Tag Archives: economics

Views on a sustainable Davis

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Two board member of the Valley Climate Action Center, Gerry Braun and Richard Bourne wrote two articles on making building energy use in Davis sustainable and resilient. VCAC board members, including myself, had input into these articles. They reflect a vision of getting to a zero-net carbon (ZNC) footprint while being economically viable. Both were published in the Davis Enterprise.

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Vogtle nuke cost could top $25 billion| From Utility Dive

The Vogtle nuclear power plant cost is projected to balloon to more than $12,000 per megawatt. In a study we did for the California Energy Commission in 2009, even at $4,000 per megawatt, nuclear power was uneconomic. This explains why nuclear power is not taken seriously as a solution to reducing greenhouse gas emissions.

Source: Vogtle nuke cost could top $25B as decision time looms | Utility Dive

A response to Environmental and Urban Economics on impact of climate change on counties

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I follow Matthew Kahn, now at USC, post on June 30 about the how the “Lucas Critique” undermines a recent study forecasting how counties across the U.S. might be affected differentially by climate change. Quoting the New Palgrave Economic Dictionary, “The ‘Lucas critique’ is a criticism of econometric policy evaluation procedures that fail to recognize that optimal decision rules of economic agents vary systematically with changes in policy.” In other words, individuals within the economy are able to anticipate changing events, including government decisions, and can mitigate the impacts of those events when compared to continuing with the status quo. Kahn puts great faith in the Chicago School premise that individuals can readily adapt to all conditions without government or collective decisions.

However, Kahn ignores two important points. First, he misses the distributional focus of the study, and instead focuses on the overall efficiency gains from the net changes. That’s not the point of the study. We can see on example that land can’t be moved from one county to another, so landowners can’t adapt in anticipation of climate change without significant investment to protect their land. Homeowners will lose value in their homes, and others will find their asset value stranded. Sure, the overall economy will adapt and certain counties may gain enough to offset those losses, but residents within the net loss counties will be worse off. Economics for too long has focused solely on net gains without parsing the impacts and considering how to manage better outcomes for the losers. (I see this failure as one aspect of dissatisfaction driving Trump voters–which brings me to my second point.)

And second, if the Lucas Critique was truly valid, coal miners in Appalachia would have long abandoned their towns as they saw the decline of coal, and the need to satisfy West Virginia coal miners would not be driving national policy today. Instead, we see that people are myopic and these changes are likely to have significant consequences.

 

 

Creative Pie Slicing To Address Climate Policy Opposition | Energy Institute at Haas

Severin Borenstein’s post raises an important issue that economists have ignore for too long. I posted the following comment there:

We gave politicians the tool of benefit-cost analysis which they have used to justify their policy objectives, but we completely failed to drive home the requirement that those parties who are on the losing end need to be compensated as well. I looked in my edition of Ned Gramlich’s book on Benefit-Cost Analysis (who taught my course), and the word “compensation” is not even in the index! Working on environmental regulations, I regularly see agency staff derive large positive ratios for the “general public” and then completely dismiss the concerns of particular groups that will be carrying all the burdens of delivering those benefits. If we’re going to teach benefit-cost analysis, we need to emphasize the “cost” side as much as the “benefit” that politicians love to extol.

Source: Creative Pie Slicing To Address Climate Policy Opposition |

And then this…Trump’s energy plan doesn’t mention solar – The Washington Post

After the release of a study showing solar now employs more than oil, gas and coal combined.

Source: Trump’s energy plan doesn’t mention solar, an industry that just added 51,000 jobs – The Washington Post