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 www.ScienceDirect.com
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: www.CityofChicago.org/Emissions. The Energy Benchmarking Report can be found at: www.CityofChicago.org/EnergyBenchmarking.
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 www.CityofChicago.org
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 www.ScienceDirect.com
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 http://tinyurl.com/gtnxog3 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 www.ScienceDirect.com
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 www.WorldBank.org
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 www.ScienceDirect.com
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 http://le.uwpress.org 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 www.ScienceDirect.com
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 http://www.greengrowthknowledge.org
Source: International Institute for Sustainable Development (IISD)
December, 2016

Study Sheds Light on Cost-Competitive Alternatives to ‘Buy And Dry’ - EDF urges Colorado policy makers to think differently about water management

A new economic study released January 11, 2017 by Environmental Defense Fund and WestWater Research shows that Alternative Transfer Methods (ATMs) are cost competitive with traditional water acquisition methods, challenging the conventional wisdom in Colorado that it’s too expensive and risky for municipalities to lease water.

ATMs are techniques for temporarily allocating and distributing agricultural water between different users, providing more flexibility to both agriculture producers and municipalities and reducing the need to permanently transfer water rights, which can result in “buy and dry”.

To satisfy the water supply needs of Colorado’s growing population, municipalities have been buying up agricultural land for its water rights. This practice of “buy and dry” is projected to take 500,000-700,000 acres of agricultural land out of production by 2050, or roughly 20% of irrigated farmland in the state.

“We’ve known for a long time that ATMs are better for farms and ranches, better for rural communities and better for the environment,” said Brian Jackson, EDF Associate Director. “And now we can add ‘cost effective’ to the list of benefits.”
Horsetooth Reservoir, part of the Colorado-Big Thompson Project, is located in Larimer County in northern Colorado.
Colorado’s Water Plan, approved in 2015, promotes the use of more ATMs, setting a policy goal of 50,000 acre-feet of ATM projects in place by 2030. Progress towards this goal has lagged due to a number of technical, legal and financial challenges.

But according to the EDF/WestWater study, new policies and state initiatives have begun to ease these challenges, opening the door for ATMs to be used more broadly. “We wanted to see if these changes had the potential to make ATMs easier and less costly to implement,” said Brett Bovee, WestWater Intermountain Regional Director.

The answer is yes. And with wider adoption of ATMs and other water conservation measures, the need for “buy and dry” and water storage projects will be diminished. “This presents a new opportunity for cities to help sustain agriculture, minimize costs and incorporate environmental benefits while planning to meet water supply needs.” said Bovee.

The report identified example ATMs in Colorado and other Western states, and selected two municipalities – the Town of Windsor and the City of Fountain in Colorado – to serve as case-studies. Using a 30-year financial model and accounting for recent changes in Colorado’s water right laws, the report found that ATM approaches had similar, and in some cases, less expensive costs when compared with permanent water right acquisitions.

For example, in the Town of Windsor, researchers compared an ATM lease agreement with a permanent water right acquisition to address projected shortages over a 30-year period. The ATM lease agreement was found to save an average of $200 per acre-foot per year over the traditional approach.

Wednesday, March 1, 2017

Beach Recreationalists' Willingness to Pay and Economic Implications of Coastal Water Quality Problems in Hawaii

The economic value of water quality is poorly understood in Hawaii. Quantifying the economic value of coastal water quality would inform policy decisions that impact the coast and help justify expenditures in water quality improvements. We conducted a non-market valuation of beach recreationalists’ preferences and willingness to pay for water quality and associated attributes at Oahu beaches. Using a discrete choice experiment analyzed by a conditional logit model, results suggest individuals were willing to pay $11.43 per day at the beach to reduce days of bacterial exceedance from 11 to 5 per year, a further $30.72 to reduce it to no bacterial exceedances at all. WTP to move from 15 ft to 30 ft of underwater visibility was $35.71, a further $14.80 to increase from 30 ft to 60 ft. Respondents were also willing to pay $15.33 to improve coral reef cover from 10% to 25%, a further $4.89 to improve to 45% cover. WTP for moving from 9 fish species to 18 species was $7.14, a further $2.47 to increase that to 27 fish species. These environmental improvements can improve Oahu recreationalists’ welfare by $205 million, $550 million, $639 million, $265 million, $274 million, $88 million, $128 million, and $44 million per year, respectively. Welfare gains may justify increased spending in management and restoration of coastal ecosystems.
File:Sea turtles on beach in hawaii.jpg
by Marcus Peng 1 and Kirsten L.L. Oleson 1 and 2
1. University of Hawaiʻi at Mānoa Department of Natural Resources and Environmental Management, 1910 East-West Road, Honolulu, Hawaii, USA
2. University of Hawaiʻi Economic Research Organization, 2424 Maile Way, Honolulu, HI, USA
Ecological Economics via Elsevier Science Direct www.ScienceDirect.com
Volume 136, June 2017, Pages 41–52, Available online 17 February 2017
Keywords: Non-market valuation; Discrete choice experiment; Water quality; Underwater visibility; Coral reefs; Fish diversity; Beach recreation; Oahu; Hawaii

What are Households Willing to Pay for Improved Water Access? Results from a Meta-Analysis

Although several factors contribute to low rates of access to improved water and sanitation in the developing world, it is especially important to understand and measure household demand for these services. One valuable source of information regarding demand is the growing empirical literature that has applied stated preference methods to estimate households' willingness to pay (WTP). Because it is difficult to generalize and support planning based on this scattered literature, we conduct a meta-analysis to take stock of the worldwide sample of household WTP for improved drinking water services. Using 171 WTP estimates drawn from 60 studies, we first describe this sample and then examine the potential factors that explain variation in WTP estimates. Our results suggest that households are willing to pay between approximately $3 and $30 per month for improvements in water access. Specifically, in line with economic theory and intuition, WTP is sensitive to scope (the magnitude of improvement in drinking water services), as well as household income, and stated-preference elicitation method. We demonstrate how our results can be used to predict household-level WTP for selected improvements in drinking water access in regions with low coverage, and find that private benefits exceed the cost of provision.
The LifeStraw is a genius new invention
by George L. Van Houtven 1, Subhrendu K. Pattanayak 2, Faraz Usmani 3, Jui-Chen Yang 4 formerly 1 
1. RTI International, Research Triangle Park, NC, USA
2. Sanford School of Public Policy, Duke University, Durham, NC, USA
3. Nicholas School of the Environment, Duke University, Durham, NC, USA
4. Pacific Economic Research, LLC, Bellevue, WA, USA
Ecological Economics via Elsevier Science Direct www.ScienceDirect.com
Volume 136; June, 2017; Pages 126–135; Available online 23 February 2017
Keywords: Meta-analysis; Water; Sanitation; Contingent valuation; Willingness to pay

Do Energy Efficiency Investments Deliver at the Right Time?

Electricity cannot be cost-effectively stored even for short periods of time. Consequently, wholesale electricity prices vary widely across hours of the day with peak prices frequently exceeding off-peak prices by a factor of ten or more. Most analyses of energy-efficiency policies ignore this variation, focusing on total energy savings without regard to when those savings occur. In this paper we demonstrate the importance of this distinction using novel evidence from a rebate program for air conditioners in Southern California. We estimate electricity savings using hourly smart-meter data and show that savings tend to occur during hours when the value of electricity is high. This significantly increases the overall value of the program, especially once we account for the large capacity payments received by generators to guarantee their availability in high-demand hours. We then compare this estimated savings profile with engineering-based estimates for this program as well as a variety of alternative energy-efficiency investments. The results illustrate a surprisingly large amount of variation in economic value across investments.
Before smart meters and other advanced metering infrastructure, it was impossible to measure policy impacts at the hourly level.... Meters were only read once per billing cycle. This situation is rapidly changing. Today in the United States more than 40% of residential electricity customers have smart meters, up from less than 2% in 2007. ...
Savings are strongly correlated with the value of electricity, making the program 48% more valuable than under a naive calculation ignoring timing. As we demonstrate, including capacity payments is important in this calculation. Most of the value of electricity in ultra-peak hours is captured by forward capacity payments to generators to guarantee their availability
Across six major U.S. markets, we find that air conditioning investments are on average 29% more valuable than under a naive calculation ignoring timing. 
For commercial and industrial heat pumps and chillers the "timing premiums" are 29% and 
25%, respectively. Other investments like refrigerators and freezers have timing premiums 
below 5% because savings are only weakly correlated with value. Lighting also does surprisingly poorly, reflecting that savings occur disproportionately during evening and winter 
hours when electricity tends to be less valuable.
Electric utilities in the United States, for example, spent $36 billion on energy-efficiency programs between 2006 and 2015, leading to more than 1.5 million gigawatt hours in reported total electricity savings. In addition, the U.S. Federal government has spent $12 billion since 2009 on income tax credits for residential energy-efficiency investments
Nine new standards promulgated by the DOE in 2016 achieve a total present value of $76 billion in energy cost savings, vs. $28 billion in avoided CO2 emissions and $5 billion in avoided NOx emissions.7 That is, more than two-thirds of the benefits come from private energy cost savings. Moreover, the hourly variation in external costs is small relative to the hourly variation in electricity prices and capacity values. Private value varies across hours by a factor of ten or more, while emission rates vary only by about a factor of two between fossil-fuel plants. 
Our empirical application is an energy-efficiency rebate program offered by Southern California Edison (SCE), a major investor-owned utility.... known as the Quality Installation Program. It provides incentives of up to $1,100 to households that install an energy-efficient central air conditioner.... Air conditioning is responsible for 10% of average residential electricity use and 15% of average commercial electricity use in California... Air conditioning is projected to be one of the fastest growing uses of electricity worldwide ....

The state utility commission compensates SCE for running the program by allowing the utility to pass on costs to ratepayers in the form of higher electricity prices. The Quality Installation Program includes an additional focus on proper installation of the new subsidized central air conditioner, which can further improve energy performance. 

The event study figure for summer shows a sharp decrease in electricity consumption in the year in which the new air conditioner is installed. The magnitude of the decrease is about 0.2 kilowatt hours per hour... As expected, winter consumption is essentially unchanged after the new air conditioner is installed.
On mild days, between 50 and 70 degrees Fahrenheit, estimated energy savings are zero or not statistically distinguishable from it.... From 70 to 100+ degrees, there is a steep, continuous relationship between temperature and energy savings, as expected from a new air conditioner. Air conditioner usage is largest on the hottest days, so energy-efficiency gains have the largest effect on these days. There is also a small decrease in consumption on days below 50 degrees following air conditioner replacement. This may be explained by improvements to ductwork, insulation, thermostats, or other HVAC-related upgrades that could in some cases occur as part of a central air conditioner replacement
During July and August there are large energy savings, particularly between noon and 10 p.m. Savings reach their nadir in the summer at 6 a.m. which is typically the coolest time of the day. During non-summer months savings are much smaller, less than 0:05 kilowatt hours saved on average per hour, compared to 0:2 to 0:3 kilowatt hours saved on average per hour during July and August.... The implied annual savings per household are 375 and 358 kilowatt hours per year, respectively.... Prior to installing a new air conditioner, program participants consumed an average of 9,820 kilowatt hours annually, so this is a 4.5% decrease in household consumption. A typical central air conditioner (3 ton, 13 SEER) in this region uses about 4,237 kilowatt hours per year, so the savings represent a 10% decrease in annual electricity consumption for air conditioning. This is broadly similar to, but slightly less than, what would be expected based on a simple engineering prediction. For example, a Department of Energy calculator shows that ignoring rebound and other factors a typical central air conditioner upgrade in Los Angeles saves 565 kilowatt hours per year.... Using hourly microdata, household by month-of-year by hour-of-day fixed effects, hour-of-sample by climate zone fixed effects, and the sample exclusions the estimate of annual program savings is 442 kilowatt hours per year.  16
Capacity payments are made to electricity generators to remain open and available, thereby ensuring desired reserve margins. Capacity costs are zero or close to it during off-peak hours because electricity demand can be easily met by existing inframarginal generators (plants that are not close to the margin between staying in the market and exiting). However, during peak hours large capacity payments are required to ensure desired reserve margins. 

Incorporating capacity values substantially increases the value of electricity during peak periods. In California during August, for example, capacity values increase the value of electricity during peak evening hours to between $200 and $600 per megawatt hour. And, overall, the pattern is very similar across the four approaches for allocating capacity value across hours....