Monday, January 13, 2020

The Impacts of Harmful Algal Blooms and E. coli on Recreational Behavior in Lake Erie

This paper examines simultaneously the effect of E. coli and harmful algal blooms on recreational behavior using survey data collected from Ohio recreators who visited Lake Erie during the summer of 2016. Using simulation based on latent class models of recreation choice, we find beachgoers and recreational anglers would lose in aggregate $7.7 million and $69.1 million, respectively, each year if water quality conditions were to become so poor that Lake Erie’s western basin were closed. Finally, we recover heterogeneity in recreators’ aversion toward algae and Escherichia coli, with beachgoers more averse to E. coli and anglers more averse to algae.
Eerie Blooms in Lake Erie
by David Wolf 1, Wei Chen 2, Sathya Gopalakrishnan 3, Timothy Haab 4 and H. Allen Klaiber 5
1. Assistant professor, Department of Economics, University of Wisconsin–Eau Claire;
2. Assistant professor, School of Agricultural Economics and Rural Development, Renmin University of China, Beijing, PR China;
3. Associate professor, Department of Agricultural, Environmental, and Development Economics, The Ohio State University, Columbus;
Professor, Department of Agricultural, Environmental, and Development Economics, The Ohio State University, Columbus;
5, Professor, Department of Agricultural, Environmental, and Development Economics, The Ohio State University, Columbus;
Land Economics via University of Wisconsin Press
Volume 95, Number 4; November 1, 2019; pages 455-472

Do Public Benefits of Voluntary Cleanup Programs Justify Their Public Costs? Evidence from New York

This paper contributes to the debate over public benefits and costs of state-funded voluntary cleanup programs, using evidence from property values in New York City. We value site redevelopment separately from cleanup and examine time to capitalization. Using property fixed effects and controlling for time-varying shocks, New York’s Brownfield Cleanup Program added 4% to property values. Off-site gains averaged 5.6% for properties with three units or less and 1.2% for multifamily residences, producing a $579.3 million tax gain that does not exceed the $667.9 million in program spending. Benefits stem from program participation and cleanup, but not from site redevelopment. 
Clean soil stockpile
by Olesya M. Savchenko 1 and John B. Braden 2
1. Assistant professor, Food and Resource Economics Department, University of Florida, Gainesville;
2. Professor Emeritus; Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign;
Land Economics via University of Wisconsin Press
Volume 95, Number 3, August 1, 2019; pages 369-390

Investors Are Learning That Clean Tech Pays: The stock performance of green companies shows that climate change is also a business opportunity.


The American companies most reliant on embracing green technology are outperforming every broad measure of the stock market, delivering a greater return last year than all but two (Russia and Greece) of the world’s 94 leading equity indexes.

These are the 92 publicly traded firms with at least 10% of their revenues derived from clean energy, energy efficiency or clean technology, according to data compiled by Bloomberg New Energy Finance. ...

The S&P 500 Index and Russell 3000 gained 31%. ... This exceptional result didn’t come close to the performance of the clean companies, with their combined total return (income plus appreciation) of 40%. Together they were worth $946 billion last year, more than triple their market capitalization at the end of 2010. Whether the investment period is 2, 5 or 10 years, the return is superior by margins of 12%, 37% and 112% for clean companies.

Total Return (Income plus appreciation)
  • ...
    The three biggest companies in this group by market capitalization all derived more than half their revenue from the clean-energy business. They are Nextera Energy Inc., ... operator of commercial nuclear power units and provider of electricity through wind, solar and natural gas; Tesla Inc. ..., manufacturer of battery-powered, electric vehicles; and Universal Display Corp., ... maker of organic light-emitting diode technology, according to data compiled by Bloomberg.

    ... The 19 energy firms in the group produced a 106% total return, 15 times the 7% gain by the overall energy-stock benchmark, the Russell 3000 energy sector. The nine technology companies among the 92 returned 70% when the Russell 3000 technology sector appreciated 46%, and the 16 BNEF-designated utilities earned 34% when the comparable Russell group advanced 26%, according to data compiled by Bloomberg.

    Even U.S.-imposed tariffs on products from China, which manufactures a ... [great deal] of clean-energy equipment, haven’t ... [hurt] the performance of the U.S. companies. Enphase Energy Inc., for example, moved its production to Mexico from China and the Petaluma, California-based maker of renewable energy equipment rallied 452% last year on revenue growth of 96%. Analyst estimates compiled by Bloomberg predict that Enphase sales will increase 26% and 27% annually through 2021.

    By contrast, revenues for the 28 companies in the S&P Energy Index, a mostly fossil-fuel crowd, declined 5% in 2019 and are forecast to grow 4% in each of the next two years.

    One investor who is bullish on clean companies ... manage[s] the most successful mutual fund in the U.S. last year, the Columbia Seligman Communication and Information Fund. The manager, Paul H. Wick, counted three of the cleaner companies among his winners: Advanced Energy Industries, Bloom Energy Corp. and Rambus Inc.

    Wick said that Bloom Energy, for example, reduced the cost of its products “on a continuous basis over the last four or five years” and “as a result will be cheaper than grid power in quite a few jurisdictions, states in the U.S. and overseas.” His fund returned 54% (income plus appreciation) in 2019 and Bloom Energy rallied 144% in the final two months of the year after Wick acquired its shares.

    Among the BNEF technology firms, Universal Display Corp., the ... provider of power-saving lighting products, appreciated 121% as sales climbed 64% last year amid forecasts for 23% and 25% growth in 2020 and 2021. That's a superior outlook compared to the 70 tech companies in the S&P 500 Information Technology Index, which saw sales increase 10% in 2019 with 10% projected for 2020 and 8% for 2021, according to analysts’ estimates.

    Renewable-energy utilities are similarly positioned for growth. Pattern Energy Group rallied 54% last year after the Canada Pension Plan Board agreed to acquire the San Francisco-based renewable power generation firm for $2.6 billion. Revenues increased 10% last year and are expected to rise 11% in 2020 and 3% in 2021, according to analyst estimates compiled by Bloomberg. The 28 companies in the S&P 500 Utility Index reported inferior sales growth of 6% last year and are likely to see only 3% in 2020 and 2% in 2021, according to the estimates.

    City to acquire streetlights, replace them with LEDs ... New lights projected to reduce energy consumption by 70% [in Warwick Rhode Island]

    "If all goes as planned, residents [of Warwick Rhode Island] won’t be waiting for weeks to have a burned-out streetlight replaced; they’ll have better roads, and best of all, the cost of borrowing all the money to get this done will be covered by all the savings."

    Key elements to the plan are city-owned LED streetlights that will save an estimated $750,000 now being paid to National Grid for the maintenance of an estimated 9,000 Warwick streetlights, plus additional energy savings, and a low-cost 10-year loan estimated at 1.3 percent for $10.2 million from the Rhode Island Infrastructure Bank. The loan would fund a ramped up three-year road replacement and paving program, while the savings from streetlights would cover loan debt costs.

    On Monday, the City Council gave second passages to ordinances authorizing the purchase of streetlights, conversion of fixtures to light-emitting diode (LED) technology and the financing of the project through an “appropriation obligation” bond not to exceed $3.2 million and the borrowing of the $10.2 million.....

    In preparation for the streetlight conversion that it is hoped can be completed by this time next year, the city has solicited bids for the acquisition and installation of a system as well as its maintenance. Eight bids have been received for maintenance of the system.... For the acquisition and installation of the system, the city received two bids... Among the issues to be considered in addition to price, equipment and timing are the capabilities of the system and whether they could generate additional savings and be of use to other departments.
    With a basic system, photoelectric cells would control when the lights go on and off. However, there is ... technology to link the lights into a “mesh network” that would give the city the capability to turn on or off lights as well as control their output by neighborhoods. The cloud-based system would come at a higher cost and would require the installation of repeaters and gateways as well as a monthly fee. An alternative is a cell phone-based system where each light is independent of the other and doesn’t require repeaters or gateways. It would have the capability of incorporating cameras. Both systems would provide real-time data on the system identifying outages and allowing ... [regulation of] the output of light.

    The city is looking [at whether] ... the capability of reducing power and perhaps evening blacking some areas of the city during early morning hours could generate sufficient savings to more than offset added upfront costs and operational fees.

    According to Michael D’Amico, financial advisor for the city, the light management option would cost an additional $1 million and the network mesh an added $1.3 million from the basic dusk to dawn photocell system at $3.2 million. At this point he doesn’t see a cost benefit to going with either of the more interactive systems.

    With LEDs it is also easier to regulate the light shed so, for instance, sidewalks and streets can be lit without light spilling into abutting properties.

    As streetlights don’t have individual meters, there’s not a precise knowledge of the energy being consumed. The city now pays National Grid a “tariff” based on light wattage and estimated power usage over the year. In addition it pays a maintenance fee.

    It is estimated once the city replaces all the National Grid lights (it will buy those fixtures for a total cost of about $50,000) with LEDs energy consumption will be reduced by 70 percent.
    Since the city will own the lights, it will assume their maintenance. The [warranty] on the lights that have a projected life expectancy of 10 years would mean the city would have little or no maintenance issues in the first year.

    The cost of maintenance is being viewed as the major cost saving of the program with the potential of offsetting borrowing costs for the mayor’s road program.

    The projected savings of $775,000 would offset about half the debt service costs of both the $3.2 million and $10.2 million bonds, D’Amico said.... 

    When he announced the program, the mayor noted the historically low interest rates available as a common-sense and cost-effective way to address the city’s myriad infrastructure needs. The weighted interest rate for the bonds is expected to be 1.3 percent. Savings from the LED technology will significantly offset debt service costs. 
    The city would spread the repayment of the bonds over ten years.

    Furthermore, by contracting for the maintenance, the burden is not placed on the Department of Public Works and the city can dictate acceptable periods for the work to be completed. A maximum of five days is being considered for the replacement of a nonfunctioning light. Currently it can take several months to replace a streetlight.
    by John Howell
    "City to acquire streetlights, replace them with LEDs; $10.2 million for roads also planned"
    Warwick Online
    Posted Thursday, January 9, 2020

    Sunday, January 12, 2020

    China's Unconventional Nationwide CO2 Emissions Trading System: The Wide-Ranging Impacts of an Implicit Output Subsidy

    China is planning to implement the largest CO2 emissions trading system in the world. To reduce emissions, the system will be a tradable performance standard (TPS), an emissions pricing mechanism that differs significantly from the emissions pricing instruments used in other countries, such as cap and trade (C&T) and a carbon tax. We employ matching analytically and numerically solved models to assess the cost-effectiveness and distributional impacts of China’s forthcoming TPS for achieving CO2 emissions reductions from the power sector.

    We find that the TPS’s implicit subsidy to electricity output has wide-ranging consequences for both cost-effectiveness and distribution. In terms of cost-effectiveness, the subsidy disadvantages the TPS relative to C&T by causing power plants to make less efficient use of output-reduction as a way of reducing emissions (indeed, it induces some generators to increase output) and by limiting the cost-reducing potential of allowance trading. In our central case simulations, TPS’s overall costs are about 47 percent higher than under C&T. At the same time, the TPS has distribution-related attractions. Through the use of multiple benchmarks (maximal emission-output ratios consistent with compliance), it can serve distributional objectives. And because it yields smaller increases in electricity prices than a comparable C&T system, it implies less international emissions leakage.
    by Lawrence H. Goulder, Xianling Long, Jieyi Lu and Richard D. Morgenstern
    National Bureau of Economic Research (NBER)
    NBER Working Paper No. 26537; Issued in December 2019

    Friday, January 10, 2020

    On the use of Hedonic Regression Models to Measure the Effect of Energy Efficiency on Residential Property Transaction Prices: Evidence for Portugal and Selected Data Issues

    Using a unique dataset containing information of around 256 thousand residential property sales, this paper discloses a clear sales premium for most energy-efficient dwellings, which is more pronounced for apartments (13%) than for houses (5 to 6%). Cross-country comparisons support the finding that energy efficiency price premiums are higher in the Portuguese residential market than in central and northern European markets. Results emphasize the relevance of data issues in hedonic regression models. They illustrate how the use of appraisal prices, explanatory variables with measurement errors, and the omission of variables associated with the quality of the properties, may seriously bias energy efficiency partial effect estimates. These findings provide valuable information not only to policymakers, but also to researchers interested in this area.
    by Rui Evangelista 1, Esmeralda A. Ramalho ad Joao Anrade E. Silva 3
    1. Instituto Nacional de Estatística,
    2. Universidade de Lisboa, Instituto Superior de Economia e Gestão & REM - CEMAPRE,
    3. Universidade de Lisboa, Instituto Superior de Economia e Gestão & REM - CEMAPRE,
    REM – Research in Economics and Mathematics
    REM Working Paper 064-2019; Lisbon, Portugal; January 2019