Category: energy

Rachel’s Journal Roundup Q3 2022

Rachel’s Journal Roundup Q3 2022

  1. Theine,H.; Humer, S.; Moser, M.; Schnetzer, M. 2022. “Emissions inequality: Disparities in income, expenditure, and the carbon footprint in Austria,” Ecological Economics (197).

Recently, we completed a project for the Blue Hill Heritage Trust, where we estimated the economic, social, and environmental carrying capacity of the peninsula. One of the issues we considered was the environmental impact of those moving to the area. Like many areas in Maine, the Blue Hill region is seeing an influx of wealthier individuals to the area, primarily due to the rise of remote work. One question that was brought up for us is how households’ environmental impact changed with higher income levels. This article investigates the carbon content of households’ expenditure patterns. They find that the top decile of the income distribution in Austria receives 22% of national income, spends 18% of national expenditure, and causes 17% of emissions. The bottom decile, by contrast, accounts for just 3% of national income, 4% of expenditure, and 4% of emissions. While the article focuses on Austria, results are suggestive for the United States, where income inequality is much larger than it is in Austria. 

While differences in income may explain some of the differences in emissions, they only explain about one third of the difference, implying that the remaining two-thirds of the variation in emissions is attributed to other factors. Not surprisingly, results show that characteristics such as housing stock, heating fuel, and car dependence all contribute to the variation in household carbon emissions. 

These results are not surprising. However, they do bring up a question about the environmental footprint of households moving to Maine (and other places). If, as evidence seems to indicate, higher income people are moving to Maine, it may presage an increase in carbon emissions, based upon these results.  However, the potential good news is that two-thirds of the variation in emissions was due to other factors. If newcomers to Maine reduce their dependence on fossil fuels either by weatherizing or upgrading existing housing stock, they may be able to mitigate some of the increase in emissions coming from increased consumption. If public transportation can be improved in areas that are attracting in-migrants, so much the better. It is possible that an influx of in-migrants will increase carbon emissions. But it is not inevitable.

  1. Kovacs, K.; West, G.; Nowak, D.; Haight, R. 2022. “Tree cover and property values in the United States: A national meta-analysis.,” Ecological Economics (197).
Tree canopy” by Jim Stanton is licensed under CC BY 2.0.

This article explores the relationship between tree coverage and property values. The authors refer to tree coverage as a public good because increased tree coverage in a given area of a neighborhood has been shown to increase value of the homes throughout the entire neighborhood. A representation of this relationship would help municipalities quantify the benefits of community forestry programs. 

The hedonic property value method is a statistical technique that can be used to assess the value of ecosystem services to property. However, these studies are expensive and time-consuming, and oftentimes, local governments are unable to access the resources needed to carry out these analyses. The authors used hedonic property studies conducted in the past to create a benefit transfer tool (whereby multiple hedonic analyses are combined in a meta-analysis) that can be used to measure the value of tree coverage in communities that have not yet conducted hedonic property value analyses. 

Results indicate that where existing tree cover is low, increasing on-property tree density increases property values, while increases in off-property tree cover has no statistically significant effect. In contrast, where tree cover is medium to high,, off -property tree cover has a greater positive effect on property valves than on-property tree cover. This perhaps reflects the belief that high density tree cover on the property is seen as increasing maintenance costs. 

Although the study finds relatively low property value effects, increases in property values are only a small part of the benefits of increased tree cover. The ecosystem services provided by tree cover include air filtration, soil stabilization, flood control, recreation, and habitat provision, as well as aesthetic value. The authors conclude by noting that hedonic property studies can also be used to support open space zoning and green space ordinances.

  1. Mueller, J. 2022. “Natural Resource Dependence and Rural American Economic Prosperity From 2000 to 2015,” Economic Development Quarterly 36(3):160–176. 

This article investigates the role that natural resources play in the economic development of US counties. There are two types of natural resource development: extractive natural resource use, such as oil and gas, mining, and timber, and non-extractive, such as tourism, recreation, and real estate. The author points out that dependence on natural resource development has been shown to be associated with decreases in per capita income, increases in inequality, and elevated poverty in the long term (the so-called “resource curse”). Yet not as much attention has been paid in the literature to the dependence on non-extractive natural resource development. This study aims to correct that, by studying both forms of resource development on economic outcomes in rural counties across the United States. The author makes a distinction between remote rural counties and metro-adjacent rural counties. 

The author finds that the relationship between natural resource development and economic prosperity varies between non-metropolitan remote and nonmetropolitan metro-adjacent counties. Generally speaking, high levels of dependence on either extractive or non-extractive resource development was associated with negative economic outcomes for both remote and metro-adjacent rural counties. However, these relationships were complex. Non-extractive resource development in particular has been promoted in some strands of the literature to have a positive effect on economic outcomes in rural areas. But this work casts doubt on that hypothesis, indicating that non-extractive resource development may actually have a negative effect on the economic outcomes of remote rural counties, perhaps due to the low wages in many of those industries. More work needs to be done in this area.

Wind power is back!

Wind power is back!

Photo: US Department of Energy

This past week, newly elected governor Janet Mills ended former governor Paul LePage’s ban on wind farms in certain areas of the state

As an environmental economist, I am in favor of increased wind power in the state.  Renewable energy sources, such as wind, solar, and in certain circumstances, hydropower, will help with our  much needed transition away from fossil-fuel based energy..  Furthermore, wind power provides well-paying jobs in construction in primarily rural areas of the state, as well as property taxes, the potential for income for rural landowners, and other tangible benefits to host communities. 

However, concerns about large-scale wind farm development include potential negative impacts on nearby residents, tourism, and wildlife.  Questions include:

  • Do wind farms enhance or detract from tourism? Answer: it depends on the context.  Some studies have found that proposed wind farms affect potential demand for tourism, but those studies are hypothetical, not actual. A recent study in Scotland found that there was no correlation between existing windfarms and tourism-related employment.    Other case studies have shown that wind farms can actually be a boon to tourism, if local tourism agencies market them as a tourist attraction .   More work needs to be done on looking at the effect of actual, operating wind farms on tourism in different contexts.  In any case, the concern about conflicts between wind farms and tourism can be mitigated by proper planning and siting.
  • Do wind farms have a significant impact on migratory birds?  The answer here depends on what you consider significant, and again, it depends on the context.  Wind turbines located in migratory corridors have been linked to avian mortality, and those deaths are increasing as wind power generation itself increases.   Still, some studies suggest that wind-power related avian deaths are less than those associated with other forms of energy, and much less than those associated with the average housecat.  However, that does not mean we should brush those concerns away lightly. New technologies in turbine and blade design, as well as proper modeling and siting procedures – as well as simply shutting down generation during peak migration – should mitigate this concern.
  • Do wind farms increase or decrease property values or property taxes? Evidence shows that large-scale wind development in residential areas does have a negative impact on homes in direct proximity (much like any other energy-related infrastructure), and that this effect declines as distance to the wind farm increase.  However, properties in rural areas that are host to a turbine can see an increase, as the potential for income from the land is realized https://www.cfra.org/news/180719/are-property-values-affected-wind-farms.  There also is evidence that the added property tax revenue from a wind farm can reduce a town’s overall mil rate.  Again, these concerns can be mitigated by proper planning and siting.        

In other words, evidence abounds on both sides of the debate, and is context-specific. We do need to be cautious about where these facilities are located, from an environmental and aesthetic context. But in the words of Governor Mills: “It is time for Maine to send a positive signal to renewable energy investors and innovators.”

Note:  This blog post is based on a  “Maine Voices” column written by Dr. Bouvier and published in February of 2018 \lsdpri

Keeping the Lights On Doesn’t Mean More Pollution

Keeping the Lights On Doesn’t Mean More Pollution

Photo – Creative Commons/Flickr Amy the Nurse

In August of 2017, Energy Secretary and former governor Rick Perry proposed to strengthen subsidies to coal- and nuclear-fueled electricity plants.  Why?  According to his proposal, coal and nuclear power plants are indispensable to our national security by virtue of the fact that they can store energy on-site. And, since the past few years have seen declines in both coal and nuclear facilities in the United States, the concern is that the nation’s electricity grid will be less reliable in the future. The proposal would have guaranteed cost recovery and a fair rate of return for generators that can store at least 90 days’ worth of energy on site.  Fortunately, the Federal Regulatory Commission rejected it.  Even so, it’s still worth looking at the pros and cons of such a proposal.

More power outages and more disruptions would, of course, harm our energy-intensive economy. As the recent spate of hurricanes (including high winds in my home state of Maine) have shown, such energy disruptions can be costly. In fact, 2017 was the costliest year in terms of economic damages from natural disasters in the US.

Would subsidizing coal and nuclear facilities really have been the best solution? To answer that, we need to take a deeper look.  When I teach cost-benefit analysis, I encourage my students to consider the baseline – what would have happened in the absence of the policy or proposal in question. The number of coal and nuclear plants in this country has been declining for decades. The decline can be attributed to several factors, including environmental regulations, but mainly the declines are due to market forces (low electricity prices, declining electricity demand, and new supplies from natural gas) and aging infrastructure. Without taking a close look at the finances of the plants in question, we can assume that at least some of these plants would have been likely to follow.  Increasing subsidies to already struggling nuclear and coal plants would likely have been just another case of throwing good money after bad.

When considering the costs and benefits of the proposed plan, there would have been several different categories, each accruing to different groups.  The beneficiaries of the plan would likely have been owners and shareholders of the qualifying coal and nuclear plants.  Their consumers, as well, may have benefited from a lower average wholesale price of electricity; however, the proposal recommended adding a surcharge to consumers’ bills in order to cover the costs. According to the analysis done by Resources for the Future, the drop in the wholesale price of electricity would not have been enough to cover the surcharge.

Moreover, practitioners of cost-benefit analysis need to carefully consider all the costs and benefits of a proposal, not just those that are easily monetized.  A complete analysis of the costs and benefits of Secretary Perry’s proposal should include the damages caused by pollution from coal and nuclear-powered plants to humans and agriculture. (While the generation of electricity from nuclear plants does not create air pollution, the mining for uranium does create environmental destruction.) Such external costs are in reality a passive subsidy that coal and nuclear plants have enjoyed for decades. An additional subsidy would exacerbate the problem. According to the analysis done by Resources for the Future, the proposed plan would have immediately increased sulfur dioxide and nitrogen oxide, two pollutants generated by the combustion of fossil fuel.  This increase in emissions is linked to an increase in premature deaths caused by respiratory diseases such as chronic bronchitis and emphysema. Once environmental costs are factored in, net benefits to society would have been decidedly negative.

The next question is: would the subsidies have alleviated the problem of grid instability? The answer to this question actually lies in the question itself.  Is there really a problem of power disruption caused by declining coal and nuclear plants? Some recent research by the Rhodium Group says no.  Researchers examined the data collected by the Department of Energy whenever an electricity generator experiences an outage or a disturbance.  Results indicate that disruptions in fuel supply were responsible for less than 1 one hundredth of one percent of lost customer service hours between 2012 and 2016.  The remainder were caused by disruptions to energy distribution  Primarily, those disruptions were caused by severe weather, not by supply disruptions.  The FERC ultimately agreed when it rejected Secretary Perry’s proposal.

However, the FERC did agree that the reliability of the grid was an issue looking into.  If the goal of Secretary Perry’s proposal was to increase the reliability of the grid – not just to prop up nuclear and coal – there are several less costly and ultimately beneficial ways of doing so.  One such possibility is to replace our nation’s aging energy-related infrastructure, much of which dates to the 1950s and 60s. Energy infrastructure actually received a “D+” on the 2017 report by the American Society of Civil Engineers. Upgrading the energy infrastructure would come with many ancillary benefits.

A second alternative would be to invest in distributed energy and microgrids.  Distributed energy is the use of small, decentralized power generation and storage systems. While larger utilities consider the rise of distributed energy to be a threat to the existing system, the greater use of distributed energy could actually increase the resilience of our current, outdated system.  However, doing so will require innovations in monitoring, modeling, “smart switches,” and other technologies to manage peak demand and integration.

A third possibility is to invest in better long-term energy storage. Lithium ion batteries may be our best choice for now, but other storage technologies, such as flow batteries or zinc air batteries.  But by far the best alternative – one that should be a crucial part of any solution – is energy conservation.  A unit of energy conserved is one that doesn’t need to be generated.  You don’t get much more reliable than that.