Tag Archives: environmental economics

Maven’s Notebook: “Normative science has a corrosive effect on the entire scientific enterprise”

‘Normative science’ has a corrosive effect on the entire scientific enterprise, says Dr. Robert Lackey These days, scientists in environmental science, natural resources, ecology, conse…

Source: MAVEN’S NOTEBOOK – Water news

Nishi and Our Obligations to Other Californians

I wrote this column for the Davis Vanguard in a series about the future of economic development for Davis:

nishi-scene-1

The University of California created what Davis is today. When UC Davis became a full-fledged campus in 1959, the State of California began the process of pouring resources into this city to develop a top notch university. UC Davis is now acknowledged as the top agricultural academic institution in the world.

We can see what the university has brought us all around. If you want to imagine what Davis would look like without UCD, go to Woodland or Dixon. We have a vibrant downtown with many community activities. We have one of the top rated school systems in the state. And our property values reflect the premium of those benefits. Davis is a very desirable place because of UCD. You have chosen to live here because of these amenities that cannot be readily found elsewhere in the Central Valley.

State taxpayers have contributed billions of dollars over the years to the campus, and students have brought resources from around the state, keeping the local economy vibrant. In return, the state has not asked Davis explicitly for any contributions or cooperation. Yet there are obligations that come with hosting UCD. Other state residents are counting on UCD, and its host city, to provide an educational gateway to both UC students and concomitant economic and cultural growth statewide.

How do we meet that obligation? By providing a fair share of housing to students, and affordable housing for faculty and staff. By incubating new businesses that spin off innovations developed on campus. And by cooperating with UCD in its long-range plans. Yes, we need to ask reasonable cooperation from the University in return (which does not always come readily. For example, I opposed the final configuration of West Village, and believe part of its difficulties arise from that configuration.) But that does not mean that we can oppose all UCD-related development.

So how does the Nishi Gateway Project relate to this obligation? UCD cannot and should not host all housing and spin offs on campus. Students need to learn how to live on their own outside of the protective UC womb. And UCD should not be directly involved in commercial activity because that puts the state directly in the role of promoting certain profit-making enterprises. Instead, the city needs to host housing and businesses. Other college towns successfully accomplish these tasks.

Davis is the only significant university town without a large research park; this puts UCD at a distinct disadvantage for attracting research dollars and researchers. And UCD is at a disadvantage recruiting faculty. Many assistant and associate professors have spouses working in technical fields, and universities usually help them find jobs as part of recruiting. Davis lags in offering these opportunities. Nishi will create jobs for this younger adult segment, both for incoming faculty’s families and for graduating students. Davis is already experiencing a hollowing out of our young adults population; we need to reverse this trend to keep the town vibrant.

Nishi offers a mix of research and development space and housing close to campus that meets most of our standards for sustainability and impacts. It may not offer the “perfect and optimal” configuration, but no one can ever achieve that standard, simply because that definition varies in the eye of the beholder.  Creating affordable housing is about much more than just designating a few units for lower income residents. A constrained housing market guarantees higher prices—just ask San Francisco and Manhattan. The best way to make housing more affordable in Davis is to offer more housing. Nishi does this in the context of a relationship with our biggest employer.

Some suggested that alternative locations exist for this development, that residents will be exposed to excessive pollution, or that we will be losing agricultural land. First, the process of assembling the parcels needed for this scale of project is much more difficult and expensive than opponents realize. Controlling the land is key to success. Second, I have not heard anyone objecting to the new housing developments along Olive Lane, yet they experience the same environmental exposures; the same can be said about much of South and West Davis. And third, farming is no longer economically viable on Nishi. Its isolation makes agricultural activities too expensive—it is time to move on.

Instead, we need to ask if this development is not approved, what will be built instead? We have already seen the type of developments popping up in West Sacramento, Roseville, Elk Grove and even “north North Davis”, i.e., Spring Lake in Woodland. As Davis suppresses growth here, less desirable developments pop up there. Are we really “thinking globally, acting locally” when we close down any new developments by demanding perfection? We cannot return to the bucolic days of the University Farm. Let’s keep real control of our future instead of pushing it off to someone else.

Richard McCann is a member of the City’s Utilities Rates Advisory Committee and Community Choice Energy Advisory Committee. He is a partner in M.Cubed, a small environmental and resources economic consulting firm. His opinions are solely his own and are not endorsed by URAC or CCEAC.

Preserving biological diversity in Costa Rica

We just returned from a trip to Costa Rica, including the cloud forest in Monteverde. We even got to see the wonderful Quetzal (see above) and hear the Three-wattled bellbird. That region is increasingly dependent on eco-tourism to support it biological reserves. Most of those are privately owned, with the national parks appearing to be more “rural preservation” zones than the ecological protection areas that we have in the U.S. The question is whether relying so heavily on eco-tourism is a desirable and sustainable path for preserving the biological diversity in such a resource-rich area?

Tourism can have a big environmental footprint from travel modes as well as pushing the local labor force from productive agriculture to service jobs. Already, 300,000 people annually visit a community with 5,000 residents. Several people in Monteverde mentioned that they were reluctant to support improving road access (which is difficult now) because it could bring in more visitors, particularly cruise-ship buses that are typically not as interested in a “close to nature” experience.

One option is to train the workforce to provide the means of maintaining and observing the local ecosystem. This could include both nature guides for eco-tourists, scientific observation and analysis, and habitat restoration.

Another question is whether the local workforce should be trained to transform the habitat to match the climate change that is likely to occur in the region? Human activities such as cattle grazing and crop and forest cultivation tend to impede natural transformations that might mitigate climate change impacts in the local ecology. We might have to acknowledge that existing local habitats will change and certain species will disappear, but that we should move to substitute appropriate habitat for other species to escape to from their disappearing habitat.

Environmental impacts of pot

I saw this interesting RFP come in:

The California Department of Food and Agriculture requires the services of an environmental consulting firm to prepare an environmental impact report for its Medical Cannabis Cultivation Program.

Awareness has increased about how marijuana cultivation has affected water diversion, pesticide use, energy use and forest habitat. The results of this study will be interesting.

Are the benefits of an RPS correct?

Lawrence Berkeley Lab released a report estimating the economic benefits from the renewable portfolio standards (RPS) around the U.S. Two surprising findings were:

  • ratepayers saved up to $1.2 billion in wholesale power costs (on top of a $1.3-$3.7 billion reduction in natural gas costs from reduced overall demand); and
  • air quality benefits were about equal to GHG reductions in economic value.

Both of these claims require a deeper review because they run contrary to previous analyses.

Based on PG&E’s Power Charge Indifference Adjustment (PCIA), the renewables contracts that it holds are increasing its rates by almost 2 cents per kilowatt-hour. It is only recently that renewable contract prices have started approaching conventional resource costs, so it’s hard to understand how an RPS could have already reduced electricity rates. (I do see that this will eventually be the case.)

Typically the emission reduction benefits from GHG reductions are several multiples of those from criteria air pollutants (e.g., NOx and volatile organic compounds (VOC or ROG) that produce ozone; particulate matter (PM 2.5)). For example, ClimateCost has issued studies estimating reduced energy impacts and health benefits compared to air quality benefits that show much larger GHG benefits.

A political-economic analysis of the Red State-Blue State dichotomy on climate change policy

Matthew Kahn at UCLA lists his research addressing why voters and politicians in low-energy cost / high-carbon emitting areas oppose GHG reduction policies. He shows how protecting the status quo is in their interests, including for lower-income suburban dwellers. Proponents of climate change policies should consider how to compensate the range of “losers” from adopting these policies. Using carbon tax revenues to offset other taxes or as income-based rebates is one type of solution. I’ve pointed out previously that ignoring the need to compensate those who have reduced welfare from a policy choice both improves economic efficiency and reduces political opposition.

Focus on uncertainty and risk in climate change

Unfortunately Alex Epstein, a blogger at Forbes, takes the wrong perspective–an underlying premise that we need absolute certainty that climate change is occurring before we should act. (And equally unfortunately, environmentalist argue that catastrophic climate change is occurring with absolute certainty to defend policy initiatives.)

The correct perspective is to ask “what are the relative risks and consequences posed by potential climate change?” Can we say with absolute certainty that GCC is not and will not occur? No, we have strong evidence that warming has occurred (although the rate can be disputed) and that various local climates have measurably changed (e.g., glaciers receding). As an analogy, would anyone argue that we shouldn’t take measures to reduce forest fire risks to communities even if fires aren’t burning nearby? We know that such fires are a strong risk, and we ask what actions are sufficient to reduce the risks while still achieving other objectives. We should be asking the same questions regarding responses to potential climate change.

Steve Moss and I wrote about this perspective in 1999 in Chapter 2 of this report. (Note that we did not coauthor the other chapters. Chapter 3 about the economic consequences of using carbon taxes to replace other tax revenues in particular is simply wrong.) Economists have evolved methodologies beyond the simple approach we presented there, such as robust decision making (RDM)real options analysis and “fat-tailed” uncertainty benefit-cost analysis. We face a great deal of uncertainty in many dimensions. We need to conduct more complete analyses that assess the potential costs and benefits under uncertainty–i.e., measure the risk of relative actions and non actions.

Simply having a battle over which scientists are correct is fruitless and distracts us from the real question at hand. Let’s agree that a large plurality of scientists have posed a plausible case for human-induced climate change, even if there are doubts about the potential magnitude and consequences. Then we can move on to what are the range of potential consequences and the justification for various responses.

Repost: California Dream – How Big Data Can Fight Climate Change in Los Angeles

EDF and UCLA have created an interesting visual presentation on the potential for solar power and energy savings in the LA county, overlaid with socio-economic characteristics. (But I have some trouble with the representation of a few West LA communities as disadvantaged with high health risk–is that the UCLA campus?

Repost: Millennials and the Future of Electric Utilities

An insightful discussion about the new type of consumers that utilities will be facing–consumers who now expect to have customized experiences for no added cost.

One potential diversion though: The Brookings Institute description of Millenials–socially conscious, distrust of big companies, more favorable to government regulation–was used to describe the Baby Boomers 50 years ago. The actual changes didn’t really pan out that way. How the marketplace evolves is still uncertain.

Repost: What’s the Worst That Could Happen?