Saturday, December 02, 2006

Real Wages abd Productivity

First, we need to think about what we mean by "wages." A worker's nominal wages are the dollar value of her take-home pay, not including benefits. For example, if a worker earns $20 per hour before taxes, that is her nominal hourly wage. However, a worker's real wages are the wages adjusted for inflation. However, the article doesn't say that real wages have decreased--indeed, with the exception of 2005, real wages have generally increased over the last few years. The article's main point is that as a percentage of GDP, real wages have been steadily declining. In other words, the growth rate of GDP has been steadily greater than the growth rate of wages and salaries.

Who needs Kyoto when we have the Endangered Species Act?

Consider the following taken from the :
Whenever any species is listed as a threatened species...the Secretary shall issue such regulations as he deems necessary and advisable to provide for the conservation of such species.
Now keep that in mind while you (from AP):
In a move hailed by environmentalists, the Bush administration announced it will review whether polar bears should be considered a threatened species given indicators that their icy habitats are melting away due to global warming.
Could the ESA really be used as backdoor legislation for global warming? Just wondering.

Friday, December 01, 2006

Oceanic Biodiversity

There has been studies by enviornmentalists that show that we must reduce the number of fish being overfished or other practices or we will destroy our oceanic biodiversity. The biodiversity is quickly being depleted and they will die off if we continue to destory at the current rate and dont re-enforce a new policy. Scientists say that with out policymakers making a change we will see a world marine biodiversity that will be depleted by the mid 21st century. Many fisheries have been completly destroyed and the amount of marine life is not an unlimited supply, which in fact is harder to repair then it is to be destoyed. In the recent news the policies have made it clear that we are staring to preserve the diversity. With the fisheries management we can say that science is responsible for keeping the ecosystem so it may sustain a long term economic health in fish communities to get the biodiversity around. More countries and fisheries need to follow the sustainalbel models that have been practiced by Alaska's fisheries. We need Congress to step in and improve the policies to make more fisheries efficent like those of them in Alaska. What needs to be done is a proposal needs to be sent to the president that would provide a strict enforceable limits on the amount that can be taken out of a given area. The biodiversity of marine life will be depeted faster than we can fix it so we have to apply policies to keep these species around.

Thursday, November 30, 2006

Are penguins heading towards extinction?

There is concern that twelve penguin species worldwide are under the threat of extinction. The Center for Biological Diversity has filed a petition to put the twelve species under the protection of the Endangered Species Act. Global warming is thought to be the cause of reduced food supply and decreased penguin populations. Humans are said to be the main contributors to global warming. The Center believes that “predators, disease, habitat destruction, disturbance of breeding colonies, oil spills, marine pollution, and in some cases, direct harvest”, are threatening penguins. There is belief that the people of Earth are in denial about what is happening and that the government of the United States needs to take control of the situation before it’s too late.

If the criteria of the Endangered Species Act were met and the species were listed, the economy could incur substantial economic costs. Knowing that economic costs are not required to be examined when making policy decisions in reference to the ESA is of concern to me. No, I do not want to see penguins disappear, but at what cost should we keep them around? Is it even possible to save them? What if the scientists are wrong about global warming? These are all questions that I do not have answers to. It says in the article that there is evidence that the “costs of reducing emissions will be vastly outweighed by the economic benefits of reducing future warming”. I just have to wonder if this is really true. If this were true, why have the companies not taken it upon themselves to invest in capital that would reduce global warming? It just does not seem to be me that it would be cheaper for them. It would add to their costs. Government would not be needed to enforce regulations if the companies had their own incentives to invest in cleaner capital. So, should we save the penguins? Probably. However, I feel that there is more information that is needed before we ultimately turn to the ESA.

Fishing industry moving toward economic efficiency and sustainability?

Seeing fishing industry move toward efficiency and sustainability is the dream of many people in the world , as there is major concern about over fishing and depletion of fish stocks….if we over fish then the ecosystem in the ocean will be massively disrupted. And many people will face starvation etc…it’s something more real to people more quantifiable... more pressing and more feared, Than global warming but it receives less press...
Most people say not to interfere with the current market and its current costs however if industry doesn’t move to a more sustainable system the real cost of feeding people will skyrocket. The current system faces gross overcapacity. Such circumstances provide for constant downward pressure on the pricing. Thus blinding us to the real cost…
I found a reference in an article to how Iceland dealt with their system Iceland is a good test market for the world because they have small enough economy to manipulate but large enough to be representative of the rest of the world . They are trying a hydrogen power car economy right now and the world is watching because its models may be used to implement similar program in rest of the world. The article goes over the 15 yr Icelandic implementation of a sustainable program the first thing introduced is quotas. These bring some protest but a solution is found in transferability. The quotas were not acceptable because they faced overcapacity. The transferable quotas solve things by allowing efficient allocation of quota to be market determined…. The government wanted to internalize over fishing‘s costs. The best way they had was to give those who make living in fisheries an economic stake in conserving the stocks this would encourage using them in a sustainable manner. For this policy to succeed the fisheries sector must be made economically efficient. Economic efficiency is a required ingredient to ensure ecological efficiency.
Here is an excerpt from the article...
"Fisheries management is of crucial importance to the promotion of sustainable fisheries. Such a system must be based on sound scientific knowledge and rigid surveillance and enforcement. Yet while fisheries management is a necessary condition for sustainable fisheries it is not sufficient all by itself. For the system to be effective it must be accepted and supported by the fishing industry and fishermen alike. An important way to build that support is to raise awareness through consultation between public authorities and the fishing community. But a more effective way is to give those who live from fisheries an economic stake in conserving the stocks and using them in a sustainable manner. For that to happen the fisheries sector must be made economically efficient. In short, economic efficiency is required to ensure ecological efficiency.
To offer an example, the Government of Iceland devoted some fifteen years to developing an effective sustainable fisheries management system. Total Allowable Catch (TAC) was introduced for all the most important commercial fish species, based on sound scientific observations and assessments. Also, to ensure that catch levels were not surpassed, a rigid enforcement and compliance system was established to monitor the fishing of every fishing vessel in the country with the help of a state-of-the-art computer system that links all ports of landings to the Directorate of Fisheries.
Yet despite the ever more stringent system, there was always pressure from the industry to increase the TAC and to allow for more fishing capacity. The underlying reason was that the system lacked the economic incentive granting the industry and fishermen a more direct stake in the conservation and sustainable use of the stocks. The one factor standing in the way of generating this incentive was the overcapacity of the fleet. In other words, there were too many boats fishing the limited amount of fish to allow for sufficient economic return for the operations. The fleet had to be rationalized. Towards this end Individual Transferable Quotas (ITQs) were introduced.
The advantage of ITQs is the efficiency and flexibility offered. Fishing operations can increase or reduce their harvesting rights and change their composition in accordance with what they feel is cost-effective. This they can do by trading in catch quotas through a public auction market, the Quota Exchange. The price is determined by supply and demand and payment for harvest rights is either made in monetary form or by exchanging rights.
The cost-effectiveness of fishing in Iceland has increased substantially due to the quota system. Many enterprises have merged to allow for increased efficiency and to spread operating risks. Both management and ownership of enterprises have also changed and presently most of the country’s larger fishery enterprises are listed on the stock market. This, coupled with the flexibility of the system, has led to results in line with the generally positive experience from the application of ITQs in other countries, which broadly speaking means,
there has been a decline in fishing efforts;
the growth of the fishing fleet has stopped and in some cases contracted;
economically important fish stocks have recovered;
the quality of landed catch has increased;
profitability has increased; and
total employment in the industry has not contracted significantly owing to the increased emphasis on product value and quality.
The fisheries management system in Iceland is still under development. But the experience to date has shown that the success of sustainable fisheries management depends not only on rigid ecological requirements with respect to science and catch levels and on active participation of stakeholders, but also and perhaps more importantly on the fisheries sector being economically efficient."

The lesson learned can apply globally as we currently estimate
  • Global overcapacity was estimated at 30% in 1989 fishing fleet
  • Some see this as an underestimation and assess the current overcapacity as high as 150%.
  • Government subsidies are a major cause of this overcapacity.
  • State subsidies have attracted more entrants into the fishing industry and financed advanced technology that otherwise may not have been afordable.
  • Subsidies to the fishing sector have prevented the market signals from influencing the fishing industry to stop investing in already overcapitalized fisheries.

Tuesday, November 28, 2006

Flamingo Paradise Shrinks Along With Lake

Flamingo Paradise Shrinks Along With Lake – Cliff Brown

In an article on, by Charles Hanley on November 16, 2006 the “famous flamingos of Nakuru are fading away.”

Warming, drought, deforestation and pollution are blamed for the decline. A sewage treatment plant is being worked on which will certainly help with the pollution issue. But, what about the other issues?

Since “Tourism is the lifeline of the area” it would seem that either assigning some kind of property rights to the Flamingos to those responsible for the polluting and/or responsible for the deforestation would help capture some of the associated negative externalities,

Combining this with an elasticity of demand study for the tourists may help raise revenues for the area. If it did then these additional monies could further enhance the efforts at reducing some of these negative effects.

As for the warming effect I have to look at the statement “Lake Nakuru … has shrunk before, even disappeared. But this time, because of global warming it may be different.” Also, some of the birds have relocated to other lakes in the Rift Valley that are suitable for the bird’s survival. This makes me wonder if it is even necessary to do anything about the “problem”? Does the cost of tying to alleviate the problem, and get the birds onto the proverbial Noah’s ark, outweigh the benefit? Might the birds figure things out for themselves and be just fine without any intervention?

Never fear. I am sure the UN Environment Program will arrive at a satisfactory solution without my intervention!

Tuesday, November 07, 2006

Import Automakers are still the best!

Volkswagen Research has developed a new and innovative type of high temperature fuel cell (HTFC) that means an affordable fuel cell-powered vehicle suitable for everyday use could be available as early as 2020.
This breakthrough is made possible thanks to a new, high temperature membrane and electrodes, which enable significantly more compact, cheaper and more efficient fuel cell systems. In the HTFC protons are exchanged via phosphoric acid. The acid has good electrolyte prperties, similar to water, but has a higher boiling point permitting higher temperature operation and simplifies the water management and humidification required in most PEM cells. On a special screen printing machine, the new electrodes, made of carbon fiber cloth are coated with a new type of paste, which makes the electrode impermeable to water and preventing dilution of the phosphoric acid.
LTFC systems are operated at a membrane temperature of approximately 80 degrees Celsius, or about 176 degrees Fahrenheit. If the temperature greatly exceeds this value, fuel cell performance breaks down and irreparable damage is done to the cell.
The high temperature, thinner membrane developed by Volkswagen can, in combination with newly-designed electrodes operates at temperatures of up to 120 degrees Celsius, or about 248 Fahrenheit, without additional humidification. Thus a distinctly simpler cooling and water management system is possible, significantly reducing the cost and the requirements for space and weight.
After additional improvements the first research vehicles are expected by 2010 and by about 2010 the first full production models could appear.

The Endangered Species Act is Endangered

I think the main critisism of the ESA is that it encurages private land owners to "shoot shovel and forget it" That is Land owners are givin the insentive to kill those species that threaten the value of thier land and the very least to under report thier existance.
"Such a law would encourage developers to go looking for environmentally sensitive areas to propose projects and seek compensation."
And this is a bad thing that we can be sure about is that species would no longer be under reported...and those with such species on thier land would have the incentive of keeping them there and keeping thier populations healthy.
My simple question is what is the intent of the ESA? To punish land owners and developers or to protect species for extintion.
The advantage of such a law is two fold first it gives insentives to land owners to preserve wild life and second it puts the burdon of preservation on the public rather then the individual land owners. Which is good becouse it is the public that benifits.

Sunday, November 05, 2006

Conservation Hotspots

For the longest time it was thought that the best way to save endangered species was to have the government allocate land for conservation. This land would have to have a large number of endangered animal species. The hope was that the designation of these hotspots would be the most effective route. However, recent studies have shown that there is no way to be certain that these areas will conserve a species. The reason is said to be that many species do not populate just one region or area. Ian Owens and David Orme found that different species in different regions have varying issues that they face. Some of the issues are poachers, disease, the destruction of their habitat, etc. There is now concern over the efficient allocation of funds to conserving the endangered species.
My thought is that maybe they should take these issues into consideration when directing funds into a conservation site. One of the men from the study said that "politics and economics control conservation". When I think of the economics of this situation I wonder if what they have been doing has been efficient or even sustainable. The study appears to show it has been neither. It would seem to me that in the future the governments need to take the issues affecting the conservation into consideration a little bit more when making policies.

Tuesday, October 31, 2006

Endangered prairie dogs

In the past three years the Bush administration has rejected recomendations on how to help the Endangered Species Act. The past U.S. presidents have done alot more in terms of emiting animails into the Endangered Species Act. For example Clinton listed 512 species as endangered compared to the 56 species that Bush has listed. There are many species that are on the edge of being extinct such as the white-tailed prairie dog. In documents talking about endangered species there has been a tremendous amount of economic and social implications for people. Over the past 30 years there has been about 25 species that have been removed from the endangered/protection list. This is a definite problem in 30 years we have only fixed the endangerment problem for only about 25 animals or plants then there has to be some changes made. The big endangerment problem is continuing to grow with the expansion of economic development. Julie MacDonald had pushed for the protection of the white-tailed prairie dog that the even if the protection came about as a not-warranted listing. The deputy assistant secretary of the interior for fish and wildlife and parks, Julie MacDonald, has made several accusations towards scientists that appear to be not business relatated but instead causing a systematic problem of tampering with science that is putting our envoironment at risk.

Alternative Energies

There have been mixed signals lately on alternative energy sources. An article came out not too long ago stating that the government is increasing federal spending by 22% in order to develop alternative energies. However, at the same time dozens of staffers and contractors in the US are being laid off. President Bush even acknowledge the confusion and claimed he would set things right and re-hire a good portion of the employees that were laid off.

This comes right at a time when a new national public opinion survey clearly demonstrates that the public is in support of the United States for government policies and investments that will support development of alternative energy sources. Nearly all voters (98%) says the costs would be worth it to get the US to reach a national goal of having 25% of the domestic energy needs met by alternative energy by 2025.

I feel that since the majority of the public feels that something needs to be done, no matter if they have to spend more money, in order to find alternative resources, the US government must make a larger financial commitment to this. But as a realist, I don’t believe that oil will be left of out the energy equation really anytime soon. In addition, by finding alternative fuels, this is not only going to be costly but it may also pose conflicts of interests between governments and oil companies. This is why the move to different energy sources will probably be slow. I think
the government just needs to get the "wheels in motion" so to say.

There is also a part of me that thinks that the government really could care less that gas prices are rising, because they don’t pay for it, the taxpayers do. Most of them drive and fly around the nation because to them it’s free. Also, I think for starters there needs to be more marketing on these alternative energy sources. How many ads to you see for solar power heated homes or even the new hybrid cars? One reason why the renewable and alternative energy markets are not growing as fast it seems is because citizens still do not hear the message of savings and independence from oil. Educating and selling these products will be vital when making the transition to the next energy sources.

Thus, I see how the transition may be slow but I feel that the government is really doing little to start the transition away from oil, especially since poll after poll show the public ready and willing to spend the extra bucks in order to depend on a better future.

Saturday, October 21, 2006

On Population

WSJ COMMENTARY on population ($$):
"At bottom, the debate over population revolves around a single question: Are human beings a burden, or a resource? The former view is embodied by the Ehrlich and Nixon quotes above. More bodies mean more mouths to feed, house and provide for. At a certain point, in this perspective, you run out of stuff.

The latter view holds that people don't just consume things. They make them too. More bodies mean more minds, more innovation, more dynamism and more progress. The history of the world as America went from 100 million or 200 million to 300 million lends a lot more support to the humans-as-resource view than the humans-as-burden view. In the middle of the last century, the fathers of the population-control school of thought warned darkly that when world population reached seven billion, the 'carrying capacity' of the planet would be reached. Mass starvation and political upheaval would be the inevitable result. Well, we're getting right up there, but the bread lines are getting shorter, not longer.

Simply put, the reason is prosperity. For decades, economic growth has easily outstripped population growth, giving the U.S., and much of the rest of the world, both more people and more prosperity, something presumed to be impossible by the Malthusians. Meanwhile, the slowdown in population growth brings a whole new set of challenges. To meet them, America and the world will need more minds generating new ideas. Four hundred million, here we come"

Wednesday, October 18, 2006

Over fishing

Over fishing - Cliff Brown

I saw this article on October 18, 2006 of the Environment News Service (ENS) website. Author un-disclosed.

The issue is pertaining primarily to the over fishing of Cod in the North Sea, but also mentions other fish such as North Sea Plaice, North Sea Sole, Blue Whiting, North Sea Sand Eel and Anchovy in the Bay of Biscay. Clearly all of these species would be considered Open Access Fisheries. The problem lies in the EU allowing fishing levels greater than what the Advisory Committee on Fishery Management (ACFM), which consists of 22 international scientists, had proposed.

We would certainly expect that this type of over fishing would occur due to the lack of an authoritative body to oversee many countries sharing a water body. Although the article does state that the committee recommends the fishing levels should be reduced. For example: “The capture rate for North Sea sole is “not sustainable,” the committee said, and should be cut from 17,670 tons to 10,800 tons”. However, we are not given any indication of how this is to be enforced. One could speculate that the EU has jurisdiction over all these waters and could implement the necessary regulations and perhaps would be successful in enforcing them – but I doubt it since they have not heeded the suggestions of the committee (maybe there is too much politics present)

However, there has been success in reducing the catch size of some species.
“Major cod stocks in northern areas, such as the Barents Sea and around Iceland, are large and productive and several other species appear to be rebounding.” And “The Norwegian spring spawning herring stock is at a high level due to a rational exploration strategy.”

It seems plausible that these successes have come about because of the lack of a serious competitor in these waters, and it is worth noting that these two countries are not members of the EU. With the exception of Greenland and possibly the UK, there is no other country that shares a coastline of these waters. In effect, this would negate the open access fishery argument and the local country essentially has absolute control over the fishing quantities.

The conclusion to this is again that over fishing in open access waters is occurring and nobody thus far has devised a solution. Perhaps the power of the EU will reverse this notion. We shall see.

Monday, October 02, 2006

Illegal Immigration Can Boost The Economy

Illegal Mexican immigrants would provide a quick fix to America’s future economic woes. And probably in more ways than obvious upon first glance. For instance, giving illegal aliens the right to work, play, and travel would open up opportunities for them to spend money - on airline tickets, auto-insurance, home loans, bank accounts, and taxes. In addition this cheap and effective work force would continue to provide America with the source of manpower that has otherwise left American businesses skirting illegal hiring procedures.

On the other hand would a newly legalized demographic pose a threat to American society - a society built on puritanical and European cultural understanding? Would these hard-working individuals demand more from their employers once their rights have been solidified by law? Will the English language be assailed by a Mexican majority?

An answer of “yes” to any of these questions leaves much analysis out of the equation. The US Government is obliged to balance the economic outfall of any decision against an open border policy. And to do this requires more than just a xenophobic and short-sighted view of those that have come to America seeking a better life.

Economics and Government

Sunday, October 01, 2006

Niger basin

The Niger basin in West Africa is being threatened by the exploitation of natural resources. There is a diverse amount of fish, livestock, and wildlife that thrives in the area. However, due to increases in deforestation, human population growth, and unsustainable resource use, there is fear that the basin may not continue to thrive in the future.
Proposed solutions involve a “sustainable and equitable management” plan where the countries involved would share the power to govern. The article suggests different proponents like how to restore the habitat, economic research on how to optimize productivity and sustainability, and informing those among the areas of how important and valuable the goods that can be obtained from the area could be.
From what has been learned thus far about sustainability one has to ask the question of whether the sustainable amount of a resource is the efficient or optimizing amount to harvest or not. Costs were not even mentioned in this article. Nor were time values mentioned. So, to this author has to believe that while this seems like a great plan to try and rejuvenate the Niger basin, it just seems a bit utopian without some actual numbers to show the plans in detail. It would be nice if all of the countries involved got together for the sake of the basin, but it just doesn’t seem likely. What appears to be most likely happen is that the countries will allow individuals to continue to overexploit the resources available until they bear the total cost of harvesting from the basin. At that point there may be a reduction in the amount of resources harvested.

Wednesday, September 27, 2006

Economics and Government

Many say the Endangered Species Act is becoming less effective. I think the main critisism of the ESA is that it encurages private land owners to "shoot shovel and forget it" That is Land owners are givin the insentive to kill those species that threaten the value of thier land and the very least to under report thier existance. "Such a law would encourage developers to go looking for environmentally sensitive areas to propose projects and seek compensation." And this is a bad thing that we can be sure about is that species would no longer be under reported...and those with such species on thier land would have the incentive of keeping them there and keeping thier populations healthy. My simple question is what is the intent of the ESA? To punish land owners and developers or to protect species for extintion. The advantage of such a law is two fold first it gives insentives to land owners to preserve wild life and second it puts the burdon of preservation on the public rather then the individual land owners. Which is good becouse it is the public that benifits.

Economics and Government

Tuesday, September 26, 2006

The Failure of the Endangered Species Act

Many say the Endangered Species Act is becoming less effective. I think the main critisism of the ESA is that it encurages private land owners to "shoot shovel and forget it" That is Land owners are givin the insentive to kill those species that threaten the value of thier land and the very least to under report thier existance. "Such a law would encourage developers to go looking for environmentally sensitive areas to propose projects and seek compensation." And this is a bad thing that we can be sure about is that species would no longer be under reported...and those with such species on thier land would have the incentive of keeping them there and keeping thier populations healthy. My simple question is what is the intent of the ESA? To punish land owners and developers or to protect species for extintion. The advantage of such a law is two fold first it gives insentives to land owners to preserve wild life and second it puts the burdon of preservation on the public rather then the individual land owners. Which is good becouse it is the public that benifits.

Endangered Species Act


Cliff Brown

Sunday 24th edition of the NY times, published by the Associated Press (AP) featured an article about endangered Red-cockaded Woodpeckers.

The Federal Fish and Wildlife Service put the town of Boiling Springs Lakes, N.C. on notice that the woodpecker was being threatened due to development. It planned to potentially assign certain neighborhoods as protected habitats. As a result landowners requested logging and some building permits and clear-cut their lands in the hopes that the option value of actually being able to build would be quashed if/when the protected habitats are assigned.

Certainly the landowners have considered the use value of their land, but those who are not actually obtained building permits have not done so efficiently – I doubt whether they considered setting up a wildlife sanctuary and selling bird-watching permits. What they have done is based their decision solely on that of their option value – they have paid to clear cut in the hopes that at some future point they will be able to use their now barren, desolate plots for something of economic value. Their has been no consideration of the non-use value of these lands. They did not allow the Nature Conservancy, or some other agency to pay the landowners for doing nothing to the lands. They simply performed a pre-emptive strike and assumed their lands would hold little value IF it was deemed to be in one of the protected areas.

Indeed it is stated that just because a tree has a woodpecker does not necessarily mean a house cannot be built – providing an alternative home can be found. Surely those tracts of land that were large enough to have both trees and houses on have now declined in value (Surely people would pay more for a plot of land that also provided a home to a rare bird)

One of the landowners who stripped his land of the offending trees after holding his 2, one-half acre-plots of land for 23 years, is now upset because the plot of land had finally obtained some value (to developers). That value has now been taken away (presumably with the announcement of the endangered species) according to the landowner in defense of cutting. Perhaps a better understanding of the environmental economics of “value” would have allowed him, and many other landowners, to re-think their strategy.

Perhaps the reason the value of land was increasing in the area was because of the wildlife around. Now many of the areas are barren and “uglier” perhaps the use value will decline and the landowners will regret that they did not have a better grasp on the economics of the situation – especially those who did not obtain building permits.

Roadless Rule

The deforestation has caused many problems such as dramatic climate change, decreased biodiversity, agriculture decline, increased deforestation, and also has lead to the declin of people indegenous to forests. One other problem that has come about from the cutting down of forests is the increasing amount of endangered species. In the article the forest service had failed to point out that there is a major rule that is mandated by law that were ignored by the policy of endangered species. The problem with endangered speices is that there are people out there that are willing to pay for the use of seeing the species in ther natural habitat. There are also the people that will pay to know that the species will be there in the future so they or someone else can see them as well as just the fact to know that they do exist and are not extinct. In Bush's new plan it is to superiority that will give govenors over the national forests within some boundaries. If we dont save the forests then we cant get the maximum benefit from the forests. a forest can be an output when harvested and also a capital good in which if left standing the forest will grow and also it can be made into a recreational good that will bring about more revenue. These current forest practices are violating substainability and efficency criteria. Deforestation can be benefical in the short run as well as in the long run.

Sunday, September 17, 2006

hunting endangered species will save them??

Bet you never would have thought that was possible.... but there is already in place a system that uses, hunters and the money they, generate to directly help with conservation in ways the federal government and taxpayer weren’t willing or able to do. The system allows the laws of economics to create a financial situation which benefits the endangered wildlife. Remember scarcity breeds value!!! And what better than an endangered product!!!!
So as a solution to the problem of endangerment we need to find market failure or at least the missing valuation equation and make it right. If the problem is chemicals get rid of the offending chemical. If its habitat provide habitat. Seems simple!!! Well it is, but paying for the solution is a whole different story... .. .using any solution that pays for needed habitat, and that pays to change business and consumer chemical usage is not likely if the marginal cost is too high. So who is going to pay??? I guess we do if we want to protect a species.
We all have great faith in the system and we have trust that in absence of externality the market will succeed in creating optimal situation. So why not use market forces rather than tax payer dollars. As I said the best product to sell is a scarce one. I found a radio show that explains an innovative solution to this problem of raising funds .It is a 12 minute segment and I think its worth listening to .It is great way to use governments force to save taxpayer dollars and save a species . It sells permits to kill endangered species and therefore save them. Little counter intuitive but it is and has been an effective method to fund conservation.
The permits are limited in number so they sell for an extraordinary price.
$69,000 to kill 1 big horn sheep!!!!!! This in turn pays for the workers and the program budget the program then employs people to provide water sources for the sheep feed in extreme winters and security from poachers etc. The workers are less likely to be corrupt in that their lively hood is what they are protecting their entire income revolves around the sheep..
This is akin to the border of Mexico idea of giving 1 million dollars to 5 generals in Mexico to be paid annually at end of year to protect 1/5 of the border from illegal immigration. The cash is reduced by 10k every time an immigrant is caught crossing to the USA. This gives powerful incentive to the generals to police the border themselves and ends up costing us taxpayers 5 million to protect border rather than the hundreds of millions we currently spend.. Currently Mexico has little incentive to prevent crossing . This internalizes the costs of illegal immigration, and it’s the same with this species protection program . It internalizes the costs of letting a species die off . It helps the situation at a much lower cost to the government..

It’s truly a great idea...

It may be hard to implement with less desirable species but it is a start. And it is the kind of outside the box thinking that’s needed to solve the externalities we face economically with endangered species..

Big horn comeback in Colorado we went from Zero to 400+ ,Utah was devoid of life
Another story of comeback
Link to text interview
audio! 12 minutes

Coal ,clean diesel ,and economic growth who knew!!

I have for some time heard about the nazi fuel production of fuel from coal in the final months of WWII . and it had been discounted as a non cost effective way to produce fuel . well last year the Nobel prize was given for a new method which produces diesel at a verry low cost and seperates out the sulfer to produce a Ultra low sulfer clean burning diesel fuel. this has huge ramifications to the economy and the environment.....

If the number of diesel vehicles in private use went from less than 10% to over 60% of the private US vehicle fleet, mirroring European diesel engine adoption rates, we would see a 25% reduction in the amount of oil used in the US.
This equates to all of the oil we currently import from all of the OPEC countries and twice as much as we import from the Middle East...
Any improved efficiency in our vehicle fleet helps us reduce our dependence on foreign oil and any reduction in oil imports helps us stay clear of getting entangled in the politics of the Middle East.

Often overlooked, an efficient substitute for high dollar high tech machines of tomorrow is sitting right where we left it, it has benefits much like the ones promised by machines that aren’t already in production .Diesel engines are an existing technology that offers us reduced emissions, flexibility for fuel sources, and 40% higher efiency. It is this very efficiency and durability, that has made diesel engines are the workhorse of the U.S. economy. Diesels already play an indispensable role in transportation and agriculture, construction, and mining. The people who run these companies are interested in getting the maximum value from their investment so if a choice is more efficient they will use it.
Diesel by its very nature contains 20% more energy in a gallon of fuel than a gallon of gasoline. This Combined with the diesel engine's much higher compression ratios and reduced pumping losses it is not hard to see why vehicles like the VW Jetta TDI get 40+ MPG highway, the US fleet average of only 23mpg is pathetic. The us fleets diesel percentage is also pathetic much lower than the European average of 68% of all passenger cars. For people who say diesel is slow how about the Opel Eco-Speedster sports car prototype. The 1.3-litre Ecotec Diesel engine produces 112 hp, giving the car a maximum speed of over 155 mph and fuel consumption of 94 mpg. And as far as hybrids go the gasoline hybrid is leaving untapped efficiency on the table domestically we aren’t talking about them and even European automakers, initially resisted the trend, choosing instead to focus conventional on diesel-powered automobiles whose fuel efficiency rivaled even the best gasoline hybrids they succeeded. But now are finally looking into PSA diesel hybrids. These start on electric power exclusively, avoiding the use of diesel in low-power, low-temperature modes where the engine is the least efficient. Also During braking, the vehicles recover energy by recharging their battery packs. Their Fuel consumption 69 mpg this sets a new record for a European compact family car, and far surpasses the current benchmark the Prius (which delivers around 50-55 mpg). The BMW 530d goes from 0-60mph in only 7 seconds, and still gets over 40 miles per gallon. This same car powered by a gasoline engine only manages to get 23 miles per gallon.

Recent innovations in diesel design and electronic control has many States developing clean air plans using diesels, many cities are looking for greater emissions reductions. Most will find that a diesel retrofit program offers one of the most cost-effective solutions for achieving real and immediate air quality as well as fuel consumption benefits. Its better to retrofit clean diesel than to wait for new technology to be produced as it will be at a much higher cost and the day of implementation may be years from now Diesel retrofits ( basically a replace, repair, refuel, retrofit or repower )offer a number of benefits over other emissions reduction strategies, including: immediate and significant reductions, flexibility for fuel sources , and no new infrastructure requirements. Advances in diesel engine technology, fuel, and exhaust treatment will make new diesel vehicles virtually emissions-free “According to the U.S. Environmental Protection Agency (EPA), by 2030 total emissions from diesel trucks, buses and off-road equipment will have been slashed by 80 percent compared to 2000 levels thanks to new regulations that start taking effect in 2007.”
However, these new clean diesel advances do not affect the approximately 11 million engines in use today. Fortunately, the same clean diesel technologies that will power the next generation of diesel vehicles and equipment can be applied to some older engines – reducing emissions by up to 90 percent. In fact Detroit diesel and the DOE just made a wonderful announcement “As part of its presentation at the recent Diesel Engine Emissions Reduction (DEER) Conference in Chicago, Illinois, Detroit Diesel Corporation (DDC) announced that it has demonstrated technology to achieve greater than 45 percent brake thermal efficiency while meeting the 2007 emissions regulations -- a result of its collaboration with the United States Department of Energy (DOE) on the Heavy Truck Engine project. This target is a key milestone for fiscal year 2005 project objectives. This technology demonstration lays a strong foundation for the next generation of development, targeting 50 percent thermal efficiency at 2010 emissions regulations. Brake thermal efficiency is a measure of the amount of fuel energy converted into useful power during the combustion process in the engine.”

so to swith to diesel we are also going to end up with an environmental gain by less use of fuel or simply a more efficent use of fuel. but also will gain flexibility that will allow us to be more resistant to oil shocks....
CI engines whether diesel or not are significantly more efficient than gasoline engines. Due to a higher compression ratio and reduced pumping losses.
Diesels also run on many more alternate fuel sources than their gasoline counterparts. This has implications including national security and the Middle East these include
• Biodiesel
• SVO or straight vegetable oil.
• WVO waste vegetable oil
• Propane diesel mixes.
• Biodiesel methanol mixes.
• Coal derived diesel fuels. (Which should be the cleanest burning diesel possible thus known as "green diesel.")

The concept of using vegetable oil as a fuel dates back to 1895 when Dr. Rudolf Diesel developed the first diesel engine to run on vegetable oil. He demonstrated his engine at the World Exhibition in Paris in 1900 and described an experiment using peanut oil as fuel in his engine. In fact In 1911 Rudolf Diesel stated: "The diesel engine can be fed with vegetable oils and would help considerably in the development of agriculture of the countries which use it." In 1912, Diesel said "the use of vegetable oils for engine fuels may seem insignificant today. But such oils may become in course of time as important as petroleum and the coal tar products of the present time." Think we have had long enough to let this settle in
Biodiesel is a great choice and is very similar to normal petrochemical based diesel fuel. It is basically composed of processed WVO or SVO mixed with diesel another interesting property of diesels is that Adding propane actually improves power as well as economy. This is due to a n effect of propane causing a much cleaner much more complete burn in the chamber. SVO is a renewable fuel source and runs great but is harder to start and doesn’t always work in colder climates. Vegetable oil can be created from oil feedstock plants like soybeans, palm oil, rape seeds, palm oil, sunflower seeds and even some types of algae. WVO is Recycled vegetable oil from local restaurants and other used sources. These businesses are also a useful reservoir of renewable fuel for diesel engines as approximately 4.5 billion gallons per year of used vegetable oil is available in the USA. Using fuel that has already contributed to the economy by producing something is very beneficial to production in our system of capitalism
With more than 4 choices to power the diesel engine it seems to be a great choice in uncertain times. If world oil supply’s were to be shut down one would merely have to switch to a renewable source like vegetable oil and the engine would be back in service alternately one could convert to coal derived diesel fuel.
Diesel should ultimately be cheaper to produce than gasoline because it takes less refining to create diesel fuel, which is why it should be cheaper than gasoline but disproportionate tax rates seem to make up this difference and raise prices so diesel cost currently is not in line with actual production costs.

Recently the Nobel Prize was given in relation to diesel fuel I found this article:
“Clean Diesel from Coal”
"When I saw this I thought it was really a terrific contribution that could be very important," says Richard Schrock, professor of chemistry at MIT, who won the Nobel Prize in Chemistry in 2005, with two other scientists, for discovering the type of catalyst used in the second step. Combining two catalysts this way "is pretty rare," he says. "You can't just throw any two things together and expect to get the results you anticipated."
According to Robert Grubbs, professor of chemistry at Caltech, who shared the Nobel Prize with Schrock, "The key is finding catalyst systems that are compatible, and will operate at the temperatures where you can do both processes together?"
"Two percent of the United States' energy reserves are in oil, 3 percent is in gas, and 95 percent is in coal," said Dr. Maurice Brookhart, W.R. Kenan Jr. Professor of chemistry in UNC's College of Arts and Sciences. "Many people in the energy sector think that when oil starts to run out, coal will be a source of transportation fuel for some time before we perfect the science behind solar and hydrogen-based energy. Producing diesel fuels from coal is especially attractive since diesel engines are more efficient than gasoline engines."
The Fischer-Tropsch method of making synthetic liquid fuels from coal and other carbon sources has been used since the 1920s. Today, Fischer-Tropsch fuels power most large vehicles in South Africa, and American companies have expressed interest in these fuels, which emit fewer particulates and less carbon monoxide than conventional diesel fuels. Such fuels have been termed "green diesel." The Fischer-Tropsch method of making synthetic liquid fuels from coal and other carbon sources has been used since the 1920s. Today, Fischer-Tropsch fuels power most large vehicles in South Africa, and American companies have expressed interest in these fuels, which emit fewer particulates and less carbon monoxide than conventional diesel fuels. Such fuels have been termed "green diesel."
Diesel fuel produced in this way has several potential advantages. Most ordinary diesel contains molecules, called aromatics, that, when combusted, produce particulates, Goldman says. But the diesel formed by the new catalysts does not include aromatics, so it burns much cleaner, overcoming one of the major objections to diesel fuel. This could lead to more vehicles using diesel engines, which are about 30 percent more efficient than gasoline engines.
The method, described in the current issue of the journal Science, uses a pair of catalysts to improve the yield of diesel fuel from Fischer-Tropsch (F-T) synthesis, a nearly century-old chemical technique for reacting carbon monoxide and hydrogen to make hydrocarbons. The mixture of gases is produced by heating coal. Although Germany used the process during World War II to convert coal to fuel for its military vehicles, F-T synthesis has generally been too expensive to compete with oil.
Part of the problem with the F-T process is that it produces a mixture of hydrocarbons -- many of which are not useful as fuel. But in the recent research, Alan Goldman, professor of chemistry and chemical biology at Rutgers University, and Maurice Brookhart, professor of chemistry at the University of North Carolina at Chapel Hill, use catalysts to convert these undesirable hydrocarbons into diesel. The catalysts work by rearranging the carbon atoms, transforming six-carbon atom hydrocarbons, for example, into two- and ten-carbon atom hydrocarbons. The ten-carbon version can power diesel engines. The first catalyst removes hydrogen atoms, which allows the second catalyst to rearrange the carbon atoms. Then the first catalyst restores the hydrogen, to form fuel.

Thursday, September 14, 2006

Sustainable Retreat?

I was recently reading an interview of James Lovelock and I ran across an idea you might find relevant to our work with Daly and Cobb:
"Q. You say in the book that sustainable development is a fantasy, essentially, and you have a different notion for what needs to happen, of “sustainable retreat.”

A. At six-going-on-eight-billion people, the idea of any further development is almost obscene. We’ve got to learn how to retreat from the world that we’re in. Planning a good retreat is always a good measure of generalship."

Friday, September 08, 2006

Possible new oil source and today's prices

Possible new oil source and today's prices

So I saw an article regarding the recent discovery of the oil field in the Gulf of Mexico. (Sure you all heard about that). I have a couple of concerns regarding the authors’ analysis of this discovery.

We don’t know really know how much oil is in existing oil fields – true. We don’t know how much oil is in this new field – also true. So now we have an uncertain amount of crude oil (possibly useable this decade) to add to our already uncertain amount of reserves, the short run effect will be – according to the author - “lower prices for oil”. Isn’t the price of oil determined by the market? The cost of a barrel of oil decreases when more oil is put into circulation (and increases when supply decreases) and not simply because it has found some more oil. If the oil in that reserve was useable NOW I could see how the price would fall, but it is still many miles underground.

Adding to the supply constraint is our refining capacity. Simply getting more crude oil does not help lower gas prices, it has to be refined. Perhaps this is where government could/should step in, or rather step back, and ease the provisions for constructing new refineries and allow the market to determine our refining capacity.

It was said that that oil could, in the future, be added to our domestic reserves which will lower prices as our future supply will be more stable (we still have some if OPEC cuts us off) and can be used when needed (such as another Katrina) but that would only serve to stabilize prices in the event of a supply shock, and not to lower prices now.

“Knowing that we have a reserve that will be ready for use 10 years from now means we can use the current reserves faster--today.”

What! First. It was made clear that we don’t know how much oil is down there, so would we really burn all our oil now in the hopes that in ten years our reserves will be replenished? Or does the author mean that since the quantity supplied has increased, prices will fall and the demand will increase - which is being defined as using our reserves faster.

Second. Would the government really put its reserves out to pasture just because more is coming in a decade? What if we have to fight another war in the next decade (unlikely I know :))? Do we not remember how long it took to tap into our reserves last year following Katrina to alleviate the high gas prices.

“Without the new reserve, scarcity of oil would put upward pressure on the price, encouraging conservation and slower withdrawal.”

And I thought that our conservation was due to the high prices (again a supply issue) and possibly the negative externalities our increased desires for consuming oil produced. And how would this [currently] unusable, unrefined oil be reducing our scarcity? If it is not able to be used now for something other than filling a rather large hole underground, what effect can it have on our existing scarce reserves that we can use? And even if the oil was useable now wouldn’t it still be the demand/supply of that scarce commodity that determines its price?

As a consumer do you demand more gas now because in ten years time the quantity supplied may increase?

Thursday, August 31, 2006

Wednesday, August 16, 2006

Global Warming & Sustainability

J.S. at Environmental Economics applies a concept of sustainability suggested by Robert Solow to the policy choices presented by global warming. Here is his conclusion:

In summary, even through a sustainability lens it is ambiguous whether we must act now to do whatever we can to avert global warming. Given the massive cuts in carbon emissions (in the realm of 70%) that many think would be required to prevent any further warming, one doesn’t have to be a pessimist to believe that given current trends the probably of this happening is extremely low, and therefore, as I have mentioned previously, mitigation strategies may be preferable.

In the end, global warming presents us with very tough choices based on a huge range of scenarios that are highly uncertain. People in the future may look back at us one day and condemn us for our inaction, or they may be grateful that we didn’t spend so much on the problem, depending on how it plays out.

Tuesday, August 15, 2006

Own the Tiger, Save the Tiger

The tiger faces extinction and Barun Mitra explains a classic insight from economics that private property offers incentives to save the tiger:
"But like forests, animals are renewable resources. If you think of tigers as products, it becomes clear that demand provides opportunity, rather than posing a threat. For instance, there are perhaps 1.5 billion head of cattle and buffalo and 2 billion goats and sheep in the world today. These are among the most exploited of animals, yet they are not in danger of dying out; there is incentive, in these instances, for humans to conserve.

So it can be for the tiger. In pragmatic terms, this is an extremely valuable animal. Given the growing popularity of traditional Chinese medicines, which make use of everything from tiger claws (to treat insomnia) to tiger fat (leprosy and rheumatism), and the prices this kind of harvesting can bring (as much as $20 for claws, and $20,000 for a skin), the tiger can in effect pay for its own survival. A single farmed specimen might fetch as much as $40,000; the retail value of all the tiger products might be three to five times that amount.

Yet for the last 30 or so years, the tiger has been priced at zero, while millions of dollars have been spent to protect it and prohibit trade that might in fact help save the species. Despite the growing environmental bureaucracy and budgets, and despite the proliferation of conservationists and conferences, the tiger is as close to extinction as it has been since Project Tiger, a conservation project backed in part by the World Wildlife Fund, was launched in 1972 and adopted by the government of India a year later."
Priced at zero, there is little incentive for people to save the tiger. Property and reliance on the market would change these circumstances.

Monday, May 15, 2006


The fuel, renewable and more environmentally freidnly than gasoline is already being used as a gas additive, replacing another additive that was found to pollute groundwater. The result: a squeeze on supplies that has doubled ehtanol's wholesale price, to $2.75 a gallo. With corn prices low and gas prices high ethanol's profit margin per gallon is at a record of more than $1. Last years energy bill requires gas marketers to sell at least 4 billion gallons of ehtnaol-blended fuel this year. Investors in ethanol plants will find themselves at the mercy of tow commmodity cycles: corn and gas. Corn prices over the next six years are likely to rise and ehtnaol rprices to fall resulting in a 25% drop in producers profits. What is the promise of ehtnaol replacing gas? WEll the likelyhood of this replacing gas is highly unlikely but the use of gas E85 which consists of 85% ehtanol would create better burning vehicles and less emissions, but in contrast will get worse mielage and become costlier in the end.

Thursday, May 11, 2006

Brazilian Sugar Cane Ethanol

The oil shocks of the late 1970's not only severely affected the United States, they had a tremendous impact on the rest of the world. Brazil decided right away to do something about this, and thanks to that decision, they are ahead of the biodiesel fuel revolution by leaps and bounds. Using economic reasoning, Brazil realized the most efficient means of gaining footing on OPEC was to introduce a substitute that would effectively compete. The government introduced such substantial tax breaks for ethanol cars between 1983 and 1988 that by the end of the 80's, 90% were powered by the fuel.
Now, with the introduction of "flex" vehicles, (allowing users to choose their fuel mix ratios) the consumer has more power than it did by relying solely on oil based fuel. Not to mention, creating thousands of jobs in Brazil's poorest regions also helps the economy tremendously. It not only gives jobs to those that would never previously have been able to attain one, but it substantially reduces the strain on many Brazilian cities, of which large parts tend to be slums. Producing sugar cane ethanol is "profitable as long as oil costs more than $37 a barrel."
I think from an efficiency standpoint, this seems to be an extremely efficient move by Brazil. Creating jobs within the country, reducing dependence on foreigners, reducing prices of fuel, and reducing stress on cities to support their impoverished populations are all benefits of this move. The only people that seem to be worse off are the OPEC guys.

Wednesday, May 10, 2006

California's ZEV (zero emission vehicle) program

California Air Resources Boardinitially proposed a ZEV program in 1990 in order to clean up the rampant air pollution - an obvious negative externality associated with driving a car. Originally, the plan called for 2% of new cars in the state to be ZEVs. A ZEV has no tailpipe emissions, no evaporative emissions, no emissions from gasoline refining or sales, and no onboard emission control systems that can deteriorate over time.
In 1998, car companies convinced CARB that they could not meet the deadline, and the 2% mandate was delayed until 2003. In 2002, the car companies sued the state, to which the state decided to sidestep the legal problem and continue to restore the ZEV program for 2005.
On one hand, the ZEV program has done alot in the name of progress towards increasing the potential we have to reduce air pollution stemming from vehicles. However, it has done so in an extremely inefficient manner, and has had little effect on the air quality so far.
From an econonmist's perspective, I would recommend the state cancel the ZEV program. Forcing a company to produce and sell a car that is not high on their efficiency list is just not the solution to the air problems in the state. The state should provide an incentive for consumers to purchase the more efficient products. One incentive that comes to mind is a tax credit equal to the pollution saved in a given year. Simply test the car to see it's pollution per mile, and record the mileage of the car for tax records.
From an efficiency standpoint, it helps the manufacturers utilize the market to decide what is best for them. It helps the state because more people will see the incentive in tax savings and the incentive to help clean the air and make a judgement on whether or not to buy the more efficient vehicle.

Thursday, May 04, 2006

Cafe Standards

Corporate Average Fuel Economy, or Café, standards as we know them have been set by Congress in attempt to get automobile makers to produce cars and trucks that are more fuel efficient. The recent hike in gas prices has led to a consideration by Congress to up the Café standards again. The last increase in acceptable miles per gallon set the standard at 27.5 mpg. This means that the average miles per gallon for the fleet of cars an automaker produces must be equal to or greater than this amount. If Congress were to up the standard to the proposed 33mpg there will be some high costs consumed by the automaker. It is unclear how well the automakers can absorb these costs. It is unclear if the companies even have the technology to meet the standards. These costs would eventually end up added to the sticker price of the vehicle. The consumer would ultimately foot the bill. The concern here is that the government appears to be thinking that if we have increased miles per gallon to our vehicles that we will not change our consumption habits any. The way it is understood by this author is that while even though our cars have continued to get more miles per gallon to a tank we still continue to increase our consumption of gasoline as a nation. So, I just don’t see how this will lower the price of gasonline. The price of gas is based upon the market for gas…meaning the supply and demand. If our demand continues to increase even though our cars are more efficient, I just don’t see this legislative decision to increase the required standards as a way to lower the price of gas. My thought is that it would be more efficient to put a bigger tax on gasoline. Consumers would not like to see these external costs internalized, however, that would force consumption habits to change more than an increase in the Café standards.

Tuesday, May 02, 2006

CAFE Standards

Currently the U.S. is the world leader in oil consumption. The CAFE (Corporate Average Fuel Economy) standard is defined as the the minimum mileage per gallon a vehicle class must meet. In todays life styles people are buying and driving bigger cars. The average new fleet of cars had a mpg lower than the one we had in 1987 because of the fact that our automobile industry is seeing an increase in inefficent SUV's and light trucks. President Bush proposed that we need to break the light tuck category up into six different sub-categories. In these differrent categories there was trucks ranging from 21 mpg to 28mpg. Due to the recent increase in the price for oil Presedent Bush has jumped in to help. From the knowledge that I posses about the prices for a barrel of oil and the increasing gas prices I wouldnt be supprised to see gas over $4 this summer. Pesident Bush's has taken the action to ask Congress for the authority to investigate an increase in the CAFE standard. In 1990 there was a bill that was called for that would increase the CAFE standard by 40%, and if this bill was made into a law cars right now would average 40mpg and light trucks 29mpg. From the auto industries point of view since cars have to become lighter and smaller the costs of of re-enginering cars to make them more fuel efficent is expensive. By trying to reduce the weight of vehicles it reduces the size of steel content which has resulted in a 1300-2600 additonal trafic fatalities. Form an environmentalists point of view in the 80's cars were more fuel efficent, as for now cars cars have become 20 percent heavier. From another point of view as an economist mandating pollution controls is a good idea.

Monday, May 01, 2006

France: Now that's Nuclear

France is pushing forward with its new nuclear power plan. France currently has 58 nuclear power plants, which accounts for nearly 80 percent of their total power output. Due to the lack of natural resources France currently possess, it is their intention to become almost entirely nuclear dependant. The agreement was naturally (no pun intended) met with haste by Greenpeace activists, regardless, France was determined to gain its energy independence. “French environmentalists say the economic benefits of nuclear energy are far outweighed by the dangers of its byproducts and their storage. They also say nuclear facilities are potential targets for terrorists.”

So what are the economic benefits?

• Nuclear power is cost competitive with other forms of electricity generation, except where there is direct access to low-cost fossil fuels.
• Fuel costs for nuclear plants are a minor proportion of total generating costs, though capital costs are greater than those for coal-fired plants.
• In assessing the cost competitiveness of nuclear energy, decommissioning and waste disposal costs are taken into account.

The U.S. looks about the same as coal to me, but if France does not have access to coal then it would be cheaper than any of the other sources.

Market for used tires?

When I went to price out new tires, for my new truck, I came across an additional cost in the purchase that I had not accounted for. The cost was titled "environmental disposal fee" and said nothing more. I went to the company's website and found out that they have a link to an explaination of said fee. The explaination is as follows:

"Environmental fees are state-mandated charges applied when you purchase new tires.
In many states, the funds raised by the collection of environmental fees go towards research and development on recycling worn out tires as an option to placing them in landfills. You may not know this, but materials reclaimed from old tires are used to power electrical plants, stop erosion in watersheds, assist in the drainage of golf courses and greenbelts, and can even be used in the construction of new homes."

To which I said inefficient!! If the market can find a value for the disposal services of tires, why then would the state mandate a fee associated with disposal. Why aren't they paying me for disposal of tires, if after all they are valuable. Its this type of policy that makes me wish politicians should be required to have a degree in econmics.

Price Of Gas Is High!!

Who do you think makes the most money on the sale of a gallon of gas? I'll tell you. It’s not “Big Oil.” It’s Big Government. Gas taxes are worth 5 to 10 times what gas profits are. The federal and state governments use the tax money to build roads, while the oil and gas companies reinvest their profits into equipment and infrastructure.

Gas prices are higher now. That can be blamed on three groups of people.

1. The environmental lobby: They are primarily responsible for the fact that a refinery hasn't been built in America in 30 years. They are primarily responsible for the fact that no drilling goes on in the Atlantic, the Pacific or Alaska. They are primarily responsible for the switch from MTBE, which poisons groundwater, to ethanol, which does not. Where are they today? Celebrating their triumph for nature? They’re crying about their gas prices.

2. The federal government: For listening to the environmentalists and not acting faster to promote alternative fuels.

3. China and India. For increasing the demand for gas so high that it outpaces supply. That’s just plain economics.

Congress is calling for price-gouging investigations and a windfall profits tax. If price-gouging had occurred, we’d already know about it. And a tax on excess profits is simply a bad idea and sends a terrible message to other industries. Plus, the money would be wasted by the government.

Sunday, April 30, 2006

negative externality of CAFE standard and stupid people

the recent elimination of exemption of autos over specific gvw is expected to raise economy and help fuel consumption but . if those seeking tax breaks and those seeking new truck sales behave in a rational manner the higher standard will just proove the fact that raising the bar generates stilt sales for taller stilts!! acording to this guys rant the car maker has made decisions to keep ahead of CAFE standards over the years that have produced porky trucks that do less than their predecessors. as a car Buff i see many flaws in the argument . but it is entirely possible that car makers have avoided innovation and increases in mileage over the years just to reduce costs. but he argues that they have been avoiding the standard. and that this revision of the standard will be a major improvment to helping fuel economy . what if ?, to get around the standard again the car makers just keep making the trucks heavy ? if all it takes is more weight then there is no reason they wont just bolt plates of lead into the floor and move on . to think that a change was needed and would be effective with out looking at his own argument that car makers have made decisions to keep advances out of trucks and purposly build heavy usless trucks is absurd. how about if it werent for CAFE standards the truck companys may have never made an extended cab truck , if not for the exmptions for taxes and write off potential to buisness, the small buisness owners wouldent buy trucks instead of cars.. i know of someone who hasent driven 1000 miles on his 2005 ford 1 ton truck and has no use for a truck yet because it qualifys for a specific credit or refund he bought a truck instead of a car. if there were no incentive there would have been a rational decision . many of these things may come about if CAFE hadent been implemented. so this authors argument that evil automakers arent using advances to make their product superior is quite flawed. and his comparason to a mercedes delivery truck is also laughable . instead of touting the mercedes advanced abilitys and more usefull attributes he should have been looking at the market forces that created such trucks . the real problem (if his supposition that the us truck makers had acted in the manner that he described) is how much better the domestic trucks would have been if CAFE standards hadent influenced the makers decisions . so if he is correct then he is also full of sandwich meat!!! and to counter his argument . in the medium duty truck market (which was minimaly regulated by mechanisims like CAFE) there were produced and still are produced 1.5 to 2 ton trucks that equall or surpass the capibilitys of the sprinter . they weigh more haul more and get darn near the same mileage with 20+ yr old tech. the delivery market and consumer market are vastly different and he has compared a delivery van with a farm truck.... the reason 20 + years ago there were allmost 2 ton trucks getting 20 mpg was its market was not interfered with! and buisness owners were looking for any way to deliver the goods with lowest costs and truck makers were looking to sell trucks! so if one were to compare apples to apples the real reason pickup trucks are gas hawgs is actually CAFE standards.

Global Warning

Although uncertainties lie in the realm of global warming, and despite the notion that warm spells have occurred many times throughout the life of our planet, increasing temperatures pose a problem whose most harm will be felt by future generations. By now everyone is aware of the predicament; production (be it microwaves or assembly lines) begets greenhouse gases such as carbon dioxide, which in turn prevents heat from radiating off the earth’s surface and back into the atmosphere. That much we do know.
But the connection of human activity and warmer climates is not being bought by the public; many find it hard to concern themselves with a threat that may be hundreds of years away from showing any bite. Recent surveys posted in the New York Times show the environment as being far down on the list of national worries behind the economy, terrorism, health care, poverty, education, and President Bush. There is a major difference, however, between the warming experienced in earlier times than that of today; higher effected population. If ice sheets in Antarctica and Greenland rise the several feet by 2100 as some experts are predicting, shorelines will be flooded. Approximately 80 percent of the world’s population lives “on the coast” and rising waters could turn disastrous. Federal insurance and government subsidies might no longer be a good idea for encouraging coastal development.
Whether or not the wellbeing of future generations is the responsibility of today or not is an individual decision, but policy needs to be considerate of problems we are all aware of. Perhaps a recent strong push for more efficient forms of energy will be the saving grace needed to prevent drastic damage to the environment and its people. Locally, UCCS is trying to do its part by implementing a new recycling program and striving for energy efficiency by adhering to the LEED policy that promotes more environment friendly practices during construction of the new science and engineering building.

Saturday, April 29, 2006

Holy Freakin' Cow - look at these proposals

I was writing my Urban Econ term paper (I'm going to cross-post this on the other blog btw) and I came across this. These proposals have an amazing belief that we can achieve some sort of immediate utopia. Scroll down under the title "Solutions that are feasible, healthy, and sustainable" and you'll find such "feasible" solutions as "The immediate installation of full-roof solar panels on every building in America" and "An immediate tripling of minimum vehicle miles per gallon standards for all vehicles produced in America - accomplished by a quick and complete conversion of all factories to the building of only hybrid, solar, and fully electric vehicles." I like to dream too. I had to look up moratorium - it means "to put an end to" or "suspension."

Friday, April 28, 2006

Tax incentive

I found a link that allows you to pick any state and find put what the state offers for tax incentives for buying a hybrid or electric vehicle.

If you look under the state of colorado it shows the amounts avialable for certain cars, which there are about only 6. One offers $4,718 for one year if u purchased a specific Toyota vehicle. There was not one tax credit amount under $1000 even on that list. Thats just unbelievable that we are getting taxed for other people buying cars and then giving them MORE money back. I find that just completely stupid and redundant.

In the state of Wisconsin allows the city to deduct almost the full cost of the vehicle.
"The full deduction is $50,000 for any truck or van with a gross vehicle weight rating (GVWR) of at least 26,000 pounds (lbs.) or a bus with seating capacity of at least 20 adults. The deduction is $5,000 for a truck or van with a GVWR greater than 10,000 lbs. and $2,000 for vehicles under 10,000 lbs."
However, they did starts a clean fuel school bus program, with some of those vehicles. The school runs the busses on biodeisel and files for reimbursement of the funds from the state. The state will incure the entire cost of the fuel being used, even when the biodiesel prices are higher than just petroleum diesel fuel.

So of the uses being provided state wise seems to be more rational that just simple tax credits to buyers of new vehicles. I like how the State of Wisconsin uses state money to fund a clean fuel bus line for the schools. The taxes are applied on the school program, as cost incure. The money is highly reguladed by the state and set aside for the program. If costs are lower than the tax credit amount the tax is allocated back to the people in a form of a utility credit.

Also one of the State Statues requires that "A state excise tax, based on the standard number of British thermal units per gallon generated by each alternative fuel, is imposed on the use of alternative fuels. No tax is imposed on alternative fuels used by vehicles for urban mass transportation of passengers." The state does not tax the excise tax on busses, but on personal vehicles. They are more efficient oh the use of the tax and the money the apply from those taxes.

I simply think that tax breaks on buying a more efficient car is the most efficient way or even a market ability that is necessary.

Thursday, April 27, 2006

Rising Gas Prices---I call it price gouging

My first question I ask myself when I hear that gas prices are rising is How can prices climb so much, seemingly overnight, when the gasoline in the tank beneath the station was bought by the retailer a day or two before and was probably refined from crude oil weeks or even months ago?
I would classify the rising prices gouging where particular states have passed laws against "price gouging," their different definitions reveal how slippery and arbitrary the concept is. What all this boils down to is that prices higher than what observers are used to are called "gouging." In other words, prices under normal conditions are supposed to prevail under abnormal conditions. This completely misunderstands the role of prices. Why do prices exist at all? To cause things to be produced and made available to the public -- and to cause consumers to limit how much they consume. Why then do prices suddenly shoot up? Because there is either less of a supply available or more of a demand, or both. What do higher prices do? Force people to restrain their own purchases more so than usual. What do higher profits do? Cause more money to be invested in producing whatever is earning higher profits, and this in turn expands output. Isn't a larger supply of oil and a reduced consumption of it what we want? Thats the question Im still pondering when all this gas discussions arise.......

Wednesday, April 26, 2006

Ethanol production will save us all from the evil of oil!!!!!!

Please keep this in mind when talking about using food to power cars. "20 % of all fossil fuel in USA is used in relation to food production in this country !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! I was listening in class to ethanol discussion and later on in the week, I heard an interview with an author. He was writing about healthy eating, yet he ended up going over very economic stuff as well as political stuff. I guess it’s just that pervasive, politics and money, are involved with everything in life. He begins with discussion about the I industrialization of the food supply. And all the evils of bad diet etc… but about half way through the interview ethanol comes up.
Any way here is the author and his book

Michael Pollan, author of The Omnivore's Dilemma: A Natural History of Four Meals; Knight professor of journalism, University of California, Berkeley
Ethanol production is described here in detail

If you have 10 minutes I recommend you listen to this clip fast forward to the ethanol discussion if you want to save time.

After 6.30 (6 min 30 seconds)…listen in to the discussion till about 17 minutes.

So it takes 1/3 gal of oil to produce enough corn to make about 1\3 gallon of ethanol which has less energy content than gasoline per gallon… If the president wants to use corn ethanol to solve oil problems then he is misinformed as a leader I wish his advisors were smarter! And had him qualify his statement with non-corn based. Basically to solve an oil crisis it is not a great idea to use corn…Why? You ask…. Well for one thing Corn is an oil product!!!!!!! Ethanol production should be from low cost items like saw grass etc.. Corn just takes tons of energy to make. So our investment will not pay dividends.

At 19:29-he talks about corn based economy problems.

The subsidy system has caused the perceived problem so we have problems with allocation of tax dollars causing another problem that we are considering subsidizing as well.

Reminds me of some quote about good after bad… think it involved money. The government is just so huge it cant see the left hand and the right at the same time so it ends up paying out to cause a problem and then paying to solve same problem. It’s the same fundamental problem that communism had there are so many choices to make in an economy that those decisions should be made by the market to be efficient. Communism thought a central control could make all the right decisions and I keep seeing when there is a failure of the market it usually involves taking power from the market to decide.

I also found this
View Ethanol Today magazine's "Technical Connections" series on the steps of the ethanol production process.
Study: Ethanol Production Consumes Six Units Of Energy To Produce Just One
In 2004, approximately 3.57 billion gallons of
ethanol were used as a gas additive in the United States, according to the Renewable Fuels Association (RFA). During the February State of the Union address, President George Bush urged Congress to pass an energy bill that would pump up the amount to 5 billion gallons by 2012. UC Berkeley geoengineering professor Tad W. Patzek thinks that's a very bad idea.

"I've come to the conclusion that if we're smart about it, nuclear power plants may be the lesser of the evils when we compare them with coal-fired plants and their impact on global warming," he says. "We're going to pay now or later. The question is what's the smallest price we'll have to pay?"
Some other tidbits from the interview that were interesting.
28:34 talks about sustainability of food production.
80 % of Iowa food is imported…
56 calories to move 1 calorie of food to cross country “real efficient” eh.

We subsidies corn syrup and tariff sugar cane. Thus preventing cane sugars domestic price from being competitive

Ethanol infrastructure Not there to distribute it and since energy content also not there we will need to consume more to receive same marginal benefit.

Corn costs oil to produce. Its energy is from oil not necessarily the sun…and its use is pervasive. Corn syrup. Beef, chicken, lots of products are corn based. It’s one crop, which we use extensively.

A large percentage of all our stuff is from corn… including us… chemical fertilizer I bushel of corn takes 1\3 gallon of oil we produce 20 billion bushels a year!!!!!!!!!
Corn is subsidized, then we get Ethanol from corn, so if they subsidise ethanol? its duble down time on the tax dollars Is a break-even process… maybe 90% waste?

So at best we get 10% return. On our oil input. What a deal sign me up.

Tuesday, April 25, 2006

Gas price policies

A couple of weeks ago, Ben Lieberman over at the Heritage Foundation analysed some proposed suggestions to the increase in gasoline prices. Lieberman did his analysis from a framework of what is cheaper for consumers, so I decided to see analyse his analysis from an efficiency perspective.

Point one - expand energy production at home

When economists talk about expanding production at home, we are talking about subsidizing an industry. This would be bad from an economic perspective since there are no positive externalities associated with energy production. However, Lieberman is not talking about government doing more to lower prices, as subsidies would do, but he is instead talking about it doing less. He points out that when prices were cheap, government banned drilling in ANWR and offshore sites. Such a ban cannot satisfy efficiency. It ignores the fact that producers could get oil out of the ground for cheaper than the market price; if they couldn't, such a ban would be pointless. Since there is no efficiency reason for government to be involved, externality, monopoly, or public good, then it would be more efficient for government to do less.

Point two - deregulate

Lieberman's second point is that deregulating the production of gas from oil would lower the price of gasoline. These regulations are command-and-control regulations that serve no efficiency purposes. They are attempts at protecting the environment, but if there were reasons to do so that the market was failing to account for, and again this would require a monopoly, externality, or public good to exist, then measures could and should be taken to fix the market failure and make things more efficient. However, the argument for market failure usually centers around the possibility of externalities (aesthetics, health, etc.), so the only government intervention that might be more efficient would be subsidies and taxes, not regulations. Lieberman's proposal of deregulation would not only lower gas prices, but would also be more efficient.

Point three - don't raise taxes

Lieberman also pointed out that a couple of politicians proposals that would increase the price of gasoline. The first is to raise taxes. Tax increases have been proposed for various reasons, including to reduce consumption of gasoline or purely because they don't like how much money oil companies are making. While Lieberman is right that it would increase gas prices, a tax on gasoline may be legitimate if negative externalities exist for the use of gasoline, such as pollution (and current taxes don't already fix those externalities). However, raising taxes simply because a company has profits is rediculous. There is no externality for profits, and the motives are pure envy, not efficiency.

Point four - no additional regulations

Lieberman also suggested consumers would be hurt by more regulations. The regulations being considered include forcing automakers to make more fuel-efficient cars. Fuel-efficiency is not a public good and no one has a monopoly on fuel-efficiency or anything related to it, so these regulations must be inefficient. Even if their was a market-failure, it would be an externality, so forcing politicians' will on automakers would not achieve efficiency.

Lieberman wasn't directly using efficiency as a framework for analysing these policies, but his framework is similar, and I wonder if he had efficiency in the back of his mind. He may have been thinking of the efficiency framework, but using the "consumer" framework so that everyone could relate better. Either way, the conclusions of the two frameworks are quite similar if not the same.

Friday, April 21, 2006

Global Termperature 1880 - 2000

You can check out a chart of global temperatures via NASA right here.

Monday, April 17, 2006

Mobile-Source Air Pollution

This is a great site for Mobile-Source Air Pollution stats.

Saturday, April 15, 2006

States Taking The Lead on Alternative Energy Ideas

Since we recently discussed these topics in class, alternative energy and sources of economic efficiencies, I thought it was an appropriate blog.

This article was written by the managing editor of the Rocky Mountain Institute (RMI), Joel Swisher. RMI is "an entrepreneurial nonprofit organization that fosters the efficient and restorative use of resources to make the world secure, just, prosperous, and life-sustaining".

Swisher opens the article describing how DC keeps talking about alternative energy sources, but that states are ahead of the national government. He then debates as to whether or not these alternatives are economically efficient. He describes how some states are starting to use portfolio standards that require alternative energy sources to be used by utility companies within a certain period of time (5-15 years). Portfolio Standards are a "flexible, market-driven policy that can ensure that the public benefits of wind, solar, biomass, and geothermal energy continue to be recognized as electricity markets become more competitive. The policy ensures that a minimum amount of renewable energy is included in the portfolio of electricity resources serving a state or country, and -- by increasing the required amount over time -- can put the electricity industry on a path toward increasing sustainability. Because it is a market standard, pollution standard relies almost entirely on the private market for its implementation. Market implementation will result in competition, efficiency and innovation that will deliver renewable energy at the lowest possible cost." (Renewables Portfolio Standard)

Other alternative energy considerations Swisher outlined were for states to use "feebates". A feebate is a fee or a rebate that is assigned to each individual vehicle type based on a fuel economy benchmark set annually for each vehicle size class. Buyers of more efficient vehicles receive a rebate; buyers of less efficient vehicles pay a fee. This would shift the costs to the right people, not taxing everyone, but taxing the right people.

Swisher refers to a document that the RMI wrote in conjunction with the Pentagon entitled The Oil Endgame. In the document they consider how auto manufacturers should be developing lines of lighter, safer and more fuel efficient domestic vehicles to reduce our overseas oil consumption. Additionally, that we should look closer at hybrids and They believe that this change of technology will shift the supply and demand balance of oil. The issue they did not discuss was the costs of production using these new lighter materials, such as carbon composites, advanced steels. And, will the production costs outweigh the competitive price of other similar vehicles? Or, will they produce the lighter cars at the right time while gas prices are at an all time high and let the market dictate.

If anyone wishes to read the "The Oil Endgame", I have downloaded a copy that can be emailed.

Wednesday, April 05, 2006

A call to ation for clean air

Air pollution is taking its effect on those both healthy and sensitive people. Even with low levels of pollution there is still an adverse effect on people. With air being the most vital resource to all living species we need to find a better way to keep it cleaner. In the Atlatnta region the smog problem has reached one of the worst in the country. The last time that this region has passed the federal air quality standard was in 2004. This past year in 2005 the city had 17 red smog days. Over half of the population in Georgia is breathing unhealthy air. Georgia's childrenwith asthma recive 28 million dollars in health care a year and on some days are not allowed to be outside for an extended period of time due to the pollution. Everytime we turn on a light or start our car we are using energy which produces pollution. One way that we can try and reduce these problems is to try and drive less and keep lights turned off in rooms that are not being used. This may only help with some of the problems but we also need to use our technilogical advancements to reduce the big contributers to the pollution like smokestacks. Although air pollution is a big issue i do not think that the problem is by itself causing heart disease, asthma, and lung problems. These problems may be enhanced by the effects of air pollution but do they really cause the problem itself? We are approaching a dangerous abundance of the number of polluting gases which in turn is increasing global warming. These issues need to be resolved or we will see a decrese in life expectency.

Monday, April 03, 2006

Curbside Recycling

I recently read a commentary that most recycling programs are a waste. Among the points noted were: no shortage of landfill space (another thousand years of garbage would only fill an area 35 miles square by 100 yards deep), double energy consumption and pollution (just preparing the recyclables can use as much energy and create as much waste as using virgin material), and cost (most recycling programs lose money).
All that having been said, the fact that something can be recycled doesn't mean it should be. Forget the esoteric arguments about externalities, finite resources, and so on--in the end recycling will (or won't) work because it is (or isn't) cheaper than throwing stuff away. This varies with the material being recycled. As a general proposition, any manufactured product that is (a) heavy or expensive in relation to its bulk, (b) homogeneous, and (c) easily separable from the waste stream by consumers can be recycled economically. Metals, notably steel and aluminum, are the obvious examples; both have high recycling rates. Surprisingly, so does newsprint. The poor candidates, at the moment, are plastics and mixed paper (including magazines). Plastics are too light and heterogeneous, while mixed paper contains too many contaminants. In the end we may conclude that this junk is best consigned to landfills. But given the advance of technology, who knows? We're in the midst of a great national experiment, and we'd be foolish at this stage to prejudge the results.

Why cellulosic ethanol is better than corn ethanol

In recent debates with energy policies, fuel has become and increasing problem for policy makers. The decisions to switch from gasoline to alternative fuels has lead officials to asses different alternatives, one being the use of ethnol. In the last decade the use of corn ethnol as an clean burning fuel has been thought of as the optimal source in creating environmental efficientcy by providing cleaner burning fuel. However, a new form of ethanol has come to emerge as the sole provider of cleaner burning fuel. Is this alternative a better solution?
In assessing whether or not biofuel saves more energy in the complete process of creating energy we must first take a look at the cultivation of the vvarious crops taht can be used to produce fuel. Fuel that uses the more traditional approtach by way of corn may yeild only marginal renewalbe envergy retruns, while ehtanol obtained from cellulose (a technology that uses fibours materials such as wood chips, or farm residues) has a clear advantage. The biggest reason cellulosic ehtano has a better energy balance than corn is that the whole plant can be used within the fuel proces. The fermentable compoonenet( is sperarated from the nonfermentable component(lignin) which yields a high energy value.
On the flip side, large scale ehtonol production rasies other envronmental concerns, the biggest being air quality. The low blends predominantly used today have higher evaporatiotvie emissions than regular gasoline in warmer climates which contributes to ozone problems. A solution to this problem could be to use ethanol in high blends.
Today ethanol is only used as a fuel additive to help it burn cleaner. The question now is how quickly can we make the transition to using ethanol as an alternative fuel as aopposed to jsut an additive?