Friday, April 28, 2017

The Effect of the Nengda Incineration Plant on Residential Property Values in Hangzhou, China

Incineration plants and derelict industrial sites can have a number of adverse effects on the local environment and social welfare, including diminution of property values. Although many incineration plants exist in China, there has been relatively little research done to estimate the negative externality affects there. In this paper, we examine the effects of the Nengda municipal incineration plant in Hangzhou city on residential property values. We employ a hedonic pricing model to examine the sales of over 500 residential condominium units in over 20 multifamily buildings within ten kilometers of the incineration plants over a one-year-period including 2014. The results show that proximate properties show decreases in initial listing price of up to 25.9%, declining monotonically until the effect is gone at three kilometers from the incinerator. These results are comparable to similar situations in the United States and Canada.
by Qinna Zhao 1, Robert A. Simons 2, Fan Li-jun 1, Zhong Fen 1
1. Hefei University of Technology, Hefei, Anhui, China 230009 
2. Cleveland State University, Cleveland State University, Cleveland, OH 44115 or
Journal of Real Estate Literature
Volume 24, Number 1; 2016; pages 85-102

Tuesday, April 11, 2017

New York Hospitals Tackle Zero-waste Goal with Help from EnviroPure Systems

EnviroPure, a self-contained food waste disposal system, is helping Montefiore Medical Center in New York reach its zero-waste goal by diverting more than 125 tons of food waste from landfills in less than two years, converting it instead into safe gray water.

Montefiore New Rochelle Hospital, a 242-bed facility located in New Rochelle, NY, installed the medical system’s first EnviroPure unit in September 2014 in order to handle 4,200 pounds of food waste produced each week.
After determining that the New Rochelle installation was successful in reducing costs and the environmental impact associated with food waste, Montefiore added a second unit at its Wakefield Campus, located in the Bronx, in 2015.

Within less than two years of installation, the New Rochelle unit alone has processed 250,000 pounds of food waste, resulting in 233,000 fewer pounds of carbon emissions and $15,000 in savings from waste hauling fees. Additional labor savings were realized over previous food waste management practices.
Image result for Enviropure Food Waste Montefiore NEw Rochelle
“EnviroPure has been a tremendous success for Montefiore. The system is simple to use for our staff, and data from the remote monitoring system shows us the impact we’re making on the environment and our bottom line,” Jeff Hogan, Montefiore Medical Center’s energy and sustainability manager said....

The EPA estimates more food reaches landfills and incinerators than any other single material in everyday trash and constitutes more than 20 percent of discarded municipal solid waste. Food waste in landfills produces environmentally damaging methane gas.

EnviroPure breaks down food waste in 24 hours through a combination of mechanical processing and aerobic decomposition and produces a gray water byproduct that meets or exceeds municipal wastewater requirements. A 100 percent natural micronutrient additive accelerates the digestive process with no intrusive odors, no invasive pests and no damaging carbon footprint.

For more information on EnviroPure, including an inside look at how the system works, visit

Press Release dated December 9, 2016
Health Care Facilities Today

Saturday, April 8, 2017

Study: Information On Peers, Not Money, Saves Energy

To reduce emissions that lead to pollution and climate change, policymakers around the world rely on energy efficiency policies. Yet, by far the greatest share of future energy consumption will come from the developing world. Identifying ways to encourage conservation is therefore an urgent policy priority. Which policies could best encourage households to save? That has been a trial-and-error exercise for policymakers for years. Now, a new analysis using India as a case study suggests one approach that might be both successful and easily implemented.

“With three hundred million people lacking access to reliable electricity in India, finding a way to conserve electricity is an essential policy objective,” says Anant Sudarshan, the author of the study and director of the Energy Policy Institute at the University of Chicago’s India office (EPIC-India). “This study demonstrates significant impacts via an approach that relies on simply telling households how they compare with their peers, and thus ‘nudging’ them to make the right choices. But it also shows how complicated human behavior can be. We provide new evidence showing that mixing monetary rewards and behavioral cues can turn into something that is less, not more, than the sum of 
its parts”.

Sudarshan used an experiment where one group of households received report cards comparing their electricity usage to that of their peers and providing tips for ways to save. A second group received the same report cards, but were also enrolled in a financial rewards program where they received money (or lost money) for reducing (or increasing) their electricity consumption in comparison to their peers.

The study found that the households that received informational “nudges” to save reduced their electricity use by 7 percent, and duplicating the effect of the "nudges" would require a tariff increase as high as 12.5 percent. But, contrary to what one might think, when monetary incentives were added, households no longer reduced consumption. 

“When money is thrown in to sweeten the deal, households react by asking themselves ‘Why is a utility paying me? What’s in it for them?’ And, is it going to cost me in the end?’” Sudarshan says. “This reflects a distrust that undermines the policy, making this distrust a problem not just for utilities but also for policymakers as they work to create effective policies.”

Do The Effects of Social Nudges Persist? Theory and Evidence from 38 Natural Field Experiments

This study examines the mechanisms underlying long-run reductions in energy consumption caused by a widely studied social nudge. Our investigation considers two channels: physical capital in the home and habit formation in the household. Using data from 38 natural field experiments, we isolate the role of physical capital by comparing treatment and control homes after the original household moves, which ends treatment. We find 35 to 55 percent of the reductions persist once treatment ends and show this is consonant with the physical capital channel. Methodologically, our findings have important implications for the design and assessment of behavioral interventions.
12-2 can products - chart
Panel B of Table 6 presents the results of this exercise for the treatment and premove period. Consistent with Alcott and Rogers 2014 (AR), we start by assuming the direct cost of administering the Home Energy Report (HER) to one household is $1 per report. Following the standard approach in the literature, we simply compare this direct cost to savings achieved by the HER as estimated in Column 1 of Table 2 (-24.98 kWh) (No Technology). To also account for the indirect costs of the HER, we use a lower-bound estimate of the cost of capital per kWh of electricity saved in Allcott and Greenstone (2012, pp. 17).37 With this cost estimate, we convert savings achieved by capital investment—as a proportion of total savings using our estimates of persistence in the first row—into dollars. Applying this conversion, we see that the Home Energy HER induces an indirect cost that ranges from $0.74 to $1.15 per report and household. The resulting cost-effectiveness is reported in the last row for all three subsamples (Technology)

Comparing the two approaches to estimating cost-effectiveness in Panel B of Table 6, we see that incorporating the indirect cost of investments in capital more than doubles the cost per kWh in two out of three cases. From this perspective, after accounting for direct and indirect costs of technology adoption, alternative programs to the HER discussed in Allcott and Mullainathan (2010) and Allcott and Greenstone (2012) appear much more attractive. 

by Alec Brandon, Paul J. Ferraro, John A. List, Robert D. Metcalfe, Michael K. Price and Florian Rundhammer
National Bureau of Economic Research (NBER)
NBER Working Paper No. 23277; Issued in March 2017

Better Buildings Showcase Project: Historic Auburn Courthouse

The Placer County Historic Courthouse, also known as the Auburn Courthouse, was built in 1898 and is listed on the National Register of Historic Places. This grand, three-story Classic Revival structure is topped by a bracketed cornice and simple Renaissance Revival-inspired dome. Over the years, the County made improvements, adding water fountains, fire escapes, and an elevator, which was installed in 1948. In 1990, the building underwent an extensive restoration effort. Since 2010 Placer County has implemented an energy efficiency retrofit to the Courthouse to reduce energy costs and improve occupant comfort.

Energy efficiency upgrades to the historic brick and stone building presented unique challenges due to the complex electrical wiring and the need to integrate new and old energy system components. Further complicating the process was the importance of completing the work while minimizing disruption to Court and museum operations, which continued throughout the upgrades.

From 2010 to 2016, the County upgraded major energy components at the Courthouse. The most significant energy savings retrofit measures, prioritized by energy saved, included:

  • Lighting retrofits: Aging and inefficient T-12 fluorescent linear systems were changed out to more efficient T-8 fluorescents, incandescent lamps in historic fixtures were changed to CFL, and interior sconce high-intensity discharge (HID) systems in courtrooms were retrofitted to CFL.
  • Central plant retrofits: An antiquated, 80-ton dual-reciprocating compressor chiller (Trane CGWC806RDNJJ432P, located in a separate building adjacent to the Courthouse) was replaced with an 80-ton high-efficiency scroll compressor chiller (York YCWL0084HE). The plant’s chilled water and condenser water pumps (and their associated motors) as well as the cooling tower fan motor were replaced. Variable speed drives were installed on the chilled water pump motors, condenser water pump motors, and the cooling tower fan motor. A water-side economizer was also installed to provide free cooling during periods when the ambient temperature drops below 65 F.
  • New high-efficiency boiler: The space-heating boiler at the Courthouse was replaced with a 92 percent efficient boiler. The old boiler was well beyond its remaining useful life. The pumping equipment (motors included) was also replaced and variable speed pump controls were implemented.
  • Window sashes, casings, and sills were updated and glazing was replaced with glass/polycarbonate laminate.
Auburn Courthouse aerial
Location: Auburn, California
Project Size: 25,000 square feet.

Annual Energy Use 
Baseline (2009): 252 kBtu/sq. ft.
Actual (2016): 177 kBtu/sq. ft.
Energy Savings: 30%
Annual Energy Cost
Baseline (2009): $89,000
Actual (2016): $76,000
Cost Savings: $13,000

Friday, April 7, 2017

Measuring the Welfare Effects of Residential Energy Efficiency Programs

This paper sets out a framework to evaluate the welfare impacts of residential energy efficiency programs in the presence of imperfect information, behavioral biases, and externalities, and then estimates key parameters using a 100,000-household field experiment. Several results run counter to conventional wisdom: we find no evidence of informational or behavioral failures thought to reduce program participation; there are large unobserved benefits and costs that traditional evaluations miss; and realized energy savings are only 58 percent of predictions. In the context of the model, the two programs we study reduce social welfare by $0.18 per subsidy dollar spent, both because subsidies are not well-calibrated to currently-estimated externality damages and because of self-selection induced by subsidies that attract households whose participation generates low social value. However, the model predicts that perfectly-calibrated subsidies would increase welfare by $2.53 per subsidy dollar, revealing the potential of energy efficiency programs....
From 2010 to 2013, the Better Buildings Neighborhood Program helped more than 40 competitively selected state and local governments develop sustainable programs to upgrade the energy efficiency of homes and buildings. These leading communities used innovation and investment in energy efficiency to expand the building improvement industry, test program delivery business models, create jobs, and save consumers hundreds of millions of dollars.
Even before quantifying welfare effects, the program evaluation process generates several important empirical results. First, in the randomized experiment, there is no evidence of the hypothesized informational or behavioral failures. Within the letter variations, only price mattered: while a $100 audit subsidy increased takeup by 32 percent relative to control, all six informational and behavioral variations had statistically and economically insignificant effects. 
Non-experimental investment takeup estimates imply that households that had audits were willing to pay an average of $330 for the unobserved attributes of a recommended investment, perhaps due to "warm glow" from contributing to externality reduction or from the improved comfort of a weatherized home. Furthermore, post-audit investment takeup was remarkably inelastic to monetary benefits and costs: consumers did not take up 40 percent of investments with private internal rates of return (IRRs) greater than 20 percent, and they did take up 36 percent of investments with negative private IRRs. This inelasticity implies that consumers perceive a wide dispersion in unobserved benefits and costs. These results highlight the importance of using revealed preference approaches to welfare analyses, instead of conventional accounting approaches that consider only observed monetary factors
We estimate that realized energy savings fell well short of predictions. Specifically, the programs’ simulation models predicted that the average household that had an audit made investments that would save $153 per year at retail prices, or about 8.5 percent of baseline energy expenditures. In contrast, we estimate an average savings of $89 per year, implying a "realization rate" of 58 percent. The shortfall cannot be explained by temporary weather patterns and is far too large to be caused by a "rebound effect" (i.e. increased utilization in response to the decreased cost of energy services).
The social internal rate of return (including externality reductions) of investments made through the programs is negative 4.1 percent using the empirical estimates of energy savings. To help address the question of whether these results generalize outside the two Wisconsin programs, Appendix E presents a parallel analysis using data from 37 Better Buildings program sites nationwide. We find that the national programs had slightly worse IRRs than the Wisconsin programs.
The full paper is currently available free of charge at:

by Hunt Allcott and Michael Greenstone
University of Chicago Department of Economics Becker Freidman Institue
April 4, 2017

Thursday, April 6, 2017

A Global Meta-Analysis of the Value of Ecosystem Services Provided by Lakes

This study presents the first meta-analysis on the economic value of ecosystem services delivered by lakes. A worldwide data set of 699 observations drawn from 133 studies combines information reported in primary studies with geospatial data. The meta-analysis explores antagonisms and synergies between ecosystem services. This is the first meta-analysis to incorporate simultaneously external geospatial data and ecosystem service interactions. We first show that it is possible to reliably predict the value of ecosystem services provided by lakes based on their physical and geographic characteristics. Second, we demonstrate that interactions between ecosystem services appear to be significant for explaining lake ecosystem service values. Third, we provide an estimation of the average value of ecosystem services provided by lakes: between 106 and 140 USD$2010 per respondent per year for non-hedonic price studies and between 169 and 403 USD$2010 per property per year for hedonic price studies.
Considering the full sample, we find a mean value for lake ecosystem services equal to 315.1 USD$2010 per year (per respondent for NHP studies and per property for HP studies). The median value is 77.6 USD$2010 per year, showing that the distribution of values is skewed with a long tail of high values. On average, the values we find for ecosystem services provided by lakes are higher than the ones reported by Brouwer et al. (1999) for wetlands, 134 USD$2010 per respondent and per year.
Fig. 4 presents mean annual lake values per country (in USD$2010 per property per year for studies using an HP approach and in USD$2010 per respondent per year for studies using a NHP valuation method). When considering HP studies, United States rank first with a mean annual value of lakes per property equal to 442.5 USD$2010. The following countries in terms of mean value are New-Zealand, Ireland, Finland, and Canada with 392.2, 310.9, 265.9 and 166.1 USD$2010, respectively. When considering studies using another type of valuation method, Switzerland ranks first with a mean annual value of lakes per respondent equal to 765 USD$2010. The following countries are France, United States and Chile with respectively 644.7, 491.4 and 465 USD$2010 for the mean annual value of lakes per respondent. For countries where lake values are available both with an HP approach and with another valuation approach (i.e. Canada, China, England, Finland, Netherlands, New-Zealand and United States), we observe some significant differences across lake values depending upon the method of valuation. This indicates that the valuation method used in the primary study might have an impact on the estimated value.
Mean annual value of lakes per country and per valuation method.
In Fig. 5, we have split the annual value of a lake according to the presence or not of a specific ecosystem service (and still according to the valuation method used in the primary study). 
Mean annual value of lakes per ecosystem services and per valuation method.
... For NHP studies, the results obtained for different specifications of the basic meta-regression model described in Eq. (1) are presented below:

Six ecosystem services (among the nine specified) appear to be significant namely fishing, swimming, sightseeing, unpecified recreational, maintenance of populations and habitats and spiritual or symbolic appreciation. A particularly high value is found for the spiritual or symbolic appreciation service (+3.6 USD$2010 per year) whereas a low value is documented for the swimming service (+2.1 USD$2010 per year).
The different models presented in Tables 2 and 3 allow also to provide some estimates of the average lake value, see Table 4. When considering NHP studies and focusing on models ML3, ML4 and ML5, the average predicted values of a lake in our sample are 106, 120 and 140 USD$2010 per respondent per year. We get higher values when considering HP studies, respectively 169, 193 and 403 USD$2010 per property per year. This suggests that the ecosystem services capitalized in property prices are not equivalent to those valued using NHP approaches. Whatever the type of valuation method considered, our results demonstrate that lakes provide substantial monetary benefits to people....

New Report Shines Light on Installed Costs and Deployment Barriers for Residential Solar PV with Energy Storage

Researchers from the U.S. Department of Energy (DOE) National Renewable Energy Laboratory (NREL) are making available the most detailed component and system-level cost breakdowns to date for residential photovoltaic (PV) solar systems equipped with energy storage-and quantifying previously unknown soft costs for the first time.

The report, titled "Installed Cost Benchmarks and Deployment Barriers for Residential Solar Photovoltaics with Energy Storage: Q1 2016," was written by researchers from NREL, the Rocky Mountain Institute, and the Energy Department.

"There is rapidly growing interest in pairing distributed PV with storage, but there's a lack of publicly available cost data and analysis," said Kristen Ardani, lead author of the report and a solar technology markets and policy analyst at NREL. "By expanding NREL's well-established component- and system-level cost modeling methodology for solar PV technologies to PV-plus-storage systems, this report is the first in a series of benchmark reports that will document progress in cost reductions for the emerging PV-plus-storage market over time."
A square of perovskite crystal luminesces from a light being directed at in an NREL laboratory.
Declining costs in customer-side energy-storage products have opened the door for batteries to improve the value and flexibility of residential PV systems while falling costs in PV technologies have been driving the growing adoption of combined PV and storage solutions. However, gaps remain in developing an in-depth understanding of the costs of combined PV and battery systems and in effectively communicating their value proposition.

Through in-depth analysis of those costs and barriers to adoption, the report's authors provide technology manufacturers, installers, and other stakeholders with invaluable information to help guide their efforts to identify cost reduction opportunities. In addition, the analysis informs decision makers on market factors that are headwinds to further growth.

The analysis covers alternating current (AC)- and direct current (DC)-coupled systems for residential use, as well as retrofitting batteries to installed arrays, and the costs of enhancing the resiliency benefits of the combined system by switching to a battery with greater capacity. Both systems are designed to provide back-up power for critical loads in the event of a grid outage, and they enable a typical customer to optimize self-consumption of PV electricity-including peak-demand shaving and time-of-use shifting.

The authors separate installed system cost into 13 categories that range from direct hardware costs, such as the PV modules and batteries themselves, to soft costs that include items such as labor for installations, permitting and inspections, and net profits. The resulting cost for a DC-coupled system that integrates a 5.6-kilowatt (kW) PV array and a 3-kW/6-kilowatt-hour (kWh) battery is $27,703, which is roughly half hardware costs and half soft costs. An AC-coupled system, which can be more effective in applications that tend to use the energy from the PV array at the time of generation, costs $1,865 more if the battery is installed at the same time as the array. In settings where the battery is retrofitted to an existing AC-coupled system, the cost is increased by $3,218 to $32,786. The system design that provides for greater resiliency with a 5-kW/20-kWh battery costs $45,237 when DC-coupled and $47,171 when AC-coupled.

Good parks – bad parks: the influence of perceptions of location on WTP and preference motives for urban parks

Urban parks generate substantial public benefits, yet explicit economic assessments of such values remain relatively rare. Surveys of willingness to pay (WTP) were undertaken to assess such values for proposed new parks. The analysis assessed how preference motives and values varied according to the location of parks. Results revealed greater altruistic motivation and higher overall values for the creation of inner city as opposed to suburban parks. Spatial decomposition revealed that, after controlling for other determinants such as incomes, values generally increase for households closer to proposed parks, but that a significant downturn in values is evident for households located very close to a proposed inner city park; a finding which echoes concerns regarding the potential for such sites to provide a focus for antisocial behaviour. While these findings provide strong overall support for provision of public parks they highlight, the importance of perceptions of location and the potential for localised dis-benefits.
Suveys were administered face to face at participant’s homes. This enabled us to remind respondents of their budgetary constraints as well as the existence of potential substitute sites. Participants were informed that “we are researching the value of parks to the people of Norwich” and wished to interview people about their experiences and views.... Participants were shown stock photos of a verdant English park and informed that the park once complete would look like the photograph.... They were asked in an open ended format to explain their choice and to categorise their expected usage of the park into one of four categories.... Interviewers explained that the significant costs of creating the new parks would be met through an increase in their annual council tax bill.
File:River Yare, Earlham Park - - 1397889.jpg

Key results are in the table below:

The Tobit models produce very similar aggregate values for park A (Mean based = £1,130,674, Tobit based = £1,297,970) when protestors are ignored.  The inclusion of a lower bound to account for protestors in the Tobit model also resulted in similar values to the equivalent measure based aggregation (mean based = £933,302 Tobit based = 1,140,256). 
Results of the CV survey presented in this paper confirm previous findings that parks are highly valued public goods, with the creation of new parks in the city of Norwich having the potential to generate substantial value to residents. The low protest bid rate in the sample suggests that not only do residents have strong preferences towards the creation of new parks but that, at least in principle, they are willing to pay for increased provisioning through a familiar and realistic payment vehicle. Using an ex ante valuation allowed values and preference motives to be compared for two locations revealing significant differences in both mean WTP and its determinants.

Pick a number, but not just any number: valuation uncertainty and maximum willingness to pay

Empirical results suggest that contingent valuation method (CVM) respondents are uncertain of their valuations, which has led critics of the method to raise issues about its validity. Alternative approaches to resolve the problem have been proposed, involving different willingness to pay (WTP) response formats allowing respondents to explicitly express uncertainty. This paper compares differences between certain and uncertain responses for four different response formats. The results suggested that mean and median (WTP) were not significantly different for respondents who were certain about their valuations. This was generally not the case for respondents who were uncertain about their valuations. However, the median WTP was not found to be significantly different for uncertain and certain respondents. A conclusion for a standard CVM application is that the sample median WTP value could serve as a proxy measure of population maximum mean WTP when uncertainty has been removed.
The analysis is based on data from a mail survey on outdoor recreation in southern Sweden.... Some previous studies targeted visitors to a specific recreation area with corresponding high familiarity with the good being valued . By contrast, this study targeted ‘an average visit’ to an unspecified forest area the respondent uses based on the Right of Public Access. This customary right allows people to freely roam the countryside and put up camp for one night regardless of land ownership [which] ... is not traded in any market, implying that it has the characteristics of a public good ...
Beechwood Forest Skane Sweden (Nature)
The resulting sample would ... be expected to involve a wide range of familiarity with the good being valued....The hypothetical valuation scenario was the same for all questionnaire versions.... The ... valuation question [was] worded as follows:
Imagine that you would continue to visit and experience the forest as you normally do. You would travel the same distance to the forest and do similar activities. Consider that your expenses to visit the forest would increase, i.e. became larger than what you stated in the previous question. [which referred to the total cost related to an average forest visit, authors’ comment] How large would your total maximum cost for an average forest visit be before you would decide not to visit the forest?
The respondents were thus faced with the task of expressing their valuation as an equivalent variation (ev), i.e. the maximum WTP to avoid losing their current forest recreation.

The four response formats were open-ended (OE), interval open-ended (IOE), multiple-bounded dichotomous choice (MBDC) and what we have here chosen to call line scale (LS).... Three (OE, IOE and MBDC) of the four samples included a follow-up question on valuation certainty. Information was given that 100% probability would mean 100% acceptance of the stated amount and 0% probability would mean 0% acceptance of the stated amount, but the respondent was allowed to state any probability within those values....
[Responses are presented in the table below]
The OE survival curve is generally bounded by the IOE lower and upper bounds. The ranges differ substantially, as the highest reported value in the OE format was SEK 5000, whereas it was SEK 10,000 for the upper bound of the IOE format. Consequently, respondents gave considerably higher values than in the OE format when explicitly asked for their upper bound valuations in the IOE format. By weighting the responses with the reported uncertainties, the response distributions became more clustered as seen in Figure 4.

Figure 4. Survival curves for open-ended responses adjusted for valuation uncertainty.

The Surprising Pass-Through of Solar Subsidies

We estimate the pass-through of solar energy subsidies to solar system prices. Rich micro-level transaction and subsidy data from California indicate that pass-through is remarkably high and differs substantially for consumers who buy versus lease solar systems. Buyers capture nearly the full subsidy, while there is more-than-complete pass-through to lessees. We formalize pass-through over-shifting as an under-utilized test for market power that can also be applied in other contexts. We rule out alternative explanations for over-shifting and conclude that our estimates provide evidence for imperfectly competitive solar markets. Our findings have implications for the distributional effects of energy subsidies.
Consumers who buy capture nearly the full subsidy amount|about 86 cents for every dollar increase in subsidies|while there is more-than-complete pass-through to consumers who lease. For lessees, our estimates imply that a $1 increase in subsidies translates, on average, into a decrease in solar system prices of $1.65. We thus find that solar subsidies are predominantly (and sometimes even more than fully) passed through to consumers, despite popular claims to the contrary. These results are robust to a variety of sensitivity checks and alternative specifications. 
The substantial difference in pass-through is not only interesting to highlight that HO and TPO systems cannot be treated as a single market for solar panels, but also because it suggests that buy and lease markets could differ in other contexts, such as automobiles, planes, and computers. Consequently, future research could focus on how tax incidence differs across the buy and lease segments of such markets. 

Perhaps most importantly, we argue that estimating pass-through and finding that it over-shifts can serve as a powerful diagnostic for detecting market power that can be applied beyond the solar market....
The fastest and cheapest way to reduce carbon emissions is more renewables and energy efficiency. This city in Japan shows what can be done....
by Jacquelyn Pless and Arthur A. van Benthem
National Bureau of Economic Research (NBER)
NBER Working Paper No. 23260; Issued in March 2017

Tuesday, March 7, 2017

Differences in the recreational value of urban parks between weekdays and weekends: A discrete choice analysis

Urban parks offer city residents a broad range of opportunities for recreation. This paper explores whether preferences for urban parks are context-dependent, i.e., whether they differ between recreational occasions on weekdays and weekends. Knowledge about such differences in behaviour and preferences could help decision makers in cities to optimise their portfolio of urban parks. Employing a discrete choice experiment for the case of Berlin, Germany, the analysis finds that preferences significantly differ between weekday and weekend recreation for some park characteristics. For weekdays, respondents prefer urban parks in closer proximity to their homes while the size of the parks is not so important. For the weekend, larger parks with picnic facilities are preferred while distance matters less. Most important are, however, cleanliness and maintenance, regardless of whether a park is visited on weekdays or the weekend. The results underline the importance of considering different temporal contexts when preferences for outdoor recreation are concerned.
• Temporal contexts significantly affect recreational preferences of urban residents.
• During the week, distance to parks is of particular importance.
• For the weekend, larger parks are preferred while distance matters less.
• Cleanliness and maintenance are most important for visits at any time of the week.

For a medium size park (10-50 hectares) the Marginal Willingness to Pay for park attributes rises from 19.56 euros on weekdays to 53.03 euros on weekends, for picnic facilities it rises from 32.21 euros to 71.45 euros as shown in the table below.
by Christine Bertram 1, Jürgen Meyerhoff 1 and 2, Katrin Rehdanz 1 and 3, and Henry Wüstemann 2
1. Kiel Institute for the World Economy, Kiellinie 66, D-24105 Kiel, Germany
2. Technische Universität Berlin, Straße des 17. Juni 145, D-10623 Berlin, Germany
3. University of Kiel, Department of Economics, Wilhelm-Seelig-Platz 1, D-24118 Kiel, Germany
Landscape and Urban Planning via Elsevier Science Direct
Volume 159; March, 2017; Available online 18 November 2016; Pages 5–14
Keywords: Urban parks; Discrete choice experiment (DCE); Recreational behaviour; Context-dependent preferences; Weekend vs. weekday

Mayor Emanuel Announces 7 Percent Reduction in Chicago Carbon Emissions - Reduced building energy use drive significant progress while population, jobs, and economy expand

[On January 24, 2017 Mayor Rahm Emanuel] announced that Chicago has reduced its carbon emissions by 7% from 2010 to 2015, according to a new analysis. This reduction in greenhouse gases came at the same time Chicago saw a 25,000 person increase in its population and 12 percent growth in the region’s economy and jobs within the city. The emissions reduction, equivalent to shutting down a coal power plant for 8 months, compares to a 1 percentage increase in nationwide emissions from 2009 to 2014.
The preliminary analysis, developed by AECOM, and the first 2015 emissions inventory for any major North America city, estimates Chicago generated 30.9 million metric tons of carbon dioxide equivalent in 2015, compared to 33.3 million in 2010. On a per capita basis emissions were reduced by 8%. The most significant reductions came from the energy used in buildings and construction. Together, the energy used to power residential, commercial, and institutional buildings comprises 73% of Chicago’s greenhouse gas emissions, and emissions from this sector have been reduced by 10%. Many of the decreases are due to lowered electricity consumption as well as switching to a less carbon-intensive fuel mix to power the electricity supply.
“Recent research by C40 shows that cities are at the center of the fight to reduce carbon emissions, and Chicago is no exception,” said Mark Watts, Executive Director of the C40 Cities Climate Leadership Group....

Over the past five years the Emanuel administration has taken significant steps to reduce energy use in buildings.

Retrofit Chicago
The Mayor’s Retrofit Chicago initiative, which facilitates energy efficiency improvements in municipal, commercial, nonprofit, and residential buildings, has retrofits planned, underway, or completed in over 23,000 homes and 132 large buildings collectively spanning over 75 million square feet. 11 new properties have joined the Retrofit Chicago Energy Challenge, in which buildings commit to a 20 percent energy reduction within five years. The new participants include six Chicago Housing Authority properties and a house of worship, reflecting the widening scope of the program. Additionally, 11 existing buildings recently received the Mayor’s Leadership Circle Award for meeting or exceeding the program’s 20 percent energy reduction target within 5 years.

Energy Benchmarking
The Chicago Energy Benchmarking ordinance accelerates energy efficiency by increasing awareness and transparency of energy use in large buildings. The City of Chicago’s Benchmarking Report, also released on January 24, 2017, shows nearly 2,700 buildings reported energy use to City, with buildings located in every neighborhood. The Report indicates regular tracking and reporting is helping to reduce energy use. Properties that have reported three consecutive years have reduced energy use by 4%, and those that have reported for two consecutive years have reduced energy use by 2%. Together, these properties have achieved estimated energy savings of $17.6 million per year.
Residential Disclosure
Chicago is the first and only jurisdiction to have energy use data into real estate listings (MLS) in the United States, allowing owners of low energy use homes to highlight the value of their energy efficiency upgrades. A 2014 study showed homes that disclosed their energy costs via the MLS sold for a greater percentage of the asking price and sold faster than those that did not.

Moving Away from Coal
In addition to working with community groups to close the Fisk and Crawford coal-fired power plants the City has utilized its buying power by removing coal from the power mix from the over $70 million of electricity its purchases annually to power public buildings, streetlights, and airports.

“The Chicago Housing Authority (CHA) provides homes to over 50,000 families and individuals, while supporting healthy communities in neighborhoods throughout the city,” said Ellen Sargent, the Director of Sustainable Initiatives at Chicago Housing Authority. “The CHA is also strongly committed to sustainable goals and objectives, such as water and energy-saving initiatives, as a way to improve our facilities and reduce costs. We are thrilled to join the Retrofit Chicago Energy Challenge as we continue on our path of tracking and reducing energy use at our facilities.”

“Improving energy efficiency throughout the Chicago Board of Trade Building™ is a key strategy of our management team,” according to Dennis Lambert, Vice President and General Manager of GlenStar Asset Management, LLC. “We are excited about the 20 percent commitment to energy reduction made by joining the Retrofit Chicago Energy Challenge, and look forward to serving as an energy ambassador to other properties looking to reduce energy consumption.”

AECOM will release its full report in 2017 that will provide information about comparisons between emissions for 2005, 2010, & 2015. The preliminary carbon reduction report can be found at: The Energy Benchmarking Report can be found at:
Wilbur Wright College recently completed several energy retroft projects including re-cladding the library, adding insulation, and upgrading lighting. From FY2014 to FY2016, the College achieved annual energy reductions of 17% of natural gas usage (57,000 therms) and 19% of electricity usage (1,300,000 kWh), saving approximately $78,000 per year in four buildings containing 544,380 square feet constructed circa 1993.

City of Chicago
Press Release dated January 24, 2017

Impact Fees Coupled With Conservation Payments to Sustain Ecosystem Structure: A Conceptual and Numerical Application at the Urban-Rural Fringe

Communities in exurban areas increasingly rely on land preservation as a strategy to balance sprawling land development with maintaining environmental amenities. Based on a review of existing approaches for preserving land, we consider a conceptual model of environmental impact fees (EIFs) coupled with conservation payments for managing private land of ecosystem value. In this framework, conservation payments are intended to cost-effectively target fair market value compensation for heterogeneous land for preservation that sustains ecosystem health. EIFs serve as a financial instrument to augment conservation payments and to allow flexibility for landowners with private information to pursue development opportunities while accounting for environmental impacts. Using a bioeconomic model of nature-reserve design, we develop an empirical illustration of how to estimate the EIF of development damage to critical habitat in southern Rhode Island in an effort to preserve land as an environmental infrastructure that maintains ecosystem health.
Preserving the entirety of the patches and corridors identified is not necessary to sustain the target level of ecosystem health with the available budget of $3 million. Indeed, the majority of the identified patches and corridors have an optimal ratio < 0.5, suggesting that only a proportion of the patch and corridor needs to be preserved such that some development is allowed on those land parcels.... There are some patches (e.g., patches 69, 84 and 85 with preservation ratios > 0.5) that require not only full preservation of core habitat but also preserved surrounding upland buffer zones.
In this empirical illustration, development damage is measured by the relative percentage loss of the proportion (i.e., the preservation ratio) of each patch or corridor that needs to be preserved for the conservation program to cost-effectively achieve its goal within the allocated budget. For example, patch 67 has an optimal preservation ratio prescribed at 0.48, which indicates 48% of the identified patch needs to be preserved. For this patch, a 10% development damage is modeled as a 10% reduction (due to development) in its preservation ratio such that only around 43% of the patch is available at most for preservation although a 48% preservation is optimal (cost-effective). Similarly, 100% development damage refers to the complete loss of the portion (48%) of the patch required to be preserved for the target level of ecosystem health.

... The estimated EIFs exhibit two characteristics that deserve mentioning.... For the same level of development damage, the EIF varies across the patches. This result can be attributed to the heterogeneity of individual land parcels in sustaining ecosystem health relative to their costs, their role in the ecosystem health function Q, and the costs and role of the replacement land. A low EIF implies that the related patch is less critical to maintaining the target level of ecosystem health with the available budget, and it is relatively easier to compensate the damage by minor adjustments in the conservation program without incurring a significant cost increase. In contrast, a high impact fee indicates an ecologically valuable patch such that any development damage would require expensive adjustment in the conservation program, including acquiring more expensive land to enhance other identified patches and corridors available for preservation or to target new patches and corridors....

As expected, EIFs can increase quickly with the extent of development damage to patches and corridors. Table 1 shows that for a 10% development damage, the estimated EIF on a per acre basis ranges from $11.03 for patch 176 to $400.07 for patch 71; in contrast, when the development damage reaches 100%, the majority of the estimated EIFs are on the order of $10,000 per acre with the highest at over $82,000 per acre for patch 85. This result implies that: 1) conservation cost increases non-linearly, at a rising rate with development damage, suggesting it is relatively cheaper and easier to establish a conservation reserve in the early stage of community development, and 2) minor development damage could be mitigated at low costs and it can be very expensive to compensate severe development damage to land of ecosystem value. Note that extremely high EIFs seem likely to prevent complete development to the corresponding patches and corridors of critical ecosystem value and yet these high EIFs remain near or below typical market (tax) value of buildable lots in the study area.
by Yong Jiang 1 and 2 and Stephen K. Swallow 3 
1. UNESCO-IHE Institute for Water Education, Westvest 7, 2611AX Delft, The Netherlands
2. Department of Public Management, Faculty of Humanities and Social Sciences, Dalian University of Technology, Dalian 116024, China
3. Department of Agricultural and Resource Economics and Center for Environmental Sciences and Engineering, University of Connecticut, Storrs, CT 06269, USA
Ecological Economics via Elsevier Science Direct
Volume 136; June, 2017; Available online 23 February 2017; Pages 136–147
Under a Creative Commons license,  Open Access
Keywords: Land use regulation; Land preservation; Impact fees; Ecosystems; Public finance; Urban sprawl; Wetlands; Development rights; Spatial; Metapopulation

Assessing Cost-effectiveness of the Conservation Reserve Program (CRP) and Interactions between the CRP and Crop Insurance

We examine the U.S. Conservation Reserve Program (CRP) enrollment design while accounting for the CRP’s interactions with the federal crop insurance program. We find that the current CRP is not cost-effective despite its intent to balance benefits and costs. Based on CRP contract-level data, we show that adopting a cost-effective enrollment design and incorporating crop insurance subsidies into the CRP’s Environmental Benefits Index would significantly increase the CRP acreage, environmental benefits, and savings on crop insurance subsidies, while leaving government outlay unchanged. Large geographical redistributions of CRP acreage would also occur. We further investigate the cost-effective design’s robustness to CRP benefit misspecifications....
Picture of CREP land in Pennsylvania

A January, 2016 version of the paper available at reports:

... Simulation results where Baseline and Scenario 1 are constrained by the actual enrollment acreage that occurred under the two signups (2 million acres for Signup 26 and 2.8 million acres for Signup 41), while Scenarios 2 and 3 are constrained by the actual level of CRP real payment (defined as CRP rental payment minus saved crop insurance subsidies by CRP enrollment) that occurred under the two signups (i.e., $95.6 million for Signup 26 and $50.2 million for Signup 41) are presented. When comparing the scenario outcomes we focus on the following: (a) CRP enrollment acreage, program payment, and avoided crop insurance subsidies; (b) environmental benefits from CRP that are measured by environmental components of EBI (i.e., physical environmental benefits, labeled as EEBI); and, (c) geographic patterns in CRP enrollment changes under different designs.
Comparison II shows that when switching to the cost-effective targeting EBI design, enrolled acreage will increase significantly (42.3% and 26.6% for Signups 26 and 41, respectively) while keeping CRP real payments equal to that under Baseline. This shows the efficiency loss from using the current EBI, which is consistent with maximizing environmental benefits per acre instead of maximizing environmental benefits per dollar spent. Notice that the percentage change in acreage enrollment under Signup 26 is larger than that under Signup 41.... An explanation is that the comparison outcomes depend on acceptance rate (i.e., acreage accepted over acreage offered) for CRP offers. Under the Baseline the acreage acceptance rates in Signups 26 and 41 are 48% and 75%, respectively.... A smaller acceptance rate in Signup 26 indicates a more competitive selection and so a larger space for acreage increase starting from the Baseline. 

For Signup 41, when crop insurance subsidies are included in the current EBI design (i.e., Scenario 1), the total annual CRP real payment is about 8.1% less than that under Baseline while leaving CRP enrolled acreage the same. For Signup 26, including crop insurance subsidies in the current EBI design can reduce CRP real payment by 1%. The reduction in real CRP payment is much larger under Signup 41 than that under Signup 26 because subsidy per acre in 2011 (year of Signup 41) was almost quadruple that in 2003 (year of Signup 26)....

Adopting cost-effective targeting EBI and incorporating insurance subsidies into EBI design have significant impacts on avoided subsidies. Under the Baseline for Signup 26, the total avoided crop insurance subsidies equaled about $16.9 million, which amounted to about 15% of total nominal CRP payment (i.e., CRP rental rents) for enrolled acres. If cost-effective targeting is applied then the avoided subsidies would increase by 41.1% when compared with Baseline (see Comparison II in Table 2). When insurance subsidies are incorporated into cost-effective targeting EBI design, then the avoided subsidies would increase by 47.3% for Signup 26 (see Comparison III in Table 3). Under the Baseline for Signup 41, the saved crop insurance subsidies are about 63% of nominal CRP payments whereas under Scenario 3 the percentage becomes 68%. The crop insurance savings are much 
larger under Signup 41 than those under Signup 26 because, as mentioned above, subsidy per acre in 2011 was much larger.

Environmental benefits from CRP. Larger environmental benefits from CRP, as measured by total EEBI, are achieved with cost-effective targeting EBI than the current EBI. For example, Comparison II shows that total EEBI of enrolled acres increases by 20.5% and 15.3% in Signup 26 and Signup 41, respectively. The increased total EEBI is largely from the increased enrolled acres under Scenario 2. Since enrolled acres increase more under Signup 26 than under Signup 41 (i.e., 42.3% versus 26.6%), the total EEBI increase under Signup 26 is larger than that under Signup 41. For the same reason, the EEBI per enrolled acre decreases under Scenario 2 when compared with the Baseline scenario, and the decrease is larger under Signup 26 than under Signup 41 (-15.3% versus -9%).

Understanding the distribution of economic benefits from improving coastal and marine ecosystems

• Estimates of welfare benefits from better environmental quality of the coastal and marine waters of Latvia are provided.
• Variation in the benefits related to differences in their socio-demographics is identified.
• A novel approach to account for differences in individuals' preferences using their characteristics is proposed.
• Latvians are willing to pay for protecting biodiversity, and reducing eutrophication, and occurrences of invasive species.
• We observe substantial heterogeneity in values placed on water quality improvements.

The ecological status of coastal and marine waterbodies world-wide is threatened by multiple stressors, including nutrient inputs from various sources and increasing occurrences of invasive alien species. These stressors impact the environmental quality of the Baltic Sea. Each Baltic Sea country contributes to the stressors and, at the same time, is affected by their negative impacts on water quality. Knowledge about benefits from improvements in coastal and marine waters is key to assessing public support for policies aimed at achieving such changes. We propose a new approach to account for variability in benefits related to differences in socio-demographics of respondents, by using a structural model of discrete choice. Our method allows to incorporate a wide range of socio-demographics as explanatory variables in conditional multinomial logit models without the risk of collinearity; the model is estimated jointly and hence more statistically efficient than the alternative, typically used approaches. We apply this new technique to a study of the preferences of Latvian citizens towards improvements of the coastal and marine environment quality. We find that overall, Latvians are willing to pay for reducing losses of biodiversity, for improving water quality for recreation by reduced eutrophication, and for reducing new occurrences of invasive alien species. However a significant group within the sample seems not to value environmental improvements in the Baltic Sea, and, thus, is unwilling to support costly measures for achieving such improvements. The structural model of discrete choice reveals substantial heterogeneity among Latvians towards changes in the quality of coastal and marine waters of Latvia.

The full paper is currently available free of charge at:
When marginal WTPs for the attributes are compared across the individuals, we find that the means of WTP for avoiding reductions of native species range from LVL [Latvian Lats currently 1 = 1.61 dollars] 0.73 to LVL 2.43, and the values do not differ significantly as indicated by the overlapping confidence intervals (we do not distinguish between the levels of the attribute because the means do not differ significantly). Better water quality for recreation is the improvement which everyone, except for the pensioner, wants to see implemented. We observe some differences across the positive WTPs for this improvement between the individuals. For example, the single mother is willing to pay statistically significantly more than the family head for having water quality for recreation improved to a moderate state; the student is willing to pay statistically significantly more than the businessman for having water quality for recreation improved to a good state. The student, the family head, and the businessman are the only who would pay for limiting new occurrences of invasive alien species. Regardless of the attribute level, the mean WTPs range from LVL 1.15 to LVL 3.23, and they do not differ significantly from each other as shown by the confidence intervals
by Kristine Pakalniete 1, Juris Aigars 2, Mikołaj Czajkowski 3, Solvita Strake 4, Ewa Zawojska 3, Nick Hanley 5
1. AKTiiVS Ltd., Latvia
2. Latvian Institute of Aquatic Ecology, Latvia
3. University of Warsaw, Department of Economics, Poland
4. Latvian Institute of Aquatic Ecology, Latvia
5. University of St Andrews, Department of Geography and Sustainable Development, UK
Science of The Total Environment via Elsevier Science Direct
Volumes 584–585; 15 April 2017; Available online 27 January 2017; Pages 29–40
Keywords: Coastal and marine water quality; Biodiversity; Invasive alien species; Eutrophication; Discrete choice experiment; Observed preference heterogeneity; Socio-demographic characteristics; Hybrid choice model

Giving Oceans a Break Could Generate US$83 Billion in Additional Benefits for Fisheries

Fishing less, and better, could  generate an additional $83 billion each year for the fisheries sector, creating a much-needed revenue stream in developing countries and improving global food security, according to a new World Bank Group report.

The Sunken Billions Revisited, an update on a 2009 study, shows that reducing the global fishing effort would allow fish stocks to recover from overexploitation and lead to increases in the weight, value and price of fish landed, boosting the profitability of the fisheries sector from an estimated $3 billion a year to $86 billion. It would also lead to more fish being caught and landed, because stocks would have recovered to healthier levels, thus helping meet growing global demand for seafood and improving food security in many countries around the world.

“This study confirms what we have seen in different country contexts: Giving the oceans a break pays off,” said Laura Tuck, World Bank Vice President for Sustainable Development. “Moving toward more sustainable fisheries management, through approaches that are tailored to local conditions, can yield significant benefits for food security, poverty reduction and long-term growth.”
The bio-economic model used in The Sunken Billions Revisited,—developed by Ragnar Arnason, professor in the Faculty of Economics at the University of Iceland—treats the world’s marine fisheries as one large fishery. It examines the mismatch between the increasingly high level of effort put into fishing and stagnant or even declining fish catches, and calculates the incremental benefits that could be derived from global fisheries reform.

The analysis reveals foregone economic benefits of about $83 billion in 2012, compared with what could be generated under the optimal scenario. This result is not statistically different from the sunken billions estimated for 2004, which were revised from an estimated $50 billion in the 2009 study to $88 billion in The Sunken Billions Revisited, based on improvements in the model, better data, and adjustment to 2012 dollars. Both figures emphasize the urgent need for reform and the important economic gains that could be made through a more sustainable management of the world’s fisheries.

While the report makes a strong case for investing in the recovery of fish stocks, it does not prescribe a particular reform path. Reform experiences in countries and regions as diverse as Peru, Morocco, the Pacific Islands and West Africa show it is possible to reduce overfishing through locally appropriate reforms that ultimately improve the livelihoods and job security of coastal populations.

Reducing the global fishing effort would allow biological processes to reverse the long-term decline in fish stocks seen in many parts of the world. About 90 percent of marine fisheries monitored by the Food and Agriculture Organization (FAO) are fully fished or overfished, up from about 75 percent in 2005. Fish stocks are also under pressure from pollution, coastal development, and the impacts of climate change.   

The World Bank helps countries improve the management of their fisheries, invest in sustainable aquaculture, and manage competing pressures on coasts and oceans, to improve the livelihoods of coastal communities and put growth on a more sustainable and resilient footing....
Reducing the fishing effort in the short term would represent an investment in increased fishing harvests in the longer term. Allowing natural biological processes to reverse the decline in fish stocks would likely lead to the following economic benefits:
  • The biomass of fish in the ocean would increase by a factor of 2.7.
  • Annual harvests would increase by 13 percent.
  • Unit fish prices would rise by up to 24 percent, thanks to the recovery of higher-value species, the depletion of which is particularly severe.
  • The annual net benefits accruing to the fisheries sector would increase by a factor of almost 30, from $3 billion to $86 billion.

The World Bank
Press Release dated February 14, 2017

Nuclear power plant closures and local housing values: Evidence from Fukushima and the German housing market

The Fukushima Daiichi accident in Japan in March 2011 caused a fundamental change in Germany’s energy policy which led to the immediate shut down of nearly half of its nuclear power plants. Using data from Germany’s largest internet platform for real estate and employing a difference-in-differences approach, we find that Fukushima reduced housing prices near nuclear power plants that were in operation before Fukushima by 4.9%. Housing prices near sites that were shut down right after the accident even fell by 9.8%. Our results suggest that on the German housing market, the negative economic effects of the closure of nuclear power plants dominate potential positive changes in local amenities.
by Thomas K. Bauer 1 and 2, Sebastian T. Braun, 3 c, and 4, Michael Kvasnickae,  5 and 6, 
1. RWI-Leibniz-Institut für Wirtschaftsforschung, Hohenzollernstr. 1-3, 45128 Essen, Germany
2. Ruhr-University Bochum, RWI-Leibniz-Institut für Wirtschaftsforschung, IZA, Germany
3. University of St Andrews, School of Economics and Finance, Castlecliffe, The Scores, KY16 9AR, UK
4. University of St Andrews, UK, Kiel Institute for the World Economy, Germany
5. Otto von Guericke University Magdeburg, Universitätsplatz 2, 39016 Magdeburg, Germany
6. Otto von Guericke University Magdeburg, RWI-Leibniz-Institut für Wirtschaftsforschung, IZA, Germany
Journal of Urban Economics via Elsevier Science Direct
Volume 99; May, 2017; Pages 94–106; Available online 10 February 2017
Keywords: Fukushima; Nuclear power plants; Housing prices; Germany

Costs of Nitrogen Runoff for Rural Water Utilities: A Shadow Cost Approach

This paper explores the interactions among scale and density economies, productive efficiency, water quality, and customer characteristics, and their impact on the costs of delivering treated drinking water. Implicit benefits of nitrogen abatement are also derived and hypothesis tests concerning their hypothesized drivers are conducted. Key findings are that nitrogen removal costs increase with rising raw water nitrogen concentration coming from agricultural activities, and that network density and system size matter in determining average total costs of community water systems. Merging water systems to take advantage of scale economies may be difficult due to the heterogeneity of the sector, however.
Location 1 has an estimated average total cost of $1,800 per million gallons of water per year, while locations 2, 3, 4, and 5 have an average estimated cost of $1,876, $1,798, $1,807, and $1,758 in 1995 dollars, respectively, or 2%, 6%, 2%, and 3% difference in costs between regions 1, 2, 3, and 4, respectively, relative to region 5. Comparisons of costs between location 2 and other regions are statistically significant in every case.
© Michigan Sea Grant
Increasing returns to economies of scale in water production are exhausted in the interval of 10,254 to 22,630 million gallons for the water sector overall. Thereafter, decreasing returns to scale set it. 
Small water utilities have a marginal cost of nitrogen removal that is about 0.14 of that of large CWSs, that is, those that have 100,000 or more customers in their service area. Smaller water utilities remove 8.4 times more nitrogen than water utilities with a large customer base. The elasticity of variable costs with respect to nitrogen removal implies that variable costs increase by 0.03% for small utilities and 0.004% for large water utilities from increasing removed nitrogen by 1%. This difference points to increasing returns to scale in nitrogen abatement....

Monday, March 6, 2017

Measuring Renewable Energy Externalities: Evidence from Subjective Well-being Data

Electricity from renewable sources avoids disadvantages of conventional power generation but often meets with local resistance. We use 324,763 observations on the subjective well-being of 46,678 individuals in Germany, 1994–2012, for identifying and valuing the local externalities from solar, wind, and biomass plants in respondents’ postcode district and adjacent postcode districts. We find significant well-being externalities of all three technologies that differ with regard to their temporal and spatial characteristics. The monetary equivalent of 1 MW capacity expansion of wind power and biomass installations is estimated to be 0.35% and 1.25% of monthly per capita income, respectively.
Nissenshörn Café, Struckum, Germany
by Charlotte von Möllendorff, and Heinz Welsch
Land Economics via University of Wisconsin Press
Volume 93, Number 1; February 1, 2017; Pages 109-126

Estimating the Residential Land Damage of the Fukushima Nuclear Accident

The cost of a nuclear power plant accident critically depends on people’s willingness to pay for avoiding exposure to the nuclear fallout. This paper is the first to estimate such a willingness to pay by observing the change in transaction prices before and after the Fukushima nuclear accident with the degree of radioactive contamination. The estimates, which are based on hedonic price equations with the degree of radioactive contamination measured by airborne surveys, indicate that the contamination decreased the price of residential land and imply a substantial willingness to pay to avoid exposure to the radioactive fallout. The estimated total residential land depreciation ranges from 1.5 to 3.0 trillion yen, approximately equivalent to 15-30 billion US dollars, or about 0.13-0.25% of Japan’s total land value.
by Daiji Kawaguchi, 1 and Norifumi Yukutake 2 
1. Graduate School of Economics, The University of Tokyo, Hongo 7-3-1, Bunkyo-ku, Tokyo 113-0033, Japan
2. College of Economics, Nihon University, Misaki-cho 1-3-2, Chiyoda-ku, Tokyo 102-8360, Japan
Journal of Urban Economics via Elsevier Science Direct
Available online 2 March 2017; In Press, Accepted Manuscript
Keywords: Willingness to Pay; Fukushima; Nuclear Power Plant; Land Property Damage; Radioactive Contamination; Land Contamination

Sunday, March 5, 2017

Comprehensive Wealth in Canada - Measuring what matters in the long run

Comprehensive wealth focuses on the role of people, the environment and the economy in creating and sustaining well-being. Complementing indicators like gross domestic product (GDP) and addressing issues the can’t capture on their own, comprehensive wealth measures are key to successfully guiding Canada through the 21st century and beyond.

This study reviewed Canada’s comprehensive wealth performance over the 33-year period from 1980 to 2013. This timeframe extends well beyond business and political cycles, ensuring that the results reveal trends free from the ebb and flow of markets and policies. The report found that comprehensive wealth grew slowly in Canada between 1980 and 2013 (0.19 per cent annually in real per capita terms). This was in contrast to relatively robust growth in real per capita consumption of goods and services (1.36 per cent annually). The divergence between these two trends points to potential concerns for long-term well-being.

In terms of the components of comprehensive wealth:
  • Produced capital was the bright spot, growing by 1.68% annually from 1980 to 2013, though most (70%) of this growth was concentrated in the oil and gas extraction industry and housing
  • Market natural capital (fossil fuels, timber, minerals and farmland) declined by 0.93% annually (for a total drop of 25%)
  • Non-market natural capital (ecosystems and climate) declined based on a set of non-monetary indicators
  • Human capital, which accounts for about 80% of Canada’s comprehensive wealth, did not grow at all, meaning that average lifetime earnings prospects in 2013 were no better than in 1980
  • Social capital appears to have been stable based on a suite of non-monetary indicators.
Comprehensive Wealth rose 7%, or .19% per year from $592000 in 1980 to $631,000 in 2013 as Market Natural Capital fell from $39,800 to $29,200 per person.

Green Growth Knowledge Platform
Source: International Institute for Sustainable Development (IISD)
December, 2016