The European Association of Environmental and Resource Economists (EAERE) held their annual conference a few months back in Prague. I took some notes:
- Any cost-benefit of biofuels versus fossil fuels needs to consider the displacement of food crops (a cost) from increased biofuel production as well as the reduction in byproducts (a cost) from reducing fossil fuel refining. My current view is that biofuels are not economical to produce (subsidies and mandates keep them going); fossil fuels are not good for the environment, but that negative impact could be reduced with taxes on carbon and other pollutants as well as the removal of subsidies to consumers. Note that these subsidies mostly go to the richer people in developing countries (Indonesian government spending on subsidized fuel is nine times its health care spending).
- Biodiverse ground cover is good for water quality, timing of runoff (fewer floods) and for biodiversity/ecosystem services.
- The "green left" may be an oxymoronic movement if its embrace of a carbon tax -- or pristine environments -- also harms the poor. I know that "exclusionary parks" are bad for displaced people who are removed from their homes and traditional "foodsheds" but carbon taxes need not harm the poor if the revenues are used to improve public services. Iran's removal of fossil fuel subsidies, for example, was acceptable because half the savings were diverted to the poorest 80 percent of Iranians.
- General note: A paper with a model but no empirics or policy recommendation is just a fancy (illustrated) opinion.
- Ian Bateman (UK) gave an excellent keynote on "economic analysis for ecosystem service assessments," i.e., how to integrate science and economics into environmental policy. Watch it.
- I also STRONGLY recommend listening to Gerlach, Mace and Moldan (the other speakers are also fine) on this panel on Rio+20. It's good to hear from ecologists and policy types taking about environmental economics.