconomics principles, markets and efficiency,

chapter 2 and http://www.technologyreview.com/printer_friendly_article.aspx?id=19842

Thursday 1/17/08 – market failure: chapter 2 and Tragedy of the Commons

2. Tuesday 1/22/08 – market intervention, when and why: chapter 3

Thursday 1/24/08 –: Valuing the Environment: chapter 4

3. Tuesday 1/29/08 – Valuing environmental goods and services, chapter 4

Thursday 1/31/08 – Valuing environmental goods and services, chapter 4

4. Tuesday 2/05/08 – Making Choices, chapter 5

Thursday 2/07/08 – Environmental Policy, chapter 5

5. Tuesday 2/12/08: EXAM 1

II. Energy Acquisition and Dissipation

Thursday 2/14/08 – Macroeconomics and the Environment, chapter 6

6. Tuesday 2/19/08 – chapter 6

Thursday 2/21/08 – chapter 8

7. Tuesday 2/26/08 – chapter 9

Thursday 2/28/08 – chapter 7

Tuesday 3/4/08 – NO CLASS

Thursday 3/6/08 – NO CLASS

8. Tuesday 3/11/08 – Chapters 8 and 9

Thursday 3/13/08 – ch. 7

9. Tuesday 3/18/08 – TBA

Thursday 3/20/08 – NO CLASS

10. Tuesday 3/25/08 – TBA

Thursday 3/27/08 – TBA

11. Tuesday 4/1/08 – TBA

Thursday 4/3/08 – Exam 2

III. International Development Issues

12. Tuesday 4/8/08 – TBA

Thursday 4/10/08 – TBA

13. Tuesday 4/15/08 – TBA

Thursday 4/17/00 – TBA

14. Tuesday 4/22/08 – TBA

Thursday 4/24/08 – REVIEW FOR THE FINAL