Wednesday, February 27, 2013

The Value of Climate Amenities: Evidence from US Migration Decisions

We value climate amenities by estimating a discrete location choice model for households that changed metropolitan statistical areas (MSAs) between 1995 and 2000. The utility of each MSA depends on location-specific amenities, earnings opportunities, housing costs, and the cost of moving to the MSA from the household’s 1995 location. We use the estimated trade-off between wages and climate amenities to value changes in mean winter and summer temperatures. At median temperatures for 1970 to 2000, a 1°F increase in winter temperature is worth less than a 1° decrease in summer temperature; however, the reverse is true at winter temperatures below 25°F. These results imply an average welfare loss of 2.7 percent of household income in 2020 to 2050 under the B1 (climate-friendly) scenario from the special report on emissions scenarios (Intergovernmental Panel on Climate Change 2000), although some cities in the Northeast and Midwest benefit. Under the A2 (more extreme) scenario, households in 25 of 26 cities suffer an average welfare loss equal to 5 percent of income.
by Paramita Sinha, Maureen L. Cropper
Resources For the Future (RFF)
RFF Discussion Paper 13-01; January, 2013

Practical Products Yield an Affordable High-Performance Home

While other building pros struggled to stay afloat during the recent housing slump, a Northwestern custom builder has carved out a successful niche for himself building affordable green homes....

Thanks to this cost-effective approach, Scott Homes’ Craftsman-style cottages are in demand with energy-conscious buyers on a budget....
Bergford’s success with building affordable green homes is based on more than nearly 30 years of on-the-job trial and error. He relies heavily on research and data from Northwest Energy Star, a program of the Northwest Energy Efficiency Alliance, in making decisions about the most cost-effective building products and materials.
The recently completed $450,000 Inspiration Home in Olympia, Wash., is an example of Bergford’s judicious choice of products. For starters, instead of specifying pricey radiant heat or budget-busting geothermal, Bergford went with a $4,000 Mitsubishi FE12 ductless heat pump system that helps keep the heating and cooling load to about $15 a month. He estimates that going with the less-expensive system netted a savings of $11,000 over radiant heat and $21,000 compared to geothermal.

To keep the home comfortable year-round, Bergford selected mid-range Vinyltek triple-pane windows with a U-factor of 0.21 for solid performance at an inexpensive price. Expensive German-made windows could provide a slightly lower U-value but would cost four times as much, says Bergford.

Bergford thoroughly considered building envelope costs as well. The beefed-up 10-inch SIPs walls and 12-inch SIPs roof were worth every penny, he says, although the material cost was a bit more than traditional framing. The assembly was super-fast—the entire shell was up in five days—and it helped make the home practically airtight, with 1.6 air changes per hour.

... The two-story, 2,020-square-foot bungalow exudes an authentic 1920s feel. Built on spec as a demonstration home, it was sold before it was completed.

Knowing that customers often experience sticker shock from the typical $25,000 pricetag of a full PV system, Bergford kept the cost of the home’s solar thermal hot water system to a minimum by installing a starter kit with infrastructure and wiring but only three panels. The .7-kW system cost about $7,000 and can be added on to in the future. Other sustainable product picks include:
  • A Caroma dual-flush toilet in the master bathroom features an integrated sink for enhanced water savings. Fresh water from the faucet drains into the toilet tank after hand washing to be used for flushing.
  • A Lifebreath recirculating HRV keeps the air temperature throughout the house balanced by within two degrees to help occupants stay comfortable year-round.
  • A Whirlpool induction range cooks food more quickly than electric- or gas-powered models.
  • A two-car garage under the house is tightly sealed and utilizes a ventilation system tied to the garage door opener to exhaust fumes.
By Jennifer Goodman
EcoBuilding Pulse
February 19, 2013

Climate change may cause severe loss in the economic value of European forest land

European forests, covering more than 2 million km2 or 32% of the land surface1, are to a large extent intensively managed and support an important timber industry. Climate change is expected to strongly affect tree species distribution within these forests2, 3. Climate and land use are undergoing rapid changes at present4, with initial range shifts already visible5. However, discussions on the consequences of biome shifts have concentrated on ecological issues6. Here we show that forecasted changes in temperature and precipitation may have severe economic consequences. On the basis of our model results, the expected value of European forest land will decrease owing to the decline of economically valuable species in the absence of effective countermeasures. We found that by 2100—depending on the interest rate and climate scenario applied—this loss varies between 14 and 50% (mean: 28% for an interest rate of 2%) of the present value of forest land in Europe, excluding Russia, and may total several hundred billion Euros. Our model shows that—depending on different realizations of three climate scenarios—by 2100, between 21 and 60% (mean: 34%) of European forest lands will be suitable only for a Mediterranean oak forest type with low economic returns for forest owners and the timber industry and reduced carbon sequestration....
Figure 4 illustrates the development of LEV for European forest land for an interest rate of 2% for all three scenarios. For the A1B scenario, the LEV decreases by almost 30% from over euro3,280 ha−1 in the year 2010 to around euro2,350 ha−1 by the year 2100. For scenario B2 the decrease is lower and changes only marginally after the year 2070, whereas A1FI reaches the lowest of all values. The decrease is due to the loss of suitable area of productive species, mainly Norway spruce and Scots pine. Mediterranean oaks that occupy more than 30% of the total area by 2100 (scenario A1B) account for only 4% of the LEV. Norway spruce makes up for more than 45% of the economic value while occupying about 15% of the total area. Applying the difference in LEV (2010–2100) of around euro930 ha−1 (Fig. 4) to the 206 million hectare forest area in Europe outside Russia1 (for which our model is parameterized) results in an overall forest-land value loss of more than euro190 billion under the A1B scenario by the year 2100. As LEV is sensitive towards a change of the interest rate (i), the loss of land value ranges greatly, from over 80 billion for i = 3%(2100) to almost 530 billion for i = 1% (2100) for scenario A1B. For B2 the values for 2100 range from 60 (i = 3%) to 340 billion (i = 1%) and for A1FI from euro100 to 680 billion (see Supplementary Tables S9 and S10).
Figure 4: Relative values (2010 = 100%) of the LEV 2010–2100 for 3 scenarios with 2% interest rate. 
Development of the relative values (2010[thinsp]=[thinsp]100%) of the LEV 2010-2100 for three scenarios with an interest rate of 2%.
Absolute values in Euros for price–cost relations of the year 2010
by Marc Hanewinkel 1, Dominik A. Cullmann 2, Mart-Jan Schelhaas 3, Gert-Jan Nabuurs 4 & Niklaus E. Zimmermann 5
1. Research Unit Forest Resources and Management, Swiss Federal Research Institute WSL, Zuercherstrasse 111, 8903 Birmensdorf, Switzerland and Institute of Forestry Economics, University of Freiburg, Tennenbacherstr. 4, 79106 Freiburg, Germany
2. Department of Biometrics and Informatics, Forest Research Institute of Baden-Wuerttemberg, Wonnhaldestr. 4, 79100 Freiburg, Germany
3. Alterra, Wageningen University and Research Centre, PO Box 47, 6700 AA Wageningen, Netherlands
4. European Forest Institute, Torikatu 34, 80100 Joensuu, Finland
5. Research Unit Landscape Dynamics, Swiss Federal Research Institute WSL, 8903 Birmensdorf, Switzerland
Nature Climate Change
3, 2013, pages 203–207
Published online 23 September 2012

Tuesday, February 26, 2013

Do Housing Prices Reflect Environmental Health Risks? Evidence from More than 1600 Toxic Plant Openings and Closings

A ubiquitous and largely unquestioned assumption in studies of housing markets is that there is perfect information about local amenities. This paper measures the housing market and health impacts of 1,600 openings and closings of industrial plants that emit toxic pollutants. We find that housing values within one mile decrease by 1.5 percent when plants open, and increase by 1.5 percent when plants close. This implies an aggregate loss in housing values per plant of about $1.5 million. While the housing value impacts are concentrated within 1/2 mile, we find statistically significant infant health impacts up to one mile away.
An operating toxic plant within one mile is associated with an increase in the incidence of low birth weight of 0.0013 - 0.0014 or about 2.0 percent. And the effect is approximately symmetric, with low birth weight increasing after plant openings and decreasing after closings, though the latter effect is statistically insignificant.
An operating plant has a small but statistically significant positive effect on the [an index of infant health created by the authors], increasing the probability of a bad health outcome by 0.016-0.017 standard deviations.
Since the mean housing value within a mile of a plant is $125,927, the value of the average house falls by about $1,890. Under the assumptions described in Section 2 these estimates can be interpreted as a household’s MWTP to avoid living within one mile of a toxic plant. This is the dollar amount that toxic plants would owe each homeowner located within one mile of the plant under a system of full compensation for losses in property values....

​Will Natural Gas Vehicles Be in Our Future?

Natural gas holds the promise of reducing carbon emissions and dependence on oil. But until recently, it was an also-ran in the sweepstakes for transforming fuel costs and transportation in the United States. The new abundance of domestically available shale gas and continuingly high gasoline and diesel prices could change that. Will these developments be enough to extend the reach of natural gas vehicles beyond buses, garbage trucks, and delivery trucks?

To answer this question, Alan Krupnick compared passenger vehicles running on compressed natural gas (CNG) with gasoline and hybrid electric models, and heavy-duty trucks running on liquefied natural gas (LNG) with their diesel counterparts. High costs, reduced cargo space, and range issues— along with stiff competition from other alternative fuels—are likely to make switching to natural gas a tough sell for passenger vehicles. Tractor trailer semi-trucks running on LNG can be a good deal for reducing oil use, conventional pollutant emissions, and costs, but significant uncertainty surrounds the size of their carbon footprints. 

Natural Gas Vehicles at a Glance
Natural gas vehicles have been a part of global vehicle fleets for decades, with an estimated 11 million on the road worldwide. With just 110,000 of these, the United States ranks 12th globally in number of gas-fueled vehicles—considerably behind Argentina, Brazil, Italy, India, and others. Between 1999 and 2009, US domestic consumption of natural gas in the transportation sector tripled, but infrastructure is lacking. There are 840 compressed natural gas and 39 liquefied natural gas fueling stations in the United States (compared with 4,000 diesel truck stops).

Passenger Vehicles: Comparing the Options
The light-duty vehicle market currently has one natural gas entrant: the Civic Natural Gas (formerly the GX) by Honda. Chrysler, Ford, and Hong Kong–based Hybrid Kinetic Motors are also gearing up to produce passenger vehicles that run, at least in part, on natural gas.

Some of the issues hindering penetration of natural gas–fueled passenger vehicles become clear using Honda’s website to compare its 2011 Civic GX with comparably equipped conventional and hybrid Civics. Without a subsidy, the natural gas Civic costs $26,240—modestly more expensive than the $24,700 hybrid but substantially more expensive than the $19,905 gasoline version. Its maintenance and repair costs are also considerably more expensive.

The fuel economy for the natural gas Civic is about the same as that of the gasoline alternative. But fuel tanks for compressed natural gas are large and heavy, decreasing cargo space by a dramatic 50 percent compared with the gasoline version. Also, its range is lowered to only 218 miles, compared with 383 miles for the comparable gasoline vehicle and 504 miles for the hybrid.

Assuming a seven-year period of annualization, an interest rate of 6 percent, a gasoline cost of $4 per gallon, and a natural gas price of $3 per thousand cubic feet, the natural gas Civic is still more expensive. While a hybrid is more expensive than its gasoline-fueled counterpart by almost $400 per year, the natural gas Civic is $721 more expensive per year when the annualized cost of a home-fueling unit is included. Things look even worse for the natural gas– fueled car with a higher interest rate and the current gasoline price of around $3.50 per gallon. 

Of course, subsidies lower costs considerably. The Energy Tax Policy of 2005 offered a $4,000 subsidy for the purchase cost. While it expired in 2010, new bills call for reinstating it, and in April 2011, Congress passed HR 1380, an act that provides a $2,000 subsidy for home charging stations and the annual cost of the loan. After these adjustments, amortized costs are about $100 less than a gasoline vehicle. But the key question is whether a subsidy is justified independently of other types of vehicles and, then, in relation to other types of vehicles.

The Economics of LNG Fueled Trucks
Natural gas is more likely to fuel large trucks, particularly tractor trailers, and fleet vehicles, including buses. In addition to the cost and range issues, it would be costly to build the infrastructure to service passenger vehicles throughout the nation’s extensive road system. But tractor trailers travel mostly by interstate highways, where natural gas refueling stations could be concentrated. Indeed, changes in the way truckers drive— few are willing to routinely travel across the country—are leading to development of an interconnected hub-and-spoke system, where interstate trucking hubs are a one- or even half-day destination for truckers to unload their cargo and then pick up a new load on the way home.
Because manufacturers have had only limited experience with natural gas engines, it is difficult to accurately estimate their future costs. Current estimates suggest natural gas trucks have very high up-front costs—around $70,000 more than comparable diesel trucks. Maintenance costs for natural gas trucks are also difficult to calculate: they have been found to be as much as 29 percent greater than their diesel counterparts at one facility, and 6 percent at another, but these estimates are dated. 

Yet natural gas historically has cost less than diesel as a fuel, and currently is much cheaper at a gasoline equivalent of $2.50 per gallon. As a result, natural gas trucks can still make economic sense under plausible, albeit optimistic, scenarios—by providing payback periods that might be acceptable to truck buyers, for example.
...It is commonly believed that industry looks for a [payback] period of two to three years or even less before it makes investments. To get there for an investment cost difference of $70,000 and fuel economy of 5.1 miles per gallon equivalent, one needs fuel price differentials in the $1.50-per-gallon equivalent range, rates of interest used to evaluate multi-year fuel savings benefits of 10 percent or less, and vehicle miles traveled around 125,000 per year. 

Monday, February 25, 2013

Sustainable Off-Grid Lighting Solutions Can Deliver Major Development and Climate Benefits
Replacing the millions of kerosene lamps, candles and flashlights used worldwide with modern solar lighting can provide an increasingly low-cost solution to reducing carbon emissions, indoor air pollution and health risks, and boosting green jobs, according to new studies from the United Nations Environment Programme (UNEP).

UNEP also announced today a new strategic partnership with the private sector to facilitate a market shift towards energy-efficient, off-grid lighting and to reduce the estimated 74 million tons of annual carbon emissions from fuel-based light sources commonly used in developing countries.

The collaboration with the Global Off-Grid Lighting Association (GOGLA) will see the launch of an international effort to accelerate the deployment of enabling policies towards sustainable off-grid lighting.

To underscore the new partnership, the UNEP-led en.lighten initiative has unveiled new national assessments for 80 countries on the economic and environmental gains that can be achieved through a shift to solar-powered alternatives.

The studies show that if Kenya, for example, replaced all fuel-based lighting with solar-powered light emitting diode (LED) systems, the costs would be repaid in only seven months, due to major fuel savings.
Countries Can Recover Costs from Switch to Sustainable Lighting in Less Than 1 Year
Kenya currently spends around US$ 900 million per year on off-grid lighting, and fuel-based light sources in the country are responsible for over 2.3 million tons of carbon dioxide (CO₂) emissions per year.

"Replacing the world's 670 million kerosene lamps with cleaner, safer solar-powered lighting represents a major opportunity to deliver across multiple fronts, from cuts in global carbon emissions, health risks from indoor air pollution, support for green technologies and the generation of green jobs," said UN Under Secretary-General and UNEP Executive Director Achim Steiner.

"UNEP's new partnership with GOGLA strengthens our ongoing work with some 50 developing countries and leading lighting companies to move away from incandescent and other inefficient light bulbs. Supporting both sustainable off-grid and on-grid lighting can bring about major financial savings in a short time, as well as additional educational, health and environmental benefits towards the achievement of the Millennium Development Goals," added Mr. Steiner.

"GOGLA is the industry advocate for promoting clean, quality off-grid lighting systems that benefit society and businesses in developing and emerging markets," said Wolfgang Gregor, Secretary-General of the Global Off-Grid Lighting Association (GOGLA).

"We want to ensure that decision-makers and government officials are aware about the importance of modern off-grid lighting solutions and recognize the potential of this multi-billion dollar market. This will lead to the implementation of policies that address product quality standards and environmental issues and create sustainable employment."

Country Lighting Assessments Highlight Significant Savings

Globally, over 1.3 billion people live without access to electric light.

Some 25 billion litres of kerosene are used annually to fuel the world's kerosene lamps, which costs end-users a total of up to US$23 billion each year. This has an even higher price tag if government subsidies are taken into account.

If Nigeria used modern off-grid lighting solutions, according to the UNEP assessment, the country could save over US$1.4 billion annually. Replacing all of the kerosene, candles and batteries used annually for off-grid lighting would save Nigeria the equivalent of 17.3 million barrels of crude oil.

In addition to saving money and reducing greenhouse gas emissions, phasing out kerosene lamps and candles greatly reduces risks from burns, fires, and respiratory illnesses caused by indoor smoke.

Passenger transport in Nigeria: Environmental and economic analysis with policy recommendations

This paper presents the life cycle environmental impacts and economic costs of the passenger transport sector in Nigeria for 2003–2030. Four scenarios are considered: business as usual (BAU); increased use of public transport (buses) at the expense of cars (LOWCAR) and motorcycles (LOWMC), respectively; and high economic growth with increased car ownership and decline of public transport (HICAR). The findings show that for the BAU scenario the life cycle environmental impacts double over the period, despite the assumption of increased fuel and vehicle efficiency of 35% over time. The total fuel costs at the sectoral level increase three times, from US$3.4 billion/yr in 2003 to US$9.7 billion in 2030. Increasing the use of buses would reduce the environmental impacts on average by 15–20% compared to BAU; at the same time, the total fuel costs would be 25–30% lower. If the use of cars grows much faster due to a high economic growth as in HICAR, the environmental impacts and fuel costs would increase by 16% and 26%, respectively. These results demonstrate clearly that future transport policy in Nigeria should promote and incentivise public (bus) transport as a much more environmentally and economically sustainable option than transport by cars and motorcycles.
► The life cycle environmental impacts of passenger transport in Nigeria estimated for 2003–2030.
► The tradeoffs between economic costs and environmental impacts discussed.
► Scenarios considered: business as usual; sustainable transport; high economic growth.
► Public transport is more sustainable than transport by cars and motorcycles.
► Ending gas flaring would improve substantially environmental, economic and social impacts.
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Fig. 3. Global warming potential (GWP) for different scenarios.
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Fig. 5. Ozone depletion potential (ODP) for different scenarios.
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Fig. 9. Human toxicity potential (HTP) for different scenarios. [DB—dichlorobenzene].

EPA Calls for 2013 Presidential Green Chemistry Challenge Award Nominations / New green chemistry technologies grow markets and save businesses money

The U.S. Environmental Protection Agency (EPA) today announced the nominations for the 2013 Presidential Green Chemistry Challenge Awards for companies and institutions that can design chemicals or a new product that help protect public health and the environment.

“The Presidential Green Chemistry Challenge is an opportunity for EPA to recognize green chemistry innovations that are having real time results in making manufacturing processes and products that we use every day safer,” said Jim Jones, acting assistant administrator for EPA's Office of Chemical Safety and Pollution Prevention. “Increasingly, environmental benefits can result in reduced costs or increased market opportunities for new products, or both. In 2012, EPA launched an effort to complement the award program by providing a forum for winners and nominees to focus on maximizing their investments in green chemistry.”

Award-winning technologies during 2012 included one which saves $2 million to $20 million each year in each of eighteen plants, which convert bauxite ore into the raw material for making aluminum. Another technology is saving over $1 million each year in a large paper mill. Today’s awards reflect the ongoing commitment President Obama highlighted in his State of the Union address to partner with businesses and communities to encourage investments that help small businesses and grow the U.S. economy.
Green chemistry is the design of chemical products and processes that reduce both the generation and use of chemicals that are hazardous to the environment and people’s health. Nominations for innovative technologies that feature the design of greener chemicals, greener chemical synthesis, or greener chemical reactions are due to the agency by April 30, 2013. EPA is particularly interested in receiving nominations on approaches or technologies that reduce or eliminate the need for brominated flame retardant chemicals. The EPA anticipates recognizing five award winning green chemistry technologies this fall.

In December 2012, EPA and the American Chemical Society co-hosted a roundtable meeting for award winners and nominees. The purpose was to share their experiences in launching their innovations into the marketplace and what those experiences mean technically, economically, and publicly for their companies, communities, the environment, and the nation. The roundtable also gave companies a forum to describe how federal assistance, public/private partnerships, and supply chain strategies combine to provide additional opportunities to strengthen the innovation-to-market pipeline. This effort will be an on-going component of the Presidential Green Chemistry Challenge Awards program.

Since the inception of the awards 18 years ago, EPA has received 1,490 nominations and presented awards to 88 technologies. It has resulted in the generation and reduced use of more than 825 million pounds of hazardous chemicals and solvents, saved 21 billion gallons of water, and eliminated 7.9 billion pounds of carbon dioxide releases to the air.

More information on past award winners and how to submit entries can be found at:
MAX HT® Bayer Sodalite Scale Inhibitor
The Bayer process converts bauxite ore to alumina, the primary raw material for aluminum. The process involves extracting alumina trihydrate from bauxite ore using hot caustic solution. After separating out the insoluble solids, the alumina trihydrate is precipitated and the spent liquor is recycled. Heat exchangers re-concentrate the liquor to the optimum concentration of caustic and then heat it to the proper temperature for digestion. Silica present as silicates, primarily clay materials, dissolves quickly in typical Bayer liquor used to digest alumina, resulting in the liquor being supersaturated in silica, particularly after precipitation of the alumina trihydrate. The silica in the liquor reacts with the caustic and alumina on the hot surfaces of the heat exchangers; as a result, sodalite scale (i.e., crystalline aluminosilicate) builds up on the heat exchangers and interstage piping in the process. This reduces the efficiency of the heat exchangers. Periodically, Bayer process plant operators must take the equipment off line for cleaning that involves removing the scale with sulfuric acid. The used acid is a waste stream that requires disposal. In addition to the acid cleaning, much of the interstage piping requires cleaning with mechanical means such as jackhammers to remove the scale.
There are about 73 operating Bayer process plants worldwide with annual capacities of 0.2–6 million tons of alumina per plant; most plants are in the 1.5–3 million ton range. Eighteen Bayer process plants worldwide have adopted this technology; seven more plants are testing it. Each plant using MAX HT® saves $2 million to $20 million annually. The realized annual energy savings for all plants together are 9.5 trillion to 47.5 trillion Btu, which is the equivalent of about 1.1 billion to 7.7 billion pounds of carbon dioxide (CO2) not released to the atmosphere. Fewer cleaning cycles and less acid per cycle result in a realized annual hazardous waste reduction of 76 million to 230 million pounds for all plants together.
The “Bayer process” converts bauxite to alumina, the raw material for making aluminum. Mineral scale deposited on the heat exchangers and pipes in Bayer process plants increases energy use. Removing the scale requires stopping production and cleaning with sulfuric acid. Cytec’s product hinders scale growth. Eighteen plants worldwide are using MAX HT® inhibitor, saving trillions of Btu (British thermal units) annually. Fewer cleaning cycles also reduce hazardous acid waste by millions of pounds annually.

1st Part of Offshore Wind Power Line Moves Ahead

An "audacious" plan to lay a multibillion-dollar wind power transmission spine under the seabed from southern Virginia to the New York City area took a step forward in January with an announcement of plans for the first leg, a 189-mile segment running from Jersey City to a spot south of Atlantic City.
The proposed backbone ... is intended to link future wind farms far offshore, sparing them the expense and regulatory problems of bringing power lines all the way to shore individually, and to move power to land-based sources. The project’s backers, which include Google and other prominent investors, argue that the buried offshore spine, impervious to storms, could also come in handy in an emergency, providing a backup for hospitals and police stations and restarting power plants in blacked-out areas. 
The latter selling point has gained importance for the line’s promoters as interest in offshore wind has suffered setbacks, including the declining price of natural gas, a competing energy source. 

The Atlantic Wind Connection, the project’s sponsor, says the first segment would run from a substation called Cardiff, near Pomona, N.J., operated by Atlantic City Electric, out into the ocean 12 to 14 miles....

Executives at Atlantic Wind say they chose to begin with a segment solely in New Jersey because the project could level the big price differences for electricity within the state, yielding an economic benefit that could justify at least some of the first leg’s $1.3 billion construction cost. Remaining within one state simplifies the regulatory process, they added, and political support for offshore wind farms is relatively strong in New Jersey. 
The state has mandated that 22.5 percent of its electricity must come from renewable sources by 2021, and the bulk of that is expected to come from wind, some of which may come from outside New Jersey. Very few onshore sites in the state are suitable for wind, however. New Jersey’s Offshore Wind Economic Development Act calls for at least 1,100 megawatts of offshore wind, but backers say it could go as high as 3,000 megawatts. Atlantic Wind hopes to secure regulatory approval and get the financing in place by mid-2015 and to start construction at the end of that year.... In 2011, 11 companies expressed interest in building wind farms, although progress all over the East Coast has been quite slow. 

Even if those farms do not materialize as fast as was once imagined, the sponsors argue that the transmission line is justified because it would allow faster recovery from crippling storms like Hurricane Sandy.
For the project to be built, New Jersey would have to submit a request to the regional grid operator, PJM Interconnection

The first step for PJM would be to determine how much money the line would save by importing cheap power from southern New Jersey into northern New Jersey. Another factor is how much prices in southern New Jersey would rise as a result of its exports. Such transfers are now limited by congestion on the grid. Once the economic value of the line had been established, a sum related to that value would be charged to all PJM customers, including those in New Jersey. If the estimated construction cost of an estimated $1.3 billion exceeded that, which seems likely, the balance would be charged to New Jersey ratepayers as an environmental project, to meet the state’s renewable energy goals.

Sunday, February 24, 2013

Carbon Trading Program Falters in Europe

Just as President Barack Obama is trying to persuade Americans that a cap and trade system is the way to curb carbon emissions, the world’s flagship program in Europe is in danger of failing. The price of carbon traded in Europe has collapsed to around 5 euros per metric ton compared with 30 euros a few years ago...

The EU Emissions Trading System is intended to set a price on greenhouse gas emissions in order to force polluters like steel mills and power stations to clean up their acts. In the European union, factories and other installations ...  must either acquire or be allocated permits each year equivalent to the amount they emit. For instance, Luxembourg-based ArcelorMittal, the world’s largest steelmaker, was allocated about 87 million tons in permits last year.

The number of permits available each year is supposed to gradually decrease, squeezing emissions down. ... But the system has actually been very permissive — even a money maker for them. Largely because of the recession, the number of permits allocated has turned out to be far too great. Companies have cut back production because of lower demand and have ended up with surplus permits, which they have been selling. That has been one of the key reasons why prices of the permits, which are traded on exchanges just like oil and other commodities, have dropped so much. 

The current low price undercuts the purpose of the trading program — which was to encourage companies to invest in energy efficient technologies. Single-digit prices don’t encourage companies to do anything, analysts say. A much higher price is needed to force change — say 30 or 40 euros per ton or even higher.

All of this raises questions about whether a cap and trade program like the European Union’s is the best way to reduce emissions. Advocates say that the simplest way to cut greenhouse gases is to set a high carbon price and then let polluters make decisions about how to do it. That way governments are not picking technologies that may or may not work. But as Europe’s experience has shown, getting carbon pricing right is not easy.

The New York Times
February 20, 2013

Evaluating “Cash-for-Clunkers”: Program effects on auto sales and the environment

“Cash-for-Clunkers” was a $3 billion program that attempted to stimulate the U.S. economy and improve the environment by encouraging consumers to retire older vehicles and purchase fuel-efficient new vehicles. We investigate the effects of this program on new vehicle sales and the environment. Using Canada as the control group in a difference-in-differences framework, we find that, of the 0.68 million transactions that occurred under the program, the program increased new vehicle sales only by about 0.37 million during July and August of 2009, implying that approximately 45 percent of the spending went to consumers who would have purchased a new vehicle anyway. Our results cannot reject the hypothesis that there is little or no gain in sales beyond 2009. The program will reduce CO2 emissions by only 9–28.2 million tons based on upper and lower bounds of the estimate of the program effect on sales, implying a cost per ton ranging from $92 to $288 even after accounting for reduced criteria pollutants.
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Fig. 1. Timeline of the Cash-for-Clunkers program.
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Fig. 3. Monthly new vehicle sales in the United States and Canada from 2007 to 2009. Note: The plots show total monthly sales in logarithm for all, eligible, and ineligible vehicles.

Pesticides, external costs and policy options for Thai agriculture

Abstract: This study addresses the questions of how to estimate the external costs of agricultural pesticide use and how to disaggregate these costs to particular chemicals and farm production systems. Using the case of Thailand—a lower-middle income country with an export-oriented agriculture and an annual growth in pesticide use of about 10%, we estimate the external costs of pesticide use for the period 1997–2010 by applying the Pesticide Environmental Accounting (PEA) tool and compare the estimates to an accounting of actual costs for two years. We also use the tool to estimate the external costs of two distinct production systems of rice and intensive horticulture. Using the PEA tool, we estimate the average external costs of pesticide use in Thailand to be USD 27.1/ha of agricultural land in 2010; yet the actual cost estimate for the same year is only USD 18.7/ha. This difference leads us to discussing the strengths and weaknesses of the PEA approach. The negative externalities of pesticide use could be reduced by giving farmers a financial incentive to use fewer pesticides, for instance by introducing an environmental tax. We argue that for such instrument to be effective, it needs to be combined with supportive measures to change on-farm practices through awareness-raising about the adverse effects of pesticides and introducing farmers to non-chemical alternatives to manage their pest problems.
► We quantify the external cost (EC) of pesticides in Thai agriculture using two methods.
► Using the Pesticide Environmental Accounting (PEA) tool, the average EC is USD 27 ha.
► Using an actual cost approach, the average EC is USD 19 ha.
► We discuss the pros and cons of using the PEA tool.
► We recommend combining a pesticide tax with supportive measures to change on-farm practices.
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Fig. 1. Agricultural pesticide use and pesticide productivity in Thailand, 1987–2010 Notes: Output based on the value added for agriculture at constant (year 2000) prices in USD. Pesticides here include insecticides, herbicides, fungicides, acaricides, rodenticides, fumigants and molluscicides. Pesticide consumption data are based on imports
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Fig. 2. External cost of pesticide use in Thailand (1996–2010), as estimated using the PEA tool and actual cost method (at constant 2010 prices).
by Suwanna Praneetvatakula, Pepijn Schreinemachersb, d, E-mail the corresponding author, Piyatat Pananurakc and Prasnee Tipraqsad 
a Department of Agricultural and Resource Economics, Kasetsart University, Bangkok, Thailand 
b Department of Land Use Economics in the Tropics and Subtropics, Universität Hohenheim, Stuttgart, Germany 
c Knowledge Network Institute of Thailand, Bangkok, Thailand 
d The Uplands Program, Chiang Mai University, Chiang Mai, Thailand
Volume 27; March, 2013; Pages 103–113
Keywords: Crop protection policy; Externality; Food safety; Pesticide Environmental Accounting (PEA); Thailand; Southeast Asia

Production possibility frontier analysis of biodiesel from waste cooking oil

This paper presents an assessment of the productive efficiency of an advanced biodiesel plant in Japan using Data Envelopment Analysis (DEA). The empirical analysis uses monthly input data (waste cooking oil, methanol, potassium hydroxide, power consumption, and the truck diesel fuel used for the procurement of waste cooking oil) and output data (biodiesel) of a biodiesel fuel plant for August 2008–July 2010. The results of this study show that the production activity with the lowest cost on the biodiesel production possibility frontier occurred in March 2010 (production activity used 1.41 kL of waste cooking oil, 0.18 kL of MeOH, 16.33 kg of KOH, and 5.45 kW h of power), and the unit production cost in that month was 18,517 yen/kL. Comparing this efficient production cost to the mean unit production cost on the production possibility frontier at 19,712 yen/kL, revealed that the cost of producing 1 kL of biodiesel could be reduced by as much as 1195 yen. We also find that the efficiency improvement will contribute to decreasing the cost ratio (cost per sale) of the biodiesel production by approximately 1% during the study period (24 months) between August 2008 and July 2010.
Full-size image (23 K) 
Fig. 2. Material costs (¥/kL) required for producing one unit of biodiesel. 
► This paper analyzes the productive efficiency of an advanced biodiesel plant using DEA.
► We examine the optimal production activities of biodiesel from waste cooking oil.
► Considering the production frontier, the unit cost of biodiesel could be reduced by 1195 yen. 
► The efficiency improvement contributes to decreasing the cost ratio of the biodiesel by 1%.
by Shigemi Kagawaa, c, E-mail the corresponding author, Kanako Takezonoa, Sangwon Suhb and Yuki Kudohc  
a Corresponding author at: Faculty of Economics, Kyushu University, 6-19-1 Hakozaki, Higashi-ku, Fukuoka 812-8581, Japan. Tel./fax: +81 92 642 2489 
b Bren School of Environmental Science and Management, The University of California, Santa Barbara, USA  
c Research Institute of Science for Safety and Sustainability, National Institute of Advanced Industrial Science and Technology, Japan 
Energy Policy via Elsevier Science Direct  
Volume 55, April 2013, Pages 362–368 
Keywords: Waste cooking oil; Biodiesel;

Saturday, February 23, 2013

Does cleanup of hazardous waste sites raise housing values? Evidence of spatially localized benefits

Economists often rely on publicly available data provided at coarse geographical resolution to value spatially localized amenities. We propose a simple refinement to the hedonic method that accommodates this reality: specifically, we measure localized benefits from the cleanup of hazardous waste sites at the sub-census tract level by examining the entire within-tract housing value distribution, rather than simply focusing on the tract median. Our point estimates indicate that the cleanup leads to larger appreciation in house prices at the lower percentiles of the within-tract house value distribution than at higher percentiles. Though not statistically different from one another, the estimates are monotonically ordered from 24.4% at the 10th percentile, 20.8% at the median and 18.7% at the 90th percentile, respectively. We confirm these results in two ways. First, our analysis using restricted access census block data finds comparable results that cleanup leads to a 14.7% appreciation in the median block-level housing values. Second, our analysis of proprietary housing transactions data show that cheaper houses within a census tract are indeed more likely to be closer to a hazardous waste site, explaining the greater impacts they receive from the cleanup process.
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Fig. 5. Distribution of net benefits from Superfund cleanup at each of the 52 sites and combined sites that have been deleted from the NPL
by Shanti Gamper-Rabindrana, E-mail the corresponding author and  Christopher Timminsb, E-mail the corresponding author  
a Graduate School of Public and International Affairs, University of Pittsburgh, USA  
b Department of Economics, Duke University, USA  
Journal of Environmental Economics and Management via Elsevier Science Direct 
In Press available online 22 December 2012
Keywords: Hedonic property method; Localized public goods; Heterogeneous treatment effects; Hazardous waste remediation

Cost-benefit analysis of riparian protection in an eastern Canadian watershed

Abstract: Forested riparian buffers have proved to be an effective management practice that helps maintain ecological goods and services in watersheds. In this study, we assessed the non-market benefits and opportunity costs associated with implementing these buffers in an eastern Canadian watershed using contingent valuation and wood supply modeling methods, respectively. A number of buffer scenarios were considered, including 30 and 60 m buffers on woodlots and on all land (including woodlots, agricultural, and residential lands) in the watershed. Household annual WTP estimates ranged from −$6.80 to $42.85, and total present value benefits ranged from −$11.7 to $121.7 million (CDN 2007), depending on the buffer scenario, affected population, time horizon, and econometric modeling assumptions considered. Opportunity cost estimates range from $1.3 to $10.4 million in present value terms, depending on silvicultural and agriculture land rental rate assumptions. Overall, we found that the net present value of riparian buffers was positive for the majority of scenarios and assumptions. Some exceptions were found under more conservative benefit, and higher unit cost, assumptions. These results provide decision makers with data on stated benefits and opportunity costs of riparian buffers, as well as insight into the importance of modeling assumptions when using this framework of analysis.
► We estimate net present values of restoring and enhancing riparian buffers.
► We examine different buffer programs, household populations, and time horizons.
► Net present values are positive under most programs considered.
► Net present values depend on household population and time horizon assumptions.
Fig. 1. Map of the Canaan-Washademoak watershed located in New Brunswick, Canada.
Full-size image (57 K)
by Ryan Trenholma, E-mail the corresponding author, Van Lantzb, c, E-mail the corresponding author, Roberto Martínez-Espiñeirad, E-mail the corresponding author and Shawn Littleb, E-mail the corresponding author 
a School of Resource and Environmental Management, Simon Fraser University, Burnaby, BC, Canada 
b Faculty of Forestry & Environmental Management, University of New Brunswick, Fredericton, NB, Canada Tel.: +1 506 458 7775.
c Department of Economics, University of New Brunswick, Fredericton, NB, Canada 
d Department of Economics, Memorial University of Newfoundland, St. John's, NFLD, Canada
Volume 116, 15 February 2013, Pages 81–94
Keywords: Contingent valuation; Wood supply model; Willingness to pay; Opportunity cost; Riparian buffer

Energy optimization software reduces industrial power consumption
Thanks to the EU funded research project ESTOMAD, a new computer program is now capable of  detecting the energy guzzlers in so-called mechatronic systems, that are controlled by both software and electronics. ... Following an energy efficiency analysis of a badminton robot with the new software, the team made some small changes in segments in the robotic where energy wastage was greatest. “We were able to cut down the energy consumption of the badminton robot by 50%!” claims Wim Symens.

Industry has already expressed interest in performing this type of energy efficiency analysis. For example, PICANOL, a [major producer] of weaving machines, was able to cut energy consumption of existing machines by 10-15% with the software.

In the future, engineers could use this software for machines even before they are built. Performing a virtual analysis at an early stage, could provide a [significant] competitive advantage to industry. “A virtual approach is always a preferred one. They can even simulate unusual conditions: high speeds or very high temperatures. In real life those tests are very expensive!” explains Tom Boermans of engineering solution consultancy LMS International, who is based in Leuven, Belgium and one of the partners in the project....
Researchers at FMTC reduced the power consumption of their badminton robot by 50 percent, ...

European Research Media Center
January 29, 2013

The Distributive Effect and Food Security Implications of Biofuels Investment in Ethiopia: A CGE Analysis

In response to global opportunities and domestic challenges, Ethiopia is revising its energy policy to switch from high-cost imported fossil fuel to domestically produced biofuels. Currently, there are biofuel investment activities in different parts of the country to produce ethanol and biodiesel. However, there is no rigorous empirical study to assess impacts of such investments. This paper assesses the distributive effect and food security implications of biofuels investment in Ethiopia, using data from 15 biofuels firms and 2 NGOs in a CGE (Computable General Equilibrium) analysis. Findings suggest that biofuels investments in the context of Ethiopia might have a ‘win-win’ outcome that can improve smallholder productivity (food security) and increase household welfare. In particular, the spillover effects of certain biofuels can increase the production of food cereals (with the effect being variable across regions) without increasing cereal prices. When spillover effects are considered, biofuel investment tends to improve the welfare of most rural poor households. Urban households benefit from returns to labor under some scenarios. These findings assume that continued government investment in roads allows biofuels production to expand on land that is currently unutilized, so that smallholders do not lose land. Investment in infrastructure such as roads can thus maximize the benefits of biofuels investment.
Banse et al. (2008) analyze the trade impacts of an EU Biofuels Directive using a global CGE model, i.e., a modified version of the GTAP model. They find that cereal prices actually decline in the long-run, though less than theywo uld without the directive. Using IFPRI’s partial equilibrium model, Rosegrant finds that biofuels demand accounted for 39% of the increase in corn price from 2000 to 2007. Rajagopal et al. (2007) analyze the effect of the ethanol production tax credit on corn price, using a stylized partial equilibrium model. They find a 21% increase in corn price attributable to a $0.51 ethanol production tax credit in the US in 2006. The US Congressional Budget Office (CBO) estimates also suggest that about 10 to 15 percent of the rise in food prices between April 2007 and April 2008 is attributable to the increased use of ethanol (CBO, 2009). However, Chakravorty et al. (2011) show that about two-thirds of the increase in food prices can be attributed to changes in consumption patterns and only one-third to biofuels mandates. 
Cereals (food) benefited most from biofuel expansion in Ethiopia, especially in zones where biofuel investment is located. In particular, the jatropha and castor bean scenarios that involved spillover effects affected cereal production, with the effect being variable across regions. For example, under the jatropha with spillover scenario, cereal production in z3 and z4 (AEZ 3 & 4) increased by 4.3 percent; it decreased by 1.6 percent in z1 and z2 and by 1.5 percent in z5. Similarly, under the castor bean with spillover scenario, cereal production in z4 and z5 respectively increased by 4.6 and 4.7 percent but decreased by 1.2 percent elsewhere.
by Zenebe Gebreegziabher, Alemu Mekonnen, Tadele Ferede, Fantu Guta, Jorgen Levin, Gunnar Kohlin, Tekie Alemu, Lars Bohlin
Resources For the Futures (RFF)
RFF Discussion Paper EfD DP 13-02; January, 2013