It’s been a while since I’ve shared quarterly journal reviews! In this post I review interesting journal articles from the first three quarters of 2021.

1. Banerjee, P., Pal, R., Wossink, A., & Asher, J. (2021). Heterogeneity in Farmers’ Social Preferences and the Design of Green Payment Schemes. Environmental and Resource Economics, 78(2), 201–226. https://doi.org/10.1007/s10640-020-00529-7

The first article to catch my attention was Banerjee et al. on the design of green payment schemes.  The article discusses “green payment schemes,” or payment programs designed to give an incentive for farmers to produce “public goods” – to provide more conservation areas, for example, or to practice no-till farming methods to reduce soil erosion. However, the authors point out that typical green payment schemes ignore differences among farmers, and assume that all farmers are solely motivated by profit. Banjeree et al develop a model that takes into account farmers’ different motivations, and the existence of a social norm for environmental preservation. They conclude that coupling a monetary payment with a “social award” would entice more farmers to take advantage of green payment schemes. 

2. Corona, J., Doley, T., Griffiths, C., Massey, M., Moore, C., Muela, S., Rashleigh, B., Wheeler, W., Whitlock, S. D., & Hewitt, J. (2020). An Integrated Assessment Model for Valuing Water Quality Changes in the United States. Land Economics, 96(4), 478–492. https://doi.org/10.3368/wple.96.4.478

I was also fascinated by an article written by several economists (plus a biologist and an engineer) at the US Environmental Protection Agency. It discusses an integrated assessment model (IAM) to measure the effects of policies designed to improve water quality. (IAMs have been used most popularly to look at the effects of climate change mitigation policy on economic outcomes.) For an economist like me, this model could potentially fill a huge hole. We may know the pathway from an environmental policy to water quality, and we may know some information about the connection between improved water quality to social and economic benefits, but an IAM links the two, making cost-benefit analyses easier to perform and understand. As the authors explain, the modeling platform is designed to quantify the economic benefits of water quality improvements to the nation’s freshwater rivers and streams” (page 479). After describing the model, they apply it to a case study in the mid-western United States. Although the model is still being developed, they hope to make an open source version of it available in the near future. 

3. Dunning, K. H. (2020). Building resilience to natural hazards through coastal governance: a case study of Hurricane Harvey recovery in Gulf of Mexico communities. Ecological Economics, 12.

Another article that speaks directly to one of the projects that we are working on now is this article, which asks, “how [do] institutions for coastal governance respond to hazards, and how do those responses relate to resilience of human and natural systems?” Essentially, the author’s key takeaway is that higher levels of government take longer than is necessary to respond to disasters. Because of this, she recommends the formation of “sub-national” collaborations, including charity and non-profit groups. While coordination among such groups can be challenging, planning and assigning roles before a disaster strikes can save crucial time, money, and resources.   

4. Da Rocha, J. M., García-Cutrín, J., Gutiérrez, M.-J., Prellezo, R., & Sanchez, E. (2021). Dynamic Integrated Model for Assessing Fisheries: Discard Bans as an Implicit Value-Added Tax. Environmental and Resource Economics, 80(1), 1–20. https://doi.org/10.1007/s10640-021-00576-8

Switching gears a little to another area that I am interested in and that is relevant to my adopted home state of Maine is this article on banning “discards” in commercial fishing. The “bycatch” issue in commercial fishing has always been a problem: as fishermen are focused on catching high value fish, any fish they catch “incidentally” may be discarded as bycatch. Most of the time, that bycatch does not survive. Several countries have implemented discard bans in various forms. This article examines discard bans using an integrated assessment model (see above). They find that discard bans not only improve the sustainability of a fishery, but can also increase economic welfare in the long run. 

5. Carlsson, F., Gravert, C., Johansson-Stenma, O., and Kurz, V. 2021. “The Use of Green Nudges as an Environmental Policy Instrument,” Review of Environmental Economics and Policy 15:(2). https://www.journals.uchicago.edu/doi/abs/10.1086/715524

If you follow behavioral economics at all, you’ll recognize the term “nudge.” A “nudge” in terms of economics is defined as “a change in the [decision-making] environment that influences people’s behavior without prohibiting any choices or significantly changing the economic incentives”.* Economics is all about incentives – subsidizing behavior we feel is important or beneficial to society, while taxing those behaviors we feel are harmful to society. A nudge is a bit different – the idea here is that policy makers can change people’s decisions by simply changing the environment within which they make those decisions. Probably the most famous example is that of contributions to retirement accounts, whereby businesses discovered that people contributed more to their retirement accounts if they had to “opt out” (i.e., actively choose not to participate) than when they had to “opt in” (i.e., actively choose to participate. According to standard economic theory, that context should not matter to an individual’s decision-making process. But evidently it does. 

The authors divide green nudges into pure green nudges, and moral green nudges. A pure green nudge simply makes it easier for an individual to choose a more environmentally-friendly option (for example, making the “green energy choice” the default rather than an alternative, or, making the environmentally friendly options more prominent on a menu or in a grocery store). A moral nudge rewards individuals for “doing the right thing” by intentionally triggering a psychological response such as pride or shame. Examples of moral nudges might be moral suasion, social comparisons, or goal setting and commitment. 

Research that compares the effectiveness of green nudges versus more conventional economic policy instruments is still in its early stages, but it is a fascinating area of study. 

* Thaler, R., and C. Sunstein. 2009. Nudge: Improving decisions about health, wealth, and happiness. New York: Penguin.

6. Gawith, D., Hodge, I., Morgan, F., & Daigneault, A. (2020). Climate change costs more than we think because people adapt less than we assume. Ecological Economics, 173. https://doi.org/10.1016/j.ecolecon.2020.106636

Finally, I was also intrigued by this article, as rbouvier consulting is currently working on a project estimating the economic costs of sea level rise in a county in southern Maine. This article discusses how the current estimates of the cost of climate change may actually be too low, because those costs assume that people will adapt to climate change (for example, planting different crops, changing occupations, or moving locations) if they can. However, literature in behavioral economics (see article above) points out that individuals are much less pliable in their behaviors than traditional economists would like to believe. The model and empirical is rather technical and probably inaccessible to those not familiar with sophisticated environmental and economic modeling. The basic idea though, is simple: because of barriers to behavioral change, individuals may not adapt to climate change as much as economic models assume, and therefore climate change may be even more damaging to the economy than previously thought.     

~ Rachel Bouvier

A week ago, I sat down to write an end of year blog post. My colleague Joie had assigned me the task, “2020 sucked but here’s some good news.” It felt overwhelming and impossible. What good news could I possibly write about, during a raging pandemic, ongoing environmental gloom, protests against injustice all over the country, gridlock in Washington… You see my dilemma. My first thought was to give up, and email Joie to say that I just couldn’t do it.

But I hate letting Joie down. So I did what anybody would do in this situation, and googled it: “positive environmental news 2020.” Turns out that there are several sites out there that are devoted to posting positive environmental news stories – not in a Pollyanna-ish, stick-your-head-in-the sand kind of way, but more as a counter to the persistent doom-scrolling many of us have been engaging in lately.

I read about the founder of one of these sites, Grant B. from Happy Eco News . He writes, “I found that when I really started looking, I could see in between all the doomsday articles and posts, were a few that were actually very positive. And so I started saving them with the intention of sharing with friends to let them know that there is some good news.” One thing lead to another, he says, and now he posts on average five times a day, and rounds up the week’s news with the weekly Top 5. Clicking on random posts within the website, I realized that there is a lot of good news out there, but our minds get hijacked by the constant doom-mongering. Outrage gets more clicks than hope. News networks and social media algorithms know that, and they take advantage of it.

So here are a few positive developments from the past year that focus on the intersection between economics and the environment:

1. President-elect Joe Biden has pledged to return to the Paris climate accord, and has appointed John Kerry as “climate envoy” and Gina Mccarthy as climate czar (Kerry’s focus will be international, while Mccarthy’s focus will be domestic) Biden’s Twin Climate Chiefs, McCarthy and Kerry, Face a Monumental Task). While we try not to be too overtly political in this blog, the fact that the climate will be elevated to such a high level in the incoming administration gives me a little hope. Not too much- I’m not going to go crazy or anything – but some. Plus, as I’m always reminding my students, real climate action takes place at the state and local level, and there’s a lot going on in Maine (where we’re located) right now.

2. Renewable energy is gaining ground. Coal is finally on the decline. Britain is ending subsidies for fossil fuel industry. While I am mindful of the difficult transition those who work in the fossil fuel industry are facing, ultimately this is good news both for the climate and for air quality.

3. Past and current injustices are being uncovered. The shooting of Breanna Taylor in March and the horrific murder of George Floyd in May served as (yet another) wakeup call to the reality of structural racism in this country. While there’s a real temptation to think that things are getting worse, perhaps they are finally being uncovered, to paraphrase adrienne maree brown. We cannot create a more sustainable future without acknowledging and reckoning with our past. 

4. The Great American Outdoors Act. Not only is the Great American Outdoors Act one  of the biggest pieces of federal environmental legislation since the Clean Air Act, it is also one of the few examples of successful bipartisanship that we can point to. The legislation provides badly needed funding to restore crumbling infrastructure in our national park system, and guarantees a steady stream of funding for the Land and Water Conservation Fund.

 5. Technology. Advances in lithium batteries could soon make the “million-mile” battery within reach. Advances in hydrogen fuel cell technology, as well, could help us in our quest to decouple the economy from fossil fuel use. 

6. Socially responsible investing hits the big time. 2020 actually began with a letter from Larry Fink, CEO of BlackRock, to his investors. In that letter, he called for a fundamental reshaping of finance, recognizing that climate risk is financial risk. BlackRock is now, in their own words, putting sustainability at the center of their investing. It remains to be seen whether this gesture marks a seachange. But when the world’s largest investment firm makes a commitment to sustainability, others will sit up and take notice.

So, yes. 2020 was a dumpster fire of a year, no question. And yet, there is some positive news on the environmental / economic front. We just need to remind ourselves to look.

The one-two punch of recession-pandemic this year has made vulnerability a more pressing topic globally. While resiliency has been discussed in our previous blog post, how to develop it requires a thorough understanding of where the metaphorical weakest link is. COVID-19 has proven to be an accelerant in many industries both in terms of developing trends and uncovering flaws in our economy. These vulnerabilities become much more apparent when considering the risk to human life imposed to our communities. 

U.S.News & World Report ranked Maine as the most economically vulnerable state to the pandemic. Maine has the highest percentage of citizens over the age of 65 (20.6%) and our economy is the 6^th most dependent on tourism and hospitality. The state is in economic hardship from missing out on the full summer tourist season which has rippling effects across small businesses. While the pandemic may not be a long-term problem for the state, the vulnerabilities it has exposed will be and should be addressed now to develop resilience.

Looking further ahead, Maine has other long-term economic vulnerabilities. The dependency on tourism and hospitality has shown us that having diverse industry representation like manufacturing and skilled professionals is essential for economic resiliency and growth. The global climate crisis will have lasting impacts to the state’s economy and public health. The Gulf of Maine has been found to be warming faster than 99% of the global ocean, disrupting the fishing industry and weather patterns in the area. The threat of sea level rise will dramatically impact coastal communities around the state which represent 34% of its population. The economic impact of these changes means that the once scenic locations are at greater risk of flooding, higher insurance rates, and less attractive for industry. Due to these challenges, Governor Janet Mills has set goals to reduce greenhouse gas emissions by 45% by 2040 and 80% by 2050. 

A new study from Robert Pollin and the Political Economy Research Institute at UMass-Amherst shows how to start the economic recovery in Maine by addressing the climate crisis.  The primary directive is for the state to invest in large scale projects to update the energy structure of the state. Coming from both the supply and demand side with energy efficiency standards and expanding on renewable energy in wind and solar. Given the temperature shifts in the state, energy efficiency is invaluable to buildings in the area so public buildings would undergo deep energy retrofits.

The economic impact of the program would be dramatic, estimating that $2 billion in investment from public and private sources would create nearly 15,000 jobs by 2022;  An investment of this scale would represent 2-2.5% of Maine’s economy each year.  Short term stimulus will boost the current recovery and long-term infrastructure investment will create jobs at scale and with longevity. The long-term annual investment of $500 million from 2021-2030 would create 7,300 jobs per year. These would be good paying working class jobs that would support Maine families. ¹

Transitioning into clean energy will  help shape a new perspective around climate policy with equity in mind. Creating good working-class jobs demonstrates that tackling climate change isn’t an elitist issue and the benefits of doing so far outweigh the costs. Nate Barr of Zootility, tool manufacturer turned mask maker, has a factory right next to the Portland Waterfront, he says “If we don’t tackle climate change, we’ll literally be underwater.” While it may be more expensive to address climate change than ignore it in the short term a greater vulnerability will be exposed in the not so long-term. Climate change will then cripple local economies much like COVID-19 has already. 

Our firm looks to address environmental issues to improve economic conditions. We do this by expanding our perspective to see how vulnerabilities can transition into resiliencies. Maine wasn’t built to handle COVID-19, but it can develop the infrastructure to combat the climate crisis and come back stronger from this pandemic. 

Policy implementation like this will need broad public support to create significant change. Elected officials base decisions on their constituents’ views highlighting the importance of clear public opinion. Look at your elected officials and see their stance on climate change. Write to them and share your views on making the economy more equitable and sustainable to create the shift needed for change. Policy decisions are one of the most effective ways to address climate change and develop a more climate conscious economy. We understand that political views are very personal but the impacts of climate change will be very real. Knowing where elected officials stand before November 3^rd will make you an informed voter and citizen, but most importantly, make sure you vote.

Written by Tom Dolloff, Intern

1. Schreiber, Laurie. “New Study: Maine Can Recover from Economic Crisis by Addressing Climate Change.” Mainebiz, 31 Aug. 2020, www.mainebiz.biz/article/new-study-maine-can-recover-from-economic-crisis-by-addressing-climate-change?utm_source=Newsletter.

We are excited to announce the publication of River Voices: Perspectives on the Presumpscot published by North Country Press. The book includes a chapter by Dr. Rachel Bouvier, “The Economic Value of a Restored Fishery on the Presumpscot River.”

In describing the chapter Dr. Bouvier said, ” I discuss the economic value of restoring a native alewife run to the Presumpscot River, one of the most heavily dammed rivers in the northeast. The chapter discusses traditional economic values such as increased property values and tourism, as well as less well measured – but no less important – values such as community revitalization, quality of life, and civic pride. It is not often that we get a second chance at something, from an ecological perspective. But just last year, one of the dams that has been impeding alewife from returning to the Presumpscot was removed. It heralds a new era for the fish, for the city of Westbrook, and for the environment.”

The publishers website describes the book as “a celebration of a river, a vision of stewardship and caring, with chapter topics ranging from geology to Native American history to fighting for fish passage. Illustrated throughout with original and historical works of art, this book embodies the concept of managing a river through appreciation of all of its attributes and aspects. If you live in this watershed you will appreciate it.  And if you live somewhere else, this is a model for caring for a river.”

For more information or to purchase a copy of the book visit North Country Press.