Thursday, December 1, 2016

New Association of Environmental and Resource Economists (AERE) Website

The new AERE website at offers up-to-date information about conferences, job opportunities, and all AERE news, as well as improved functionality! 

The site will be your portal for: 
  • Access to every issue of JAERE and REEP and the AERE Newsletter;
  • Registration for AERE events;
  • Abstract submission for the AERE Summer Conference;
  • Abstract submission for the five regional and national meetings at which AERE sponsors sessions each year;
  • Announcements for conferences and jobs; and
  • Information on how to nominate someone for AERE honors and awards.

The site will enable all in the organization to communicate more efficiently and seamlessly about opportunities in environmental and natural resource economics.  Tthe online payment system will make membership payment and registering for events much easier

Click here for the newly designed website's homepage.

Upcoming AERE events include:
  • AERE sessions and luncheon at the 2017 ASSA meeting in Chicago. Steve Polasky of the University of Minnesota will be giving the AERE Fellows Talk at the luncheon on January 7th. Reservation deadline is December 21st
  • The AERE Summer Conference in Pittsburgh, Pennsylvania (May 31-June 2, 2017). The Call for Papers will open on December 1st and close on January 18, 2017;
  • AERE sessions at a variety of national and regional meetings.
See the November AERE Newsletter for details on all these events.

Tuesday, November 29, 2016

Unit of Colas SA designed solar panels that embed into roads - Work progressing on larger test site in northern France - Solar-Panel Roads to Be Built on Four Continents Next Year

... [Wattway] has designed rugged solar panels, capable of [withstanding] the weight of an 18-wheeler truck.... They’re constructing 100 outdoor test sites and plan to commercialize the technology in early 2018.
As solar costs plummet, panels are being increasingly integrated into everyday materials. Last month Tesla Motors Inc. [unveiled] roof shingles that double as solar panels. Other companies are integrating photovoltaics into building facades. Wattway joins groups including Sweden’s Scania and Solar Roadways in the U.S. seeking to integrate panels onto pavement.

A kilometer-sized testing site began construction last month in the French village of Tourouvre in Normandy. The 2,800 square meters of solar panels are expected to generate 280 kilowatts at peak, with the installation generating enough to power all the public lighting in a town of 5,000 for a year, according to the company.

For now, the cost of the materials makes only demonstration projects sensible. A square meter of the solar road currently costs 2,000 ($2,126) and 2,500 euros. That includes monitoring, data collection and installation costs. Wattway says it can make the price competitive with traditional solar farms by 2020.
The next two sites will be in Calgary in Canada and in the U.S. state of Georgia.
For more information go to

by Anna Hirtenstein
November 23, 2016

Willingness to Pay for a Highland Agricultural Restriction Policy to Improve Water Quality in South Korea: Correcting Anomalous Preference in Contingent Valuation Method

Abstract: This study examines the willingness to pay (WTP) for the highland agriculture restriction policy which aims to stabilize the water quality in the Han River basin, South Korea. To estimate the WTP, we use a double-bounded contingent valuation method and a random-effects interval-data regression. We extend contingent valuation studies by dealing with the potential preference anomalies (shift, anchoring, and inconsistent response effects). The result indicates that after the preference anomalies are corrected, the statistical precision of parameter estimates is improved. After correcting the potential preference anomalies, estimated welfare gains are on average South Korean currency (KRW) 2,861 per month per household. Based on the WTP estimate, the total benefits from the land use restriction policy are around KRW 297.73 billion and the total costs are around KRW 129.44 billion. The net benefit is, thus, around KRW 168.29 billion. This study suggests several practical solutions that would be useful for the water management. First, a priority should be given to the valid compensation for the highland farmers’ expected income loss. Second, it is necessary to increase in the unit cost of the highland purchase. Third, wasted or inefficiently used costs (e.g., overinvestment in waste treatment facilities, and temporary upstream community support) should be transferred to the program associated with high mountainous agriculture field purchase. Results of our analysis support South Korean legislators and land use policy makers with useful information for the approval and operationalization of the policy.
by Ik-Chang Choi 1, Hyun No Kim 2, Hio-Jung Shin 3,*, John Tenhunen 1 and Trung Thanh Nguyen 4
1 Bayreuth Center of Ecology and Environmental Research, University of Bayreuth, 95440 Bayreuth, Germany
2 Environmental Policy Research Group, Korea Environment Institute, 30147 Sejong, Korea
3 Department of Agricultural and Resource Economics, Kangwon National University, 24341 Chuncheon, Korea
4 Institute for Environmental Economics and Word Trade, University of Hannover, 30167 Hannover, Germany
* Correspondence: Tel.: +82-33-250-8667
2016, Volume 8, Issue 11; Received: 29 August 2016 / Accepted: 14 November 2016 / Published: 23 November 2016
Keywords: double-bounded contingent valuation method; willingness to pay; random-effects interval-data regression; potential preference anomalies; benefit-cost analysis

Monday, November 28, 2016

New Report Finds that Preserving Quad Cities and Clinton Nuclear Plants will Save Illinois Businesses and Consumers over $3 Billion in Electricity Costs over Next 10 Years

Without the Quad Cities and Clinton nuclear plants in Illinois, consumers would pay $364 million more annually and over $3.1 billion more over the next ten years (on a present value basis) in electricity costs.  Annually, this equates to $115 million in savings for residential customers and $249 million in savings for commercial and industrial customers, according to a new study conducted by economists at global consulting firm The Brattle Group.

The study was sponsored by leading Illinois business organizations, including the Illinois Retail Merchants Association (IRMA), the Illinois Hispanic Chamber of Commerce and the Chicagoland Chamber of Commerce.

The report also finds that Quad Cities and Clinton nuclear plants:

  • Avoid 15 million tons of CO2 emissions annually over the next five years, valued at $657 million per year.  This is the equivalent of taking 3.2 million cars off the road.
  • Avoid significant amounts of criteria pollutants annually, valued at $109 million per year over the next five years.
  • Create a broader benefit to the Illinois economy.  By keeping electricity prices lower, these nuclear plants leave residential, commercial, and industrial consumers with more money to spend on other goods and services, which boosts overall economic activity in Illinois, including jobs, GDP, and tax revenues.

Clinton power station pano.jpg
The bill would also bring a number of additional benefits to businesses in Illinois, including:

  • Increasing funding for energy assessments, cash incentives for retrofits and new equipment, technical services and whole-building solutions, helping more than 60,000 medium and large businesses every year.
  • Dedicating 6 percent of all efficiency funding to an emerging technology fund that powers innovation in delivering efficiency products & services, allowing Illinois to invest in the next generation of energy efficiency technology and setting the stage for future businesses to grow.

Illinois Retail Merchants Association 
Press Release dated November 28, 2016
via PRNewswire

Trade Costs, CO2, and the Environment

This paper quantifies how international trade affects CO2 emissions and analyzes the welfare consequences of regulating the CO2 emissions from shipping. To this end, the paper describes a model of trade and the environment, compiles new data on the CO2 emissions from shipping, and estimates key parameters using panel data regressions. Results show that the benefits of international trade exceed trade's environmental costs due to CO2 emissions by two orders of magnitude. While proposed regional carbon taxes on the CO2 emissions from shipping would increase global welfare and increase the implementing region's GDP, they would also harm poor countries.
All three counterfactual policies increase social welfare globally, albeit by small amounts. In each case, the gains from trade fall slightly, but the environmental costs of trade due to CO2 fall even more. In total, social welfare increases by about $1 billion over a decade for the EU policy, $7 billion for the US policy, and $10 billion for a global policy. While these effects are positive, they are small in magnitude and do not exceed two tenths of a basis point relative to baseline levels of global income. While the median country is actually harmed by the regional policies ... the positive benefits to GDP in the implementing region more than offset these losses elsewhere.
Regulations benefit wealthy countries but actually decrease welfare in poor countries.... The richest third, which had 2007 GDP per capita above $14,000; the middle third, which had 2007 GDP per capita of $2,400 to $14,000; and the bottom third, which had 2007 GDP per capita below $2,400. The global policy increases welfare in the richest third of countries by half a basis point, decreases welfare in the middle third of countries by three quarters of a basis point, and decreases welfare in the poorest third of countries by 1.3 basis points. The EU and US counterfactual policies generate similar patterns but with smaller magnitude effects
by Joseph S. Shapiro
American Economic Journal: Economic Policy
Volume 8, Number 4; November, 2016; pages 220-254
The full article is currently available free of charge at

Sunday, November 27, 2016

The Mortality and Medical Costs of Air Pollution: Evidence from Changes in Wind Direction

We estimate the effect of acute air pollution exposure on mortality, life-years lost, and health care utilization among the US elderly. We address endogeneity and measurement error using a novel instrument for air pollution that strongly predicts changes in fine particulate matter (PM 2.5) concentrations: changes in the local wind direction. Using detailed administrative data on the universe of Medicare beneficiaries, we find that an increase in daily PM 2.5 concentrations increases three-day county-level mortality, hospitalizations, and inpatient spending, and that these effects are not explained by co-transported pollutants like ozone and carbon monoxide. We then develop a new methodology to estimate the number of life-years lost due to PM 2.5. Our estimate is much smaller than one calculated using traditional methods, which do not adequately account for the relatively low life expectancy of those killed by pollution. Heterogeneity analysis reveals that life-years lost due to PM 2.5 varies inversely with individual life expectancy, indicating that unhealthy individuals are disproportionately vulnerable to air pollution. However, the largest aggregate burden is borne by those with medium life expectancy, who are both vulnerable and comprise a large share of the elderly population.
[In the first Ordinary Least Squares (OLS) estimate presented] each 1-μg/m3 increase in daily PM 2.5 exposure is associated with 0.098 additional deaths per million elderly over the following three days, or a 0.025 percent increase relative to the average 3-day mortality rate.... Those aged 70-79 experiencing lower (and insignificant) increases in death rates than those aged 64-69 despite having higher mean death rates.... The Instrumental Variables (IV) estimates are about five times larger than the corresponding [OLS] estimates in Panel A, suggesting that OLS estimation suffers from significant bias. The IV estimates imply that each 1-μg/m3 increase in daily PM 2.5 exposure corresponds to 0.605 additional deaths per million elderly over the following three days, or a 0.15 percent increase relative to the average 3-day mortality rate. The corresponding estimate for a one standard deviation increase in daily PM 2.5 is a 1.1 percent increase in 3-day mortality. Columns (2)-(6) show a largely monotonic relationship between the mortality effect of PM 2.5 and age, with each 1-μg/m3 increase in daily PM 2.5 causing 0.263 additional deaths per million among the 65-69 population but 2.050 additional deaths per million among the 85 and over population. However because the average mortality rate is also much higher for the older elderly, the relative mortality effects across age groups follow a U-shaped pattern: each 1-μg/m3 increase in daily PM 2.5 exposure increases 3-day mortality by 0.20 percent among ages 65-69, by 0.10 percent among ages 75-79, and by 0.18 percent among ages 85 and over. This pattern is somewhat unexpected, since, if sicker individuals are more vulnerable to pollution shocks, and if age is a good proxy for health, then we would expect relative mortality to increase monotonically with age. ...

...The association between PM 2.5, hospitalization, and medical spending is mixed: each 1-μg/mincrease in daily PM 2.5 exposure is associated with significantly less inpatient spending and fewer hospital admissions, is not associated with spending on ER admissions, and is associated with significantly more ER admissions and visits. A more consistent story emerges from our IV approach (Panel B), which shows that increases in daily PM 2.5 increase both hospitalizations and inpatient spending, driven primarily by encounters that originate in the ER. The IV estimates imply that each 1-μg/m3 increase in daily PM 2.5 causes a highly significant increase in ER inpatient spending of over $15 thousand per million beneficiaries (relative to a mean of $13.7 million).... The overall admissions rate increases by 2.03 per million beneficiaries, an increase which also can be almost entirely explained by the 1.96 additional admissions originating through the ER. Finally, we estimate that PM 2.5 increases total ER visits, including visits that do not result in a hospital admission, by 2.29 per million beneficiaries. 
A simple numerical exercise helps to illustrate the policy implications of our results. The average level of PM 2.5 decreased by 3.65-μg/m3 nationwide between 1999 and 2011.... The estimate reported in Column (5) of Table 4 implies that such a decrease saved 147,098 life-years annually among the 41 million Medicare beneficiaries alive in 2011.26 If we assign each life year a standard value of $100,000 each, the mortality reduction benefits of this decrease added up to about $15 billion in 2011. The EPA's calculation of the annual costs of meeting the 1990 Clean Air Act Amendment air quality standard increased from $19.9 billion to $43.9 billion between 2000 and 2010 (EPA 2011). Thus, the estimated $15 billion in annual mortality benefits represents a large fraction of the estimated annual costs of complying with air pollution standards during this period. By contrast, the reduction in hospitalization costs implied by our estimates is an order of magnitude smaller – about $0.93 billion annually.
Kris Krug/Flickr  Fort McMurray, Alberta hub of Canada's oil sands industry
... Table 4 displays estimates of equation (1) when the outcome variable is the estimated 3-day life-years lost per million beneficiaries... Column (2) displays results when every decedent’s counterfactual life expectancy is set equal to the mean for the 2-year FFS population (11.6 years). This estimate implies that each 1-μg/m3 increase in 2 daily PM 2.5 increases life-years lost by 8.6 years per million beneficiaries. This same effect can also be obtained directly by multiplying the mortality effect of 0.746 in Column (1) by the mean life expectancy of 11.6.... Accounting for decedents’ age and sex reduces the estimated impact of PM 2.5 on life-years lost by 31 percent, to 5.9 life-years per million beneficiaries.... The estimate decreases by another 40 percent when the counterfactual life-years estimates account for previously diagnosed chronic conditions.... Finally, we estimate counterfactual life expectancy using the LASSO machine learning algorithm, which allows us to optimally incorporate over 1,000 additional predictors, as described earlier. This final estimate, ... is 24 percent smaller than estimates that account only for age, sex, and chronic conditions and implies that each 1-μg/m3 increase in daily PM 2.5 increases life-years lost by 2.7 years per million beneficiaries.... This final estimate may be close to the true value.

... Adding additional predictors when estimating life expectancy can substantially reduce the estimate of life-years lost due to pollution. This reduction can occur for two reasons. First, better survival models should predict lower remaining life expectancy for decedents on average....The mean life-years lost per decedent (“LYL per decedent”) decreases from 11.56 in the model with no predictors to 4.86 in the LASSO model. Second, a better survival model should also predict a more accurate distribution of predicted life expectancies among decedents. This matters if air pollution selectively kills individuals in this population who are systematically healthier (or sicker) than the average decedent. Indeed,...  This second channel also plays a role in reducing the estimated life-years lost from improved survival modeling. While the average LYL per decedent decreases by only 0.43 per million when moving from LYL estimates based on age, sex, and chronic conditions to those based on the LASSO model, the estimated effect of PM 2.5 on LYL drops by nearly twice as much (0.85 per million). This indicates that the mortality effects of PM 2.5 tend to be larger among individuals with characteristics that LASSO associates with lower life expectancy, even after conditioning on age, sex, and chronic conditions.

The estimates... can also be used to describe the estimated counterfactual life-years lost among “compliers”: those individuals who died because of increases in wind-driven PM 2.5. This estimate can be compared to the average life-years lost among all decedents to shed light on whether those dying from increased pollution appear to be differentially healthy or frail compared to those who die on a typical day. The LYL per complier is calculated by dividing the estimated effect of increased PM 2.5 on life-years lost by the estimated mortality effect (the coefficient reported in Column 1).25 When life expectancy is modeled as a function of age and sex alone, those dying from pollution appear to have slightly longer life expectancies (7.9 years) compared to the average decedent (7.8 years). However, estimates that rely on chronic conditions or the LASSO model show the opposite pattern. In Column (5), those dying from pollution appear to have somewhat shorter life expectancies (3.6 years) compared to the average decedent (4.9 years).
The mortality rate effect of PM 2.5 decreases monotonically with life expectancy. A 1-μg/m3 increase in daily PM 2.5 increases deaths among those with life expectancy of less than one year by 18.9 per million. By contrast, the effect on those with life expectancies of 5-10 years is only 0.53 deaths per million, and the mortality rate effect for those with life expectancies exceeding 10 years is even smaller and not statistically different from zero.... Relative mortality also decreases monotonically with life expectancy, which is consistent with the notion that the sickest individuals are most vulnerable to pollution shocks....

Although beneficiaries with a life expectancy of less than one year are the most likely to be killed by air pollution, beneficiaries with a life expectancy of up to 10 years are also vulnerable.

Although beneficiaries in Column (1) have less than one year of life expectancy, their high mortality rate causes their number of life-years lost due to pollution to exceed that of any other group: 11.3 life years per million beneficiaries....  By contrast, among beneficiaries with a life expectancy of 5-10 years..., the life-years lost from pollution is only equal to 3.7. Although their life expectancy is high relative to those in Column (1), their mortality rate is much lower, resulting in a smaller loss of life years. Those with 1-2 or 2-5 years of life expectancy (Columns 2 and 3) fall somewhere in between, losing 8.2 and 6.7 life years per million beneficiaries, respectively, when PM 2.5 increases by 1 μg/m3.

Weighting the life-years lost coefficients from Table 5 by the respective sizes of the groups, we see
that the largest portion of the social cost of pollution is borne by those with a life expectancy of 5-10 years (30 percent of sample, 43 percent of burden), followed by those with a life expectancy of 2-5 years (12.7 percent of sample, 33 percent of burden). While the per capita burden is highest for those with the lowest life expectancy, the majority of the aggregate social burden falls on those with intermediate life expectancy (2 to 10 additional years).
by Tatyana Deryugina, Garth Heutel, Nolan H. Miller, David Molitor and Julian Reif
National Bureau of Economic Research (NBER)
NBER Working Paper No. 22796; Issued in November 2016