26 November 2014

Hurricane Economics: Housing

Robert D writes:*

First in 2005, and once again in 2012, the U.S. Was devastated by both hurricane Katrina and Sandy. Of course these disasters impacted society in countless ways, the housing market (or in some cases the lack there of) provides an interesting perspective on these impacts. With both hurricanes, thousands of residents were displaced due to the severe damaging of houses. This led to an overall decrease in housing prices in areas impacted by the storms. At the same time, these displaced resident were now in search of new (and affordable) housing. Traditionally, the replacement housing and or compensation for damage is provided by the federal government. But as you might recall, there was (and still is) some serious doubt about the government's capability in providing these 'goods'. If the government is inadequate in providing support for hurricane victims then what are the alternatives, and does this mean that there is a potential market for hurricane relief?

In New Orleans alone, over 214,700 houses were damaged and approximately 400,000 residents were displaced. This created an overwhelming demand for emergency relief shelters. This demand could not be met through federal means, therefore new systems should be implemented to account for the (possible) demand. One possible system is the Exo unit, which is a small, affordable, emergency housing unit for up to four people. These units are designed as “upside down coffee cups” and therefore they are easily transported. Even if this solves the short term housing issue, there are still long term consequences like whether the change in housing prices correspond with the impact of the storm. More specifically, the price of houses may drop too much or too little due to the federal supply of houses immediately after the hurricane.

But even if we implement a new relief system before it is too late (i.e. another catastrophic hurricane occurs), there must be an initial investment towards the system. At this point, it becomes a matter of risk. How large of a risk are the investors of the new relief system willing to take? This question depends on the expected level of destruction for a hurricane as well as what is considered 'enough' in terms of emergency housing relief. If there becomes a lack of investment, it is difficult to see a solution that does not involve the intervention of the government.

Bottom Line: In post-hurricane areas, the federal supply of housing units disrupt the housing market so much that prices may not reflect the damage caused by the storm. This calls for a change in hurricane relief policies in regards to housing.

* Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.

The corn(y) side of beef production

Alexia T writes:*

The vast majority of US cattle today spend most of their lives away from pasture, confined in overcrowded and revolting feedlots, and force-fed a diet of grains, especially corn.

For centuries cows have been used to convert grass into meat and milk, however, in the past few decades the trend of mass production, at low costs, to maximise profits has turned the beef industry into a profit seeking machine rather than a sustainable source of feed. This ever-expanding industry comes with a great cost to society and its environment.

Corn-fed cows grow and fatten up much faster than grass-fed cows have ever done. 75 years ago it took cows about 4 to 5 years to reach their ideal slaughter weight, whilst today, with the high influx of corn, and other supplements such as antibiotics and growth hormones, it takes approximately less than 15 months for a cow to reach this weight.

Corn consumption in cattle causes several important problems. The production of corn, which by the way is heavily subsidised by the US government, demands vast doses of pesticide as well as continual applications of nitrogen fertilisers, which in turn use great quantities of natural gas and oil. In 2010, US corn production consumed more than 9 million tons of fertiliser and led to roughly 42 million tons of CO2 greenhouse gas emissions.

A corn diet raises the acidity levels in the animal’s stomach, creating several health conditions such as E. Coli contamination, which not only affects animals, but humans as well (remember the mad cow disease…). Further, the corn diet has changed the levels of Omega 3 and Omega 6 in beef, which has paved the way for higher rates of cancer, weight gain, diabetes, and heart disease amongst meat eaters. The corn diet along with the other supplements that cattle are stuffed with has also led to the weakening of the humane immune systems, making many forms of modern medicine ineffective.

It may be true that the corn-fed beef industry is more efficient, but it may be neither sustainable nor efficient in the long run. The true cost of “cheaper meat” is becoming more and more evident, and the beef production industry is having a worrisome impact on climate change. Not only is it slowly destroying the environment around us, but individuals regularly consuming corn-fed cattle are also receiving direct health impacts.

Bottom Line: Corn-fed cattle production and consumption contribute negatively to climate change and severe health impacts. Changing our patterns of production and consumption would assist in reducing these negative outcomes.

* Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.

As a migrant...

A friend of mine wrote this on FB:
So being a poor immigrant means more than not owning a home, not having nice clothes and not speaking the language. It also means not having a home-community with strong ties to relatives, neighbors, friends, church members etc. These factors could affect one's ability to see, establish and appreciate such vital connections. I have seen and felt this "numbness" in myself and others in a way that reminds me of the first day I stepped into a new school in a new country with a different language. It makes me SO appreciate my first U.S. teacher Mrs. M. who started teaching me English, my first Mexican friend EV who also spoke (albeit a weird version of) Spanish, my first high school friends..., my neighbors..., my adopted family..., and SO many others! THANK YOU!!! We are ONE human race, ONE community, ONE family. We all have SO much LOVE to give and yet have no idea how much even the tiniest gesture of KINDNESS can mean to those that need it!
Bottom Line: Even 30 years later, these feelings are worth appreciating.

25 November 2014

Amsterdam chilled out

This video has a nice feel...



Related: Eighteen things to love about Amsterdam

The Cost of Deception

Ezra S writes:*

When one needs to make a certain decision, a basic cost-benefit analysis is often used to weigh options -- especially when it comes to economic or political decision-making processes. Although such processes may seem straightforward, there are sometimes less easily measured, but important aspects to consider.

Take, for example, the 2004 sale of publicly owned hospitals to a private company that took place in Hamburg. The incumbent city government assessed the money they would gain from the sale to outweigh the cost of not being able to control part of the public health care system of its citizens. In a country like Germany where health care is considered a public good, making significant changes with long-term impact within the system always comes hand in hand with a public and political battle. A referendum assessing public opinion found a clear majority (76,8%) against the sale. That result seemed to settle matters until the court ruled that public referenda results were not binding. That ruling allowed the government decided return to its original plan and sell the hospitals to the private company Asklepios.

That selling against the public’s will is problematic with regard to basic beliefs associated with democratic rule is rather obvious, but that shall not be the focus of this post. It shall rather be stressed that the government did not take changing circumstances to its original cost-benefit analysis into account, which were caused by the referendum. The citizens of Hamburg believed that a majority vote against the sale of the hospitals would mean that the city would not sell, period. When the government decided to sell anyways, many citizens felt directly deceived. Psychological research (pdf) has shown that deception causes significant cognitive-emotional and behavioural responses. In this case the trust not only in the government at the time but also in the whole democratic process was diminished. That meant that the ultimate cost for selling the hospitals increased significantly after the referendum, a development that the government did not fully take into consideration.

Bottom Line: Quantifying emotional costs and taking them into account when making a decision, may it be political, economic or of any other nature, might be difficult but is essential. Especially when a party involved is left with a feeling of deception, which triggers distress and negative responses, the resulting increase in costs should not be ignored.

* Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.

Quinoa boom threatens people and their environment

Theresa L writes:*

Quinoa has been an essential food for Andean people over centuries but, until recently, was unnoticed in most of the Western world. I got to know quinoa when living in Ecuador four years ago. Back home in Europe, the crop could only be found in fair trade shops or specific organic supermarkets. Today it is promoted as a "Superfood", becoming ever more trendy due to being the grain crop with the highest nutritional value per 100 calories. No matter in which supermarket I have recently been, quinoa was always prominently featured.

As consumers in Europe, the United States and Australia enjoy the valuable addition that quinoa is for their diets, its world market price has tripled since 2006. It is now strongly discussed whether this price increase has more negative or positive effects on traditional producers and consumers in Peru and Bolivia. According to a study of the FAO (pdf) local quinoa consumption didn't break down. Instead, higher prices enabled farmers to afford products like fruit and vegetables that they weren't able to consume before the quinoa boom. However, non-farmers, especially the urban poor, only face higher prices. Critics thus point towards the fact that many locals can't afford quinoa anymore and are forced to substitute it with cheaper but less nutritional products like rice or noodles.

Additionally, the increased demand of quinoa leads to serious environmental problems. According to the FAO, more than 50 percent of interviewed quinoa farmers in Bolivia noticed a decrease in soil quality during the past three years. This is due to the land now being farmed year-round and being treated with pesticides. Additionally, farmers focussing on higher quinoa production are allowing their lama populations to shrink. Thus, the important services of grazing and fertilizing traditional farms and preventing erosion with their large, padded feet is missing. The Southern Altiplano area where quinoa is grown is a very fragile ecosystem as it has an average altitude of 3,600 meters where not many organisms are able to survive. Therefore, changes like an increase in quinoa along with a decrease of lamas that might seem little can bring this ecosystem out of balance, threatening its future fertility.

Facing these problems, quinoa lovers might question whether they should still consume the product. That decision may be easier in the future, as cultivation expands in the United States, Canada, China, Denmark, India and Australia. In the meantime, consider organic and fair trade quinoa if you want to support Peruvian and Bolivian farmers and their environment.

Bottom Line: A boom of an agricultural commodity might be beneficial for the GDP of a country and for particular groups involved in production, but is at the same time problematic for the environment and national consumers. Higher incomes due to an increase in the market value might thus not make up for the total negative effects.

* Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.

Speed blogging

  1. Back to the future: some California winegrowers see the virtue (risk reduction) in "dry" farming without irrigation. Related: climate change may bring back local food production as diversification replaces mono-sourced, monocropped farms. Also related: a nice overview on "water markets" (loosely defined) in California and an excellent analysis (pdf) of how to address calls for "more storage" into California's water system

  2. The Dutch government engages citizens on climate change and flood risk, via apps!

  3. LA has moved to Owens Lake 3.0 (furrowed dry beds) in an attempt to restore exports

  4. Late and misunderstood budgets interfere with good water management

  5. An update on unbundling customer service from water provision in England/Wales

  6. The Daily Show criticizes Detroit's efforts to collect money from the poor -- just as I did
H/Ts to DL and RM

    24 November 2014

    Monday funnies

    I could watch this all day...

    Transvestite fish and male infertility

    Kristian K writes:*

    Superstition and misleading information regarding the Pill is abundant both from the obvious Catholic adversaries and extremist websites, but also in women’s magazines and protective parental blogs. “The Pill is a sensitive issue for many reasons” (My Girlfriend, 2014), and strong accusations against it including the risk of blood clogs, feminization of fish and male infertility only exacerbates this. To some extent such accusations do not come out of nowhere, but there is no clear evidence that the pill is the sole responsible factor. At best it is a contributor amongst many. However, this does not necessarily mean that the pill does not cause any environmental problems, only that we need to remain realistic regarding what we know and what we don’t.

    The artificial hormone and EDC 17-alpha-ethinylestradiol (EE2) is a main component in female hormonal contraception. EE2 has been linked to for instance the feminization of fish, and has been found in damaging concentrations in freshwater American streams. Still, it remains unclear how large a responsibility can be ascribed to EE2 compared to other endocrine disruptors. A 2009 study found that feminization of fish could best be statistically explained by the presence of estrogen together with anti-androgens (used in for instance the treatment of cancers) or by anti-androgens alone.

    Still, regardless of how large concentrations are in a given area, it has to be admitted that artificial estrogen, like other EDCs, can have severe adverse effects to animals and young humans. Therefore, a general solution should be found to limit the presence of EDCs, found in a variety of products, in waterways and the air. Another idea is to improve general water sanitation. This is difficult in places that do not have water sanitation already but it might be a possibility in places such as Europe or The US. In order to fund such a sanitation program, it might be possible to estimate the concentrations of the different EDCs in the water sources, and ascribe a fitting sanitation tax to the products, either at a consumer or producer level. We could also consider alternative contraceptives, for both males, females (and all in between).

    Bottom Line: EDCs are a problem for the environment and we need a solution. Since birth control pills do contain EDCs, they should be considered as part of the discussion of how to mitigate adverse effects. As a man it seems almost hypocritical to ask women to use an alternative, since the idea of a temporary vasectomy or using the potential ‘male’ pill, does not sound particularly tempting to me. Still, surely there is a solution to this problem, but whether it should be found in alternative contraception methods or in better sanitation, begs the question. What do you think?

    * Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.

    The invisible problem of light

    Līza L writes:*

    After the 1994 earthquake knocked out power in Los Angeles, local emergency centers received calls from anxious residents who reported a strange “giant, silvery cloud” in the dark sky that they had never seen before. They were reporting the Milky Way – the galaxy that contains our Solar System. As someone who grew up in the suburbs of Rīga, the capital of Latvia, I find it comic that people had never seen the Milky Way before. What is less comic is that this is the reality for millions of urban people around the world.

    Source: www.stellarium.org
    The stars in very urbanized and industrial cities have become (almost) non-existent. It’s not that stars are suddenly dying out; they are simply hidden from view because of urban sky glow. Due to urbanization at least half the kids in any given population are growing up in urban areas where most of the light pollution is happening, and they might not know what a sky full of stars looks like. They are not presented with the stark contrast of a countryside sky and a city sky if they barely leave cities, so they don’t realize there is a problem. And it’s not just kids but adults too – while light pollution is now talked about more, many adults don’t realize that all the artificial light in cities is creating problems not only for their health, but for ecosystems disturbed by artificial light. Most wildlife follows diurnal patterns of dark and light so their interactions might alter and overall physiological harm can be done to plants and animals alike.

    Light pollution is, in a sense, similar to the problems presented as a consequence of fisheries depletion because people don’t necessarily see the strong impacts in their immediate environment. People who assume there isn’t a problem are mistaken. Similarly to ocean fisheries, people feel like they are far away from the light pollution problem. This false perception creates an imaginary distance between individuals and "unattainable" solutions. But of all the pollution we face, light pollution is probably most easily remedied because most of the solutions are quite simple, such as changing the type of light used or improving light fixtures so that light isn’t leaked. So even if raising awareness of light pollution and its harmful consequences to the general public is too difficult, it shouldn’t be too difficult to change policies and reduce light pollution.

    Bottom Line: Light pollution is an ‘invisible’ problem which can be easily remedied. Even if we cannot make the problem ‘visible’ to the general public, simple policies can substantially reduce that pollution -- and bring back the stars.

    * Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.

    Some thoughts on my Reddit AMA

    My "ask me anything about water" was roughly 4x more popular (based on votes) than the first one I did in July. (It was also more popular than Naomi Klein's, but she was only answering questions for an hour :)

    I spent about 8 hours in total, writing 450 replies to over 1,000 questions and comments.

    The most popular question was "What's your opinion of the bottled water industry?" to which I replied: "It's like the soft drink industry. Both need to worry about groundwater supplies and litter. Both promise quality and advertise well ahead of what they deliver."

    My most popular answer was in response to this question:
    Hello. I live in Manila, where the tap water is not as clean as in other countries, so we don't drink it. Do you know what it would take to make it drinking water, just in general? Also, any interesting water facts about the Philippines? We have loads of slums and corruption here, coupled with massive flooding and the biologically dead Pasig River flowing through town. As far as improving water quality is concerned, what would you say is the best way?
    I wrote:
    Yep. Tough problems. Leaking pipes are the start, as they lose water and allow contaminants to get clean water (from the treatment plant) dirty. Neighborhoods should look at small scale treatment-for-sale facilities (see photo with bottles here).

    Corrupt people don't care about slums, so they need to take care of themselves. For drinking, you can use filters and chlorine, but it's MUCH better to have drinkable tap water for cooking, showering, etc.

    Get your neighbors together. After you get 100, look into larger filters. After 1,000, you can build a larger system. They are affordable, even in slums, when shared among many...
    It was interesting to see this response -- and several others -- covered in a nice summary by a Filipino blog.

    Here are a few of my favorite questions and answers (in no particular order):
    • Them: "Water economist... Alright, in developing countries in Africa and Asia there are many people who earn a living by selling water. How can you build water infrastructure in developing countries without ruining their lives?"
      Me: "Well, people can switch jobs (like nightsoil collectors). Look at the benefit to water USERS, in terms of cheaper, cleaner water."
    • Them: "How does one get into studying the economy of water?"
      Me:
      1. Read my book.
      2. If still interested, then find a water issue that interests you.
      3. Study that (or work in the area).
      4. ???
      5. AMA!
    • Them: "Where is the "Manhattan Project" to passively desalinate ocean water? [snip] It just seems that if population rates - regardless of location - allow for a doubling of humans within 30 years, the water has to come from somewhere. Business people and globalist control freaks love to make everything SCARCE in order to regulate it, control it, charge more for it, etc. There is a lot of talk about ABUNDANCE in this gee-whiz age of Google this and Apple that. It just seems that a program to passively separate salts and minerals from ocean water for use in human activities is a necessity"
      Me:
      It's called "rain" :) Seriously, lots of people support supply side solutions. Those are no problem, as long as users pay for them.
    • Them: "Why is it so difficult to desalinate water?"
      Front page! Woo hoo!

      Me: "Salt and water like each other."
    • Them: "I live in Melbourne, Australia and in the first decade of the new millennium, we went through a drought that rendered our water storage levels dangerously low. As a bit of a knee-jerk reaction, our government hastily spent BILLIONS of dollars building a desalination plant, because I guess they saw the possibility of our water reserves running dry. Shortly after construction of the plant had gone past the point of no return, we had record breaking rainfalls which basically filled our water storages, and continue to have very good rainfalls year on year. We are still paying money for our desalination plant via a water levy (tax), and will continue to pay it until we have completely paid off, which will be in about a decade or so, and the plant is yet to deliver us with a single drop of water. My question is do you think that building the plant was a good idea back then, and do you think it is a good idea to have it for the future of Melbourne? Do you think in the foreseeable future we will ever turn it on?"
      Me:
      "Good question. The plant is an insurance policy. You don't always need insurance... until you do."
    • Them: "What does California need to do to solve (both in the short-term and long-term) the drought/water shortages it is currently facing?"
      Me: "(1) Raise the price of water so people don't have lawns in the desert (2) Protect groundwater and use aquifers (3) Allow water markets, so ag can reposition/shrink (4) STOP subsidizing sprawl (via cheap water)"
    • Them: "Based on your knowledge of major trends, what will be the biggest changes we'll see over the next 20 years?"
      Me:
      "Food chain disruption. Groundwater exhaustion. Dead ecosystems. These will be black and white WTF [were we thinking?] situations in many places."
    • Them: "How quickly will there be major impacts from ground water exhaustion in US south west?"
      Me:
      "The impacts will be felt after 3-5 more years of drought for ag; cities can get along for 25+ years."
    • Them: "What is more likely to occur in severe cases all around the world in a few years: extreme drought or extreme rainfall/floods?"
      Me: "Both."
    • Them: "You mentioned competition on quality. Where does that apply - developing countries, developed countries or plain everywhere? I wouldn't know how to judge whether tap water or battled water were higher quality. These numbers (German pdf) released by the utilities company mean nothing to me and they aren't even available for bottled water."
      Me: "Yep. Everywhere. Consumer's Union could nail that one."
    Bottom Line: People are very curious to know the risks, causes and potential solutions to water quality and quantity problems. Many put too much weight on technical hope (desalination) or moral outrage (bottled water is evil). Few understand the roles of government failure, monopolistic ineptitude and community engagement. I am working to move the discussion in that direction, and the fact that people downloaded 2,000 copies of my book during the AMA gives me hope.

    John Briscoe has died. May his insights endure.

    I never met Professor Briscoe, but I was familiar with his work at the World Bank and Harvard. He had an excellent reputation, and perhaps this is why:
    By the time Dr. Briscoe arrived at the World Bank, lending for infrastructure projects was under attack and “social-sector lending” on health and education had become a priority. Many dam projects were scuttled as the bank became a target for environmental nongovernmental organizations and protesters with general grievances against what they saw as a corporate model of development.

    The complaints, Dr. Briscoe said, often came from places where the lights and water flowed with regularity because of hydrodams.

    “Time and time again I have seen NGOs and politicians in rich countries advocate that the poor follow a path that they, the rich, never have followed, nor are willing to follow,” he once wrote.
    Although there are obvious costs to dams, Briscoe had the right perspective on their benefits. It's a pity that so many dams (and other water projects) are not about helping the poor or promoting sustainability but rewarding privileged special interests.

    Let us remember him for working to put water in the service of those who needed help.

    22 November 2014

    Flashback: 17-23 Nov 2013

    Flashback: 10-16 Nov 2013A year later and still worth reading...

    21 November 2014

    Friday party!

    This rant underlines the problem (bankers screwing taxpayers and customers without consequences) and the solution (utility banking separation from markets).*



    Bottom Line: I'd drink to honest bankers and diligent regulators!

    * Read more about "rabid bankers" in The Economist

    Light pollution - easy solutions, difficult implementation

    Moritz M writes:*

    Can’t sleep? Feel depressed? Chances are that the reason might be in front of your window: more and more studies suggest that light pollution is causing many health problems, including sleep deprivation, depression and various forms of cancer. This light pollution map illustrates how bright your city/district looks from space. Although the topic remained relatively disregarded in the past, governments and municipalities more and more realize the impact of excessive use of light on the environment, health and public spending. Many examples show how light pollution can be limited with additional technology: Fully shielded streetlights stop light to shine anywhere else than where it is needed – the street. But if we look closer at the “success cases”, we see that no of them were realized on a broad national basis. Since these technological solutions are relatively expensive to implement everywhere in a country and usually only find support, if the impact is felt directly by the population, e.g. if the area is famous for its clear night sky and there are no tourists anymore, because the sky has become too bright to watch the stars.



    Therefore we must come up with other, more “globalizable” solutions. We have to work with what we already have (which is a lot of lights) and simply reduce the usage. As one of the first, France has stepped forward with a national regulation of the usage of light in public areas. Since June 2013 these regulations have been in place and the government claims to save energy equivalent to 250.000 tons of carbon dioxide annually (this is about as much energy as 750.000 household use in France). While the effect seems quite big, the actual regulations are not as excessive as one might think:
    • Interior lights have to be turned off one hour after the last staff leaves the building
    • Exterior lighting that illuminates facades and window lightning have to be turned off by 1am and can be turned on one hour before sunset (more details)

    So far the regulations have been very successful in the country and should encourage policy makers to move on to other sources of light overuse. We still see the bright illuminated advertisements everywhere, even in the middle of the night. Why not also shut them off during the late night and ask for a progressive tax on every consecutive hour of the night? Companies will think twice about the reach of their advertisement and whether that is justified by higher costs.

    Bottom Line: The solutions are right there. Just make them look attractive.

    * Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.

    The Benefits of Climate Change

    Diederik B. writes:*

    Climate change has began transforming life on earth. Everyday we read about the impacts of global warming on the internet and in newspapers. We have learned that it is responsible for the rise of sea levels, for a loss of biodiversity, and for many other terrible things. It is evident that global warming is an issue that needs to be dealt with quickly. However, there are also some positive externalities that can be derived from climate change.

    In this post I would like to focus on the arctic specifically. While the melting ice caps is becoming a huge issue for some countries, especially China, Vietnam and the Netherlands, new opportunities arise in the arctic region. An example of this is the Northern Sea Route (see illustration). This route is now accessible for cargo ships because of the melting ice. It can even shave two weeks off the normal route.

    Another notable is example is that global warming increases the amount of agricultural possibilities in the arctic region. Whereas up until a few years a go the agricultural sector was basically non existent in Greenland, they now have the means and environmental circumstances that allow them to grow different fruits and vegetables, including strawberries! Of course, this does not mean that tomorrow the whole world will be eating strawberries from the arctic region, but it definitely shows potential.

    Thirdly, the melting of the icecaps also exposes many undiscovered natural resources. According to the U.S. Geological Survey, these new sources should add up to about 22 percent of the world’s undiscovered oil and natural gas. Because almost the whole world still heavily depends on these depletable resources, one could argue that discovering new oil wells is a benefit of climate change as well.

    Bottom Line: Despite all of the negative externalities of climate change, some people actually benefit from it. This of course does not mean that climate change is immediately a good thing, but it is always good to place things into perspective. It teaches us that we can still make a good thing out of something bad. While we are trying to stop climate change from happening, why not recap its benefits at the same time?

    * Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.

    Anything but water

    1. True: "It seems that the most fearful people in our country are those who don't travel and are metaphorically barricaded in America... We end up afraid of things we shouldn't be and ignoring things that threaten our society, such as climate change and the growing gap between rich and poor"

    2. Want to save the climate? End subsidies of $550 billion to fossil fuels

    3. PDFs from the EU: "How to communicate the risks of population growth?" and "Five principles to guide knowledge exchange in environmental management"

    4. Great TED talks on "The Global War on Drugs [FAIL]" and "The Social Progress Index [as a alternative for GDP]"

    5. Has life improved since 1989 for the people of Eastern Europe? Two economists say yes [pdf], but this reporter disagrees with them (his original analysis). I side with the economists, mostly due to the "freedoms" that do not appear in GDP statistics

    20 November 2014

    Controversy over Finland's shifting policies on peat

    Miika K. writes:*

    Finland is the 6th-richest country in the world in peatland. One-third of its area is swamp, from where peat is found. These energy reserves double the energy from oil in the North Sea. Despite Finland’s energy-sufficiency, peat energy spurs controversy and hot debate. Carbon dioxide emission intensity of peat is higher than that of coal and natural gas, let alone damage on animals such a grouse and migratory birds, who live at swamps. Peatlands are also tremendous ‘carbon sinks’, which absorb CO2 from the atmosphere.

    At the Finnish political level, peat-discussion revolves around energy self-sufficiency. The alternatives for peat energy are limited – reducing peat could potentially push Finland to import more coal from Russia.

    Policy-making with peat is intriguing. Some of the political parties are frantic to amend the definition of peat to a ‘renewable source of energy’, thus making its production easier to support, whereas other political parties use any opportunity to obstruct peat energy.

    The Finnish government in 2011-2014 was formed from 6 political parties out of 8 total in the parliament. The populist True Finns (TF) party, which had undergone tremendous success in the elections, avoided responsibility in forming the government and wished to stay in opposition. Consequently, several small parties had to be taken in to form a majority government. The Green Party (GP), whose ideology pertains to environmental protection, was one of the small parties taken on board, and its leader Ville Niinistö became the Minister of the Environment. In order to keep the government from breaking down, the small parties acquired tremendous leverage for policies they cared passionately about.

    Niinistö was hard on curbing down peat energy by increasing its taxation from the original 1.90 €/MWh to 4.90 €/MWh. By 2015 the tax would have already been 5.90€/MWh. Simultaneously, swamp-protection areas were expanded. In September 2014, however, the GP left the government due to controversy with nuclear energy permissions. Subsequently, the new Minister of the Environment Sanni Grahn-Laasonen from the National Coalition Party (NCP) brought the recent peat policy to halt within weeks, with the intention to amend it looser and more feasible for companies to adapt. This agitated Niinistö, who responded: “never in Finland has a minister of the Environment stopped an already negotiated protection policy”. Moreover, the peat tax is now being continued to reduce from the beginning of 2016 such that the tax returns to the original 1.90€/MWh.

    The case with Finnish peat policies presents a dilemma. The government’s swift policies may have been advantageous for environmental protection with the tremendous leverage by the GP. The policies, however, were toothless once the GP left the government.

    Bottom line: We must now contemplate: do we crave hasty and ‘quick-remedy’ environmental policies, which can be quickly set-up and altered by anyone in power? Or should we rather prefer the sturdy decision-making processes that ideally produce robust policies, although slowly? In the case of peat policies, for example, two consecutive governments’ approval could be required to alter, as well as bring about, a protection policy.

    * Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.

    LEDs and light pollution

    Iris G writes:*

    As the world demand for energy grows, research into more efficient and sustainable ways of using energy is booming. This is especially noticeably in the field of lighting, which is experiencing nothing short of a revolution. Just last month, it was announced that this years Nobel Prize in Physics has been awarded to three scientists for their work on light-emitting diodes, commonly known as LEDs. In the past decades industrial and domestic lighting transitioned from the traditional incandescent bulbs to CFLs and now moved on to LEDs, which are used for a variety of applications ranging from domestic lighting to cellphone screens to Christmas lights.

    The improvement in energy-saving is significant: LEDs are much more efficient at generating visible light compared to an incandescent light bulb, their lifespan is over 40 years longer than that of a traditional bulb, and due to recent improvements in lighting technology LEDs have also become much cheaper. Many types of LEDs, however, also have one major downside: they can contribute severely to light pollution.

    The phenomenon of light pollution has been recognized for some time and appears to be an almost inevitable consequence of development. It is virtually omnipresent in the urban areas of the United States and Western Europe, where it is estimated that around two-thirds of the population can no longer view the Milky Way with the naked eye [1]. In recent years it has become increasingly clear that light pollution can be very detrimental to the environment and human health, and many of its effects are not yet well understood. High levels of pollution are linked to weight and mood problems as well as breast cancer in humans, and generally impact the biorhythm and behavior of wildlife, especially nocturnal animals [2].


    Although any light above pollution thresholds can have an effect on health and nature, the blue-white light (wavelengths below 500nm) emitted by LEDs may be especially detrimental. This type of lighting could cause two to five times as much light pollution if it replaced all of the current lighting, due to the greater scattering of blue light compared to green or red light (this is also why the sky is blue and no other color)[3]. Warmer hues of LEDs are being developed, but are currently not as effective and competitive as their blue light counterparts.

    This is not to say that LEDs should not be used and celebrated - on the contrary. Rather, it should be recognized that while they are a major breakthrough in lighting, LEDs form only part of the solution to more efficient and sustainable lighting. Businesses and industries should still look critically at their use of lighting even when they implement LEDs, and shield their light emissions where possible. In urban areas, local municipalities should carefully consider where and in which way LEDs can be used efficiently without exposing citizens to detrimental effects from light pollution. Individuals could cut down significantly on their energy use by transitioning to LEDs in their home. Finally, it is important to remember that even when lighting becomes cheaper, it can't hurt to turn the light off every now and then.

    Bottom line: LEDs are a great new money- and energy saving source of lighting, but we have to be careful about when and where to implement them as they are not without downsides.

    * Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.

    Sources:
    1. Pierantonio Cinzano, Fabio Falchi, Christopher D. Elvidge. 2001 Monthly Notices of the Royal Astron. Society 328, 689–707
    2. Ron Chepesiuk. 2009. “Missing the Dark: Health Effects of Light Pollution.” Environmental Health Perspectives 117:1: A20-A27. Accessed at: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2627884/
    3. Fabio Falchi, Pierantonio Cinzano, Christopher D. Elvidge, David M. Keith, and Abraham Haim. 2011. “Limiting the impact of light pollution on human health, environment and stellar visibility.” Journal of Environmental Management 92: 2714-2722. doi:10.1016/j.jenvman.2011.06.029

    The underlying truth in figures

    I look at a lot of pictures, maps and statistics on water use. A good figure will help you understand, but a bad one will mislead you. What's the difference between good and bad? Sometimes it's intention, sometimes it's interpretation, but often it's an unfamiliarity with the underlying data.

    Take this example from the Hamilton Project:



    Three observations:
    1. Irrigation doesn't mean farming when you can grow crops with rain. You know that, but does this map help you understand where our food grows?
    2. Withdrawals have nothing to do with value. It's quite possible for heavy withdrawals for valuable -- or marginal -- use.
    3. How much can be taken out without threatening tomorrow's supplies? I don't see that.
    Here's another, more complicated example from the USGS:


    Fleck notes that (a) thermoelectric withdrawals are usually returned, (b) irrigation withdrawals do not reflect return flows, and (c) the recent dip reflects a drop in the economy. I'll add these notes:
    1. How can we know irrigation withdrawals when many surface diversions and groundwater withdrawals are unmetered?
    2. How do these uses occur locally, where excess demand has a local impact? National totals are almost meaningless, especially if one ignores seasonal variations in water supply.
    3. Residential water services require water, but they also require careful management and robust distribution systems. Are lower withdrawals a sign of better service?
    Bottom Line: I'm glad to see more data on water use, but let's make sure we use these figures as the start, rather than the end of the conversation.

    H/Ts to RM and MV

    19 November 2014

    Don't let the yuckiness bug you

    Lara J writes:*

    By 2050, the world’s population is expected to rise to 9 billion, and there are fears that this will lead to an increase in world hunger and food shortages. The UN Food and Agriculture Organization (FAO) estimates that food production will need to increase by 70% if we want to feed the growing population. Seeing as it isn’t ethically viable to somehow put a halt to this population growth or get rid of half of the world’s existing population, our best call is to find a way to use the world’s resources in a more sustainable manner… perhaps by eating bugs.

    Entomophagy (i.e. the practice of eating edible insects) has many benefits (pdf) for the environment and people’s health: they have a better feed-to-meat ratio than conventional meat sources, emit less greenhouse gases, take up less space to raise, require little water, and contain high levels of protein, good fats, iron, calcium, and zinc. Overall, farming insects as miniature livestock is a smarter, more efficient and ultimately environmentally safer means of sustaining a healthy and convenient food supply.

    More than 2 billion people worldwide supplement their daily diets with insects, so why can’t we do it too? The main obstacle to the consumption of insects in the Western world is the "yuck factor" involved in it; people are not used to seeing animal food sources in their entirety, and insects are generally seen as creepy crawlers that are dirty and unappetizing.

    Nevertheless, the Dutch supermarket chain Jumbo has decided to add bugs onto its shelves from January 2015 onwards, in an attempt to gradually incorporate it into the Western diet. Their "Buggy burgers" and "Buggy Balls" (article in Dutch) will consist of only 6-10% bug parts, and may thus be the solution to our problem; gradually start introducing small amounts of bug produce into our diets to get over the yuck barrier. After all, disgust, like culture, is passed down from generation to generation, and it is never too late to start making a change. We did it with sushi, so why can’t we do it with bugs?

    Bottom Line: We don’t need to start eating crickets for lunch every day, but a gradual change in attitudes towards incorporating bugs into our diets can lead to a significant reduction in the threat of food shortage the world is expected to face in the future.

    * Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.

    Life for sale -- going fast!

    Casey B. writes:*

    Patents on seeds have become a "thing." Seeds have been patented in the States for a while now and have just recently made their way to Europe - but what exactly is the problem with the patents on seeds?

    Well for starters they are not technical, human made interventions, but part of nature and as such should be available for everyone..right?

    Unfortunately however they aren’t. Almost any plant can be patented if they are [1] either technically modified, [2] if patented genes are inserted or [3] if merely their molecular properties are analyzed - this patent also extends to all "future off-spring" and crossed seeds.

    The mere analyzation of the components in one plant can be enough to patent all plants with the same components. DuPont, for example, simply analyzed (pdf) the structure of a specific maize corn and received a patent for ALL maize plants with the same structure - including plants which have been a vital part of the Mexican agriculture for centuries.

    Patents on seeds are growing quickly. It is estimated that DuPont, Monsanto and Sygenta currently dominate the world-wide seed market as they control the majority of the market with 53 percent. Their unique position allows them to introduce genetically modified seeds on a large scale to small and medium sized farmers with the promise, that they - if used with the companies own and very expensive pesticides - will survive all wind or weather conditions.

    Deciding which seeds to purchase or examine for scientific reasons proves to be a big issues as some seeds are covered with up to 70 patents (pdf). According to a report by the Center for Food Safety (pdf), "93 percent of soybeans and 86 percent of corn crops in the U.S. come from patented, genetically engineered seeds.” Prices have been rising rapidly - since 1995 the price for soy beans has risen 325%, and the price for corn 259% - both seeds are essential nutritious crops, especially in third world countries - further price increases could have devastating consequences.

    Jonas Salk has pointed out the ethical problem with patents after he was asked who owns the patent to his essential polio vaccine: “There is no patent. Could you patent the sun?” But wealthy companies think differently, as they dominate farmers, breeders and politicians: initiatives for new laws and legislation's against genetically modified organisms (GMO’s) continue to fail.

    Bottom Line: Patents have created an environment in which it is almost impossible for small-scale farmers to make profit, endanger the world's food supply, and hinder the development of better, more nutritious seeds.

    * Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.

    Speed blogging

    1. Members of Congress are attempting to stop the EPA from regulating "fleeting" bodies of water. I agree that such regulation represents a huge reach for power, but I also worry about local politicians who sacrifice waters for short term financial (and corrupt) gains

    2. California farmers are harvesting record tonnage of tomatoes in the middle of a record drought. Why? Because they got a good price for tomatoes. How? Because they begged, borrowed bought, or stole the water they needed. Impacts? Tomatoes will be cheap, but other crops more expensive. Oh, and groundwater further depleted

    3. Law of unintended consequences example #2943: the Ivanpah solar array in California's desert is generating 40% of promised power, cooking birds and depleting groundwater necessary for operations. Whoops

    4. IWMI (the people who know) have a free book (pdf) on how to set and achieve water-related sustainable development goals

    5. On 10 Dec, you can attend the California-Australia Dialogue on Drought Solutions (free or cheap) to learn how Australians lived through their Millennium Drought. (Hint: markets)
    H/T to RM and SS