Category: Uncategorized

Economics of Climate Change

Economics of Climate Change

Lake Chilwa, Malawi” by U.S. Geological Survey is marked with CC0 1.0.

During the summer of 2022, I created and taught a course entitled “The Economics of Climate Change.” In honor of the 2022 United Nations Climate Change Conference in Sharm El Sheikh, Egypt, I thought I would share the outline of the course and reading materials. 

We began by a brief overview of the physical causes and consequences of climate change, followed by discussion of several guiding questions:

  • How can economics help us to think about and analyze the causes of climate change?
  • How can economics help us to think about and analyze the consequences of climate change?
  • How can economics help us to think about and analyze the costs of climate change mitigation?
  • How can economic policies help us to reduce climate change? and
  • What are the equity considerations surrounding climate change? 

Our primary readings were a teaching module published by the Global Development and Environment Institute at Tufts University, and the latest version of the IPCC (International Panel on Climate Change) report. The citations and links are below. 

  1. Harris, J., Roach, B., and A-M Codur. 2017. The Economics of Global Climate Change. Medford, MA: Global Development and Environment Institute. https://www.bu.edu/eci/files/2019/06/The_Economics_of_Global_Climate_Change.pdf 
  1. IPCC, 2022. Summary for Policymakers. In: Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change  Cambridge University Press, Cambridge, UK and New York, NY. https://www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_SummaryForPolicymakers.pdf

We also relied heavily on readings from the Economist magazine.  I have included the links below, but they are behind a paywall. Please check to see if your local library subscribes to this publication. 

Readings from The Economist Magazine:

  1. Staff, 2019. “The past, present, and future of climate change,” The Economist. September 21 [updated Jan 17 2020]. London. https://www.economist.com/briefing/2019/09/21/the-past-present-and-future-of-climate-change 
  2. Staff, 2020. “Why tackling global warming is a challenge without precedent,” The Economist. April 23 [updated May 23 2022]. London. https://www.economist.com/schools-brief/2020/04/23/why-tackling-global-warming-is-a-challenge-without-precedent 
  3. Staff, 2020. “Damage from climate change will be widespread and sometimes surprising,” The Economist. May 16 [updated May 23 2022]. London. https://www.economist.com/schools-brief/2020/05/16/damage-from-climate-change-will-be-widespread-and-sometimes-surprising 
  4. Staff, 2020. “How modelling articulates the science of climate change,” The Economist. May 2 [updated May 23 2022]. London. https://www.economist.com/schools-brief/2020/05/02/how-modelling-articulates-the-science-of-climate-change 
  5. Staff, 2020. “The world urgently needs a price on carbon,” The Economist. May 23. London. https://www.economist.com/briefing/2020/05/23/the-world-urgently-needs-to-expand-its-use-of-carbon-prices 
  6. Shumpeter, 2021. “What if firms were forced to pay for frying the planet?” The Economist. October 9. London. https://www.economist.com/business/2021/10/09/what-if-firms-were-forced-to-pay-for-frying-the-planet 
  7. Staff, 2020. “Climate adaptation policies are needed more than ever,” The Economist. May 30. London. https://www.economist.com/schools-brief/2020/05/30/climate-adaptation-policies-are-needed-more-than-ever 
  8. Staff, 2017. “Climate change and inequality,” The Economist. July 13. London. https://www.economist.com/finance-and-economics/2017/07/13/climate-change-and-inequality 
  9. Staff, 2022. “Do men and women think about climate change differently?” The Economist. July 22. London. https://www.economist.com/graphic-detail/2022/07/22/do-men-and-women-think-about-climate-change-differently 
  10. Staff, 2021. “Maine relies on its marine life, but climate change will alter what that means,” The Economist. October 23. London. https://www.economist.com/united-states/2021/10/23/maine-relies-on-its-marine-life-but-climate-change-will-alter-what-that-means 

Other readings came from McKinsey and Company, Resources for the Future, the Brookings Institute, and others:

  1. McKinsey and Company, 2007. “Reducing US greenhouse gas emissions: How much at what cost?” Executive Summary. https://www.mckinsey.com/capabilities/sustainability/our-insights/reducing-us-greenhouse-gas-emissions.
  2. Hafstead, M., 2019. “Carbon Pricing 101,” Resources for the Future, Washington DC. https://www.rff.org/publications/explainers/carbon-pricing-101/.
  3. Hayes, K. and M. Hafstead, 2020. “Carbon Pricing 103: Effects across sectors,” https://www.rff.org/publications/explainers/carbon-pricing-103-effects-across-sectors/
  4. The Hamilton Project and the Stanford Institute for Economic Policy Research, 2019. Ten Facts about the Economics of Climate Change and Climate Policy. Washington, DC: Brookings Institute. https://www.brookings.edu/wp-content/uploads/2019/10/Environmental-Facts_WEB.pdf
  5. Urpelainen, J. and George, E. 2021. “Reforming Global Fossil Fuel Subsidies”, Washington, DC: Brookings Institution. https://www.brookings.edu/research/reforming-global-fossil-fuel-subsidies-how-the-united-states-can-restart-international-cooperation/
  6. Hu, Ellie. 2022. “The Gendered Impacts of Climate Change” [blog post]. Global Development Policy Center: Economics in Context Initiative. Boston, MA. https://www.bu.edu/eci/2022/05/17/the-gendered-impacts-of-climate-change/ 

We also listened to an eight part podcast entitled “To a Lesser Degree,” also from the Economist. The series was a runup to the COP 26 Conference in Glasgow, Scotland. You can find the entire series here: https://www.economist.com/podcasts/2021/09/25/to-a-lesser-degree-a-climate-podcast-from-the-economist. No subscription required. 

Finally, we listened to two episodes of the podcast “Resources Radio,” from the Washington, DC-based think tank Resources for the Future: 

  1. Raimi, Daniel [host]. 2020. “Which Climate Change Path are We On?” [Audio Podcast Episode]. In Resources Radio, Resources for the Future. Feb 25. https://www.resources.org/resources-radio/which-climate-path-are-we-zeke-hausfather/ 
  2. Hayes, Kristin [host]. 2019. “Carbon Dioxide Removal,” [Audio Podcast Episode]. In Resources Radio, Resources for the Future. April 2. https://www.resources.org/resources-radio/resources-radio-carbon-dioxide-removal-greg-nemet-university-wisconsin-madison/ 

Feel free to email me for more information!

Using Another Measure than GDP

Using Another Measure than GDP

“[Gross domestic product] does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our courage, nor our wisdom, nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile…” – Robert Kennedy 

The United States has the largest economy in the world when measured by gross domestic product (GDP).  The World Bank lists the total US GDP at $22.9 trillion, followed by China, $17.7 trillion, and Japan $4.9 trillion. The country’s rank falls to eighth place when we look at GDP per capita.  The US has a GDP per capita of just over $69 thousand which is fairly distant from Luxembourg’s $135 thousand or Ireland’s $99 thousand.1 On the surface these numbers don’t seem all that bad but having a $22.9 trillion dollar economy doesn’t mean that the wealth, and its benefits, are distributed equally or fairly.  

pixabay free images, CC BY-SA 4.0, via Wikimedia Commons 

Life expectancy has dropped two years in row in the United States with a decline of 1.8 years for 2019-2020 and 1.9 years for 2020-2021.2 While much of this is attributed to the Covid-19 pandemic, heart disease, liver disease, and suicide also contributed to the decrease. This decline was not seen in all countries around the world. New Zealand, Taiwan, and Norway all had increases in life expectancy despite the pandemic, and Denmark, Iceland, and North Korea had no change at all during this same time period. 3 With 1 in 10 adults in the US carrying medical debt and many Americans being one injury or illness away from bankruptcy, it comes as no surprise that many people delay needed healthcare out of fear of the cost which likely also contributed to the decline.4 

When we look at other measures of wellbeing the US continues to perform poorly. The US infant mortality rate of 5.9 deaths per 1,000 births is higher than similarly wealthy countries such as France and the UK at 3.8. The US also ranks poorly when measuring income inequality coming in with the 46th highest rate of income inequality out of 162 countries ranked with the Gini index. If you looked at the Gini index more closely, you’d see the US is alongside countries we consider to be a part of the developing world.5  With all of these other indicators pointing towards things not being as rosy as they could be, why is the GDP often seen as the primary measure of a country’s wellbeing?  

The first question we should probably answer is, “What exactly is GDP and what does it measure?” GDP measures the total value of goods and services produced in a particular country over a particular period of time. If a good or service can be bought or sold and those funds can be accounted for, it can be counted as part of GDP. 6 GDP does not count unpaid labor or economic activity that takes place on underground markets.  One example used to demonstrate this is childcare. The time a stay-at-home parent spends caring for their children would not be counted; however if that same parent paid a daycare to care for their child, the funds spent on childcare would be counted. If they paid their teenage neighbor cash to watch their children and those funds are not accounted for in some way, it would also not be counted as part of GDP.  

GDP only measures economic activity without indication as to the source of that activity. For example, if looking at the costs associated with cleaning up a chemical spill at a manufacturing plant, the labor of those working on the cleanup, any equipment purchased, and the money spent on healthcare treatment for those injured by the spill will  be measured as economic activity, without indication as to the cause of that activity. In many cases the costs of such a cleanup may make it appear that there has been an increase in overall economic activity.  GDP would not include intangible losses like soil degradation, loss of wildlife species, or decreased quality of life.  

Back to our initial question, if GDP doesn’t measure wellbeing, why is it so often held up as a measure of it?   

Well, an economist would tell you that it doesn’t measure wellbeing and that it is not meant to but, however those that tally the numbers may intend the figures to be used, this is not how it plays out in the real world. News reporters and politicians will still use GDP as a measure because it is available and most people have at least a vague idea that it measures economic activity.  In addition, numbers that are continually increasing are easy to point to as a measure of things doing well. Finally, there is an assumption that the wealthier a country is the more funds the country has available to spend on things like healthcare, childcare, food, housing, and other things that contribute to the general well-being of the people in a society. But, if we look at the measures above, that is not how these funds are actually used. 

If GDP is not a reliable measure of wellbeing, is there a different measure that would give people a better understanding of just how well a country is doing in taking care of the people who live in it? 

Two well known, and actually used, measures are the Human Development Index (HDI) developed by the United Nations, and the Social Progress Index (SPI), created by the Social Progress Initiative and based on the work of Amartya Sen, Douglass North, and Joseph Stiglitz.7, 8   

The HDI uses human longevity (life expectancy), education, and income (using the GINI index), to measure the well-being of a country.  Using this measure the United States ranked 21st out of 191 countries in 2021.  

The SPI incorporates a total of 53 social and environmental indicators. It is unique in that it uses only non-economic measures to assess wellbeing.  In 2016 the European Union published the first EU Social Progress Index ranking all member countries of the EU, and the Social Progress Initiative published their most recent global rankings in 2021. The measures used include things such as nutrition and basic medical care, water and sanitation access, health and wellness, access to opportunity, human rights, access to education, and other measures.  The United States SPI rank is 24th out of 78 countries assessed in 2021.  

Both HDI and SPI have their criticisms, the primary one being that some of the measures are seen as too subjective, but when looking at what GDP excludes, which is basically everything outside of economic activity, they both provide a better picture of human wellbeing than GDP alone.  

GDP has its place if we are solely looking at economic activity, but we can no longer continue to assume that a country’s high level of overall wealth translates into a higher level of wellbeing for its citizens. If that economic prosperity is not used to increase the health and wellbeing of a population other measures must be used to give a more accurate picture of a nation’s ability and willingness to care for and uplift the people who live in it.  

Post by Joie Grandbois

Addendum to this post by Rachel Lyn Rumson:

In a recent Resources Radio podcast with Margaret Walls called Integrating Nature into US Economic Statistics, with Eli Fenichel (Margaret Walls, Oct, 2022, #206). The show’s guest Eli Fenichel is the Assistant Director for Natural Resource Economics and Accounting in the Office of Science and Technology Policy. He explained that earlier this year the Biden-Harris Administration started a natural capital accounting system that can be folded into the national income and product accounts in the future. We found it refreshing to hear the guest on this podcast say that GDP is problematic on two counts. First, “it does not measure wellbeing” and second, “nature is missing entirely”. Why this is a good step, Fenichel says, is that “now, as we think about making new investments in infrastructure and in nature-based solutions to combat climate change, if we invest in nature, we want it to show up somewhere. Otherwise, it looks like we’re just spending our money, and we’re not.” This new accounting will be annual rather than quarterly and it will roll out in phases over 15 years, the assistant director reported. 


[1] https://data.worldbank.org

[2] https://www.cdc.gov/nchs/pressroom/nchs_press_releases/2022/20220831.htm

[3] https://jamanetwork.com/journals/jama/fullarticle/2788128

[4] https://www.minnpost.com/health/2022/08/the-stories-faces-behind-the-100-million-americans-touched-by-medical-debt/

[5] https://www.indexmundi.com/facts/indicators/SI.POV.GINI/rankings

[6] https://www.imf.org/external/pubs/ft/fandd/basics/gdp.htm

[7] https://hdr.undp.org/data-center/human-development-index#/indicies/HDI

[8] https://www.socialprogress.org/index/global

Second Quarter 2022 Journal Round Up!

Second Quarter 2022 Journal Round Up!

  1. Hynes, et al. 2022. “Estimating the costs and benefits of protecting a coastal amenity from climate change-related hazards: Nature based solutions via oyster reef restoration versus grey infrastructure.” Ecological Economics, vol 194.
Oyster reefs” by USFWS Headquarters is licensed under CC BY 2.0.

While ecologists have known that nature-based solutions to problems like flooding and pollution control are in many cases less expensive and more efficient than human-made solutions, economists have been rather late to the party. A case in point is discovering that so-called “green infrastructure,” like restored wetlands or oyster reefs, can be better in many ways than “gray infrastructure,” or manufactured barriers to wave action. 

This article investigates the recreational value associated with restoring an oyster reef bar that would act as a natural breakwater versus a permanent seawall on a coastal walking trail that is under threat from sea level rise and storm surge. The authors estimated the costs of protecting the walking trail under both scenarios, and found that the benefit-cost ratio of restoring the oyster reef was several times higher than the benefit-cost ratio of the manmade seawall. Moreover, the analysis does not include the positive ecosystem services that the oyster reef could provide above and beyond providing a natural breakwater, such as pollution control or carbon sequestration. 


2. Huang, Yui and Woodward, R. 2022. “Spillover Effects of Grocery Bag Legislation: Evidence of Bag Bans and Bag Fees.” Environmental and Resource Economics (81:711–741) 

This article investigates the unintended consequences of carryout grocery bag regulations by looking at the impact on sales of alternative plastic bags. The unfortunate conclusion of the article is that both the carry out bag ban and the carry out bag fee that they examined led to a significant increase in small plastic trash bag consumption. Whereas previous studies had looked at whether fees on single use plastic bags in grocery stores directly reduced the usage of those bags or increased recycled bag usage, this is one of the first studies to look at the indirect effects of such policies. Their hypothesis is that consumers reuse plastic grocery bags as trash can liners. When those bags either became more expensive or less available, consumers switched to purchasing small trash bags. This article highlights the importance of considering unintended consequences of well-meaning regulations.

Changes to the Census: What it Means to Researchers and Policy Makers

Changes to the Census: What it Means to Researchers and Policy Makers

At rbouvier consulting, we understand how vital Census data is at all levels of society. Not only is decennial Census data used to appropriate seats in the US House of Representatives, state governments, and allocate billions of dollars in federal funding, it’s also vital data used in research across the country that supports both public and private decision making.  

Which is why we’re concerned about changes to the 2022 Census and what it might mean for researchers and policy makers alike.

Challenges of the 2020 Census  

The 2020 Decennial Census was set to face unprecedented challenges even before the COVID-19 pandemic hit. In 2019, Kenneth Prewitt, a Carnegie Professor of Public Affairs and the Special Advisor to the President at Columbia University, spoke out about the 2020 Census and the issues it was expected to face. He addressed the major challenges the decennial census has faced throughout history and the nuanced challenges of the 2020 decennial census.

Since its inception, the census has consistently faced two major challenges: operational issues and partisan interference. Budget constraints and public distrust in the period prior to the COVID-19 pandemic added to those difficulties for the 2020 census. 

The US Census Bureau’s advertising budget for the 2000 and 2010 Censuses was dramatically boosted as a result of the concerningly high and rising non-response rates in the 1990 Census. Due to the success of the Bureau’s advertising activities and the country’s population growth, another budget rise for the 2020 Census was anticipated. Congress, however, decided against approving a budget increase for the 2020 Census. The Census Bureau did manage to offset at least part of its budget constraints by allowing able households to fill out the Census online. It also used administrative records to fill in gaps when respondents choose not to answer certain questions, helping to avoid costly in-person follow-ups to these respondents’ homes. The use of administrative records, however, posed another operational issue to the Bureau: public distrust and privacy concerns, which were more difficult to manage. 

Unsurprisingly, the outset of the pandemic brought about additional operational issues as concerns over health and safety halted all in-person operations. When in-person field operations did resume, the country was experiencing multiple hurricanes and deadly wildfires, and the Census Bureau struggled to find in-field staff due to public health concerns. Additionally, the country saw a mass number of people that were forced to relocate due to both the pandemic and multiple natural disasters, impacting the public’s ability to participate in the Census and the Bureau’s ability to reach certain households. There were a number of actions the Bureau took to mitigate these challenges, such as encouraging online responses and extending in-field operations by two months.2 

Partisan interference is a long-standing tradition of the Census, and the 2020 Census was no exception. Interference in the 2020 Census came in the form of a directive from the Trump Administration to add a citizenship question to the 2020 Census form. The Administration claimed that the directive would assist the US Department of Justice in applying the Voting Rights Act. The directive went against the recommendation of the Census Bureau and sparked a fierce debate. The Bureau held that the question would both increase costs and result in a significant increase in non-response rates about immigrants and non-citizen households. It was expected that, if this question were to be added to the 2020 Census form, major cities with large immigrant populations could lose up to billions in federal funding. Many also feared the addition of a citizenship question would have significant implications for both disaster relief funding and disaster planning. Without an accurate count of the population, planners and emergency responders would struggle with both identifying vulnerable populations and effectively allocating resources. The Trump Administration did ultimately drop its efforts to add a citizenship question due to legal challenges, however, it is possible that the Administration’s efforts had lasting effects on the public’s view of the Census. The heated political debate both increased public concerns about the use of the Census as a government surveillance tool, as well as throwing the topic of the Census into a fiercely politically polarized debate. 

Quality of the 2020 Census 

In March of 2022, the Census Bureau released the results of its analyses of the quality of the 2020 Census. The Census conducts two analyses, a Post-Enumeration Survey (PES) and a Demographic Analysis (DA). Both of these analyses estimate the accuracy with which the Census has counted the nation’s population and population groups. The PES uses a sample survey to estimate the population size while the DA uses vital records and other types of data.  

Nationally, only 0.24% of the entire population was missed in 2020. Some states, however, experienced higher miscounts than others. The map below shows which states had undercounts and overcounts. Six states had undercounts, including Arkansas, Florida, Illinois, Mississippi, Tennessee, and Texas. Arkansas and Tennessee had approximately 5% of their populations missed, about 1 in 20 residents, and undercounts in Florida and Texas cost the state’s congressional seats.3 States that were overcounted include Delaware, Hawaii, Massachusetts, Minnesota, New York, Ohio, Rhode Island, and Utah. Overcounts in Minnesota and Rhode Island have appeared to have gained the states congressional representatives. 

Diagram

Description automatically generated

Certain demographic groups were also undercounted and overcounted. By race or Hispanic origin, the Census undercounted those who self-reported as Black, Hispanic or Latino, American Indian or Alaska Native, and “some other race” American Indians or Alaska Natives living on reservations were undercounted at the highest rate. Racial groups that were overcounted include those that reported as non-Hispanic white alone and Asian. When compared with the 2010 Census, groups that were undercounted or overcounted at statistically significant rates include non-Hispanic white alone, black, Asian, some other race, and Hispanic or Latino. 

Source: United States Census Bureau4

By age and sex, those 50 years and over were overcounted. Children aged 0 to 4, both males and females aged 18 to 29, and males 30 to 49 were undercounted. 

Source: United States Census Bureau5

Additionally, homeowners were overcounted in the 2020 Census by 0.42%, while renters were undercounted by 1.5%.

Many researchers, including us at rbouvier consulting, rely on Census data for accurate information regarding the sociodemographic characteristics of the region we study. While any undertaking as large as the Census is bound to have its issues (and the Census has attempted to rectify some of its prior errors), it is unsettling to see traditionally underrepresented groups continue to be underrepresented. This concern is compounded when we consider “differential privacy,” a practice by which the Census Bureau attempts to preserve the anonymity of residents from small geographic areas, a topic of one of our upcoming blog posts. The decennial Census is one of the best and most reliable sources of sociodemographic statistics we have. Nonetheless, it is worth “ground truthing” it with local results wherever possible.

References

1Prewitt, K. (2019). The 2020 Census: Unprecedented Challenges & Their Implications. American Academy of Arts & Sciences. https://www.amacad.org/news/2020-census-challenges-implications, retrieved on May 19, 2022.

2Jennifer Reichert & Dale Kelly. (2021, March 1). Adapting Field Operations to Meet Unprecedented Challenges. United States Census Bureau. https://www.census.gov/newsroom/blogs/random-samplings/2021/03/unprecedented-challenges.htmll

3Mike Schneider & Associated Press. (2022, May 19). In 2 states, 1 in 20 residents were missed during U.S. Census. PBS News Hour. https://www.pbs.org/newshour/politics/in-2-states-1-in-20-residents-were-missed-during-u-s-census

4,5 United States Census Bureau. (2022, March 10). Census Bureau Releases Estimates of Undercount and Overcount in the 2020 Census [Government]. Census.Gov. https://www.census.gov/newsroom/press-releases/2022/2020-census-estimates-of-undercount-and-overcount.html#:~:text=The%20PES%20found%20that%20the,not%20statistically%20different%20from%20zero

Blog post by – Averi Varney

Rising seas, rising problems: Using locally relevant data to prepare solutions.

Rising seas, rising problems: Using locally relevant data to prepare solutions.

What is a Nor’Easter?

In January of this year, coastal communities on the East Coast were hit with a Nor’easter that set record snow falls in Boston. The storm brought more than just snow, with severe winds, power outages, and flooding. Nor’easters are a type of storm caused by low pressure moving along the coast. Pressures from a storm moving along the coast cause strong winds to push water toward the shore. Some coastal areas in the state were completely underwater around high tide from the storm surge flooding. Waves toppled over seawalls, flooding streets. The island of Nantucket saw the worst of it. There were even reports of young men using a canoe to travel through the flood streets of Nantucket. Storm surge from the nor’easter also caused significant erosion to the beaches along the coast. Local papers in Boston have reported on stories of storm surge erosion cases on Cape Cod where houses fall into the sea. One house in Truro, MA lost twenty 20 feet of Earth underneath it. It was standing on pilons for months as surge after surge eroded the remaining due, as local planning officials tried to decided how to move the historic building. It was moved at the time of this writing.

The Issue 

While nor’easters are an event that New England has long been familiar with, climate change has already begun to exacerbate the severity and frequency of these storm events, along with their consequences. Storm events, extreme high tides, and rising seas intensify flooding and put vulnerable communities at risk. The number of coastal flood days in Massachusetts, shown in the graphic below, increased drastically in the last two decades.

Findings from 2016 from at Climate Central study covered by the New York Times, via https://riskfinder.climatecentral.org/state/massachusetts.us?.

Solutions & Our Contributions 

It is becoming increasingly clear how important it is for communities to prepare for a changing climate. As the implications of climate change come to a head, effects will be felt disproportionately across populations, communities, regions, and industries. It’s vital that we assess the areas in which we are vulnerable and are resilient. 

rbouvier consulting recently partnered with the Southern Maine Planning and Development Commission (SMPDC) to assist in their economic resilience planning project for coastal York County, where we were tasked with conducting a socio-economic impact assessment of sea-level rise and storm surge to six coastal communities in southern Maine. 

Geospatial experts from GEI Consultants were also partnered on the project. With capabilities of today’s geospatial technology, GEI Consultants were able to provide us with the physical vulnerabilities of the project area at different sea-level rise and storm surge scenarios. They combined data on businesses, roads, and other important infrastructure with floodplains to produce geospatial layers and other data products that show what of the infrastructure in the area will be impacted at 1.6 and 3.0 feet of sea-level rise.This information allowed us here at rbouvier consulting to determine what culturally and economically significant infrastructure is at risk of flooding or impaired access, such as economic service areas or beaches that draw tourists into Maine. 

Using business-level data on sales revenue and employees, along with data on local demographic and economic conditions, rbouvier consulting was able to assess how sea-level rise will affect output and employment in the area. We determined what industries in the area are most at risk based on the businesses that are within floodplains, and related the risks posed to those industries to the health of the local and regional economies. Conducting a socio-economic impact assessment of sea-level rise tailored to the local conditions of the communities in the project area allowed us to pinpoint areas of economic vulnerability and resilience, and subsequently determine a number of adaptation and mitigation strategies we feel best prepares these communities for a changing climate. 

If you’re interested in talking to rbouvier consulting about climate change solutions and the types of services we offer, please send us an email.

Blog Post by Averi Varney.

The things we value

The things we value

Graywalls, CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0, via Wikimedia Commons

As an environmental economics firm, we are often called upon to assign a dollar value to something that doesn’t normally have a price tag assigned to it. This is often a confusing, and sometimes contradictory, idea to many people.  In the United States we live in a culture that tends to equate something’s value in terms of how much it can be sold for. It’s easy enough to say that the value of a forest is in the number of board feet of lumber that would be produced out of it, but that wouldn’t give you the value of the forest’s beauty, or the watershed protection benefits, or the clean air it provides.

To assign a value to these things we might look at the mental and physical health benefits of spending time in a beautiful place; increased mental and physical health can result in decreases in medical costs. A forest’s watershed protection can be measured in the cost savings of reduced levels of water filtration needed for drinking water, and clean air benefits can be seen in reduced rates of lung disease and the associated costs of treating it. And those dollar values can be presented to city councils, congress, or whomever else you might need to convince that protecting forest land has value beyond just the timber in its trees.

While this may be great for trying to persuade your local city council that a patch of forest is worth protecting, it rapidly proves inadequate when looking at the personal, more human value.

How do you put a dollar value on being able to look back on the memory of walking through the woods with your children and being witness to their joyful explorations of the natural world? How do we quantify the opportunities for human connection provided by parks, forests, and other open, and thus safer, spaces during a pandemic? How do we quantify the loss when the spaces in which we created memories, found peace, or took refuge are gone?

A poet might say we measure these things by the space they take up in our hearts or the hole they leave behind when they are gone. But then we aren’t really known for valuing the words of the poets either.

What if we expand beyond forests? How do we put a value on the feeling that comes with having a safe, warm place to live?  Or not having to choose between one’s health and the expense of a medical bill? What is the value of the absence of hunger?

Many of us don’t ever think to put a value on those things because we’ve always been safely housed, had access to medical care, and have never experienced food scarcity. These things have no value to us until we find ourselves without them.

Is the value of a safe place to live measured in the number of nights you go to sleep without worrying where you might sleep tomorrow? Can access to medical care be measured in the years of memories you are able to make, and the stories you can pass on because you lived instead of dying too early?  Is the absence of hunger quantified by the thoughts you are able to think when your brain is not busy figuring out where the next meal comes from, or how to feed your children?

The pandemic has made many of us realize the value of the things we couldn’t put a price on until they were made absent in our lives. Gathering with friends and family, being able to spontaneously hug another person, the enjoyment of previously innocuous activities like sharing a meal together, and a general feeling of being safe in the world. And for a whole lot of people, it was the first time that they experienced the thought that there might not be a tomorrow.  They were only able to assess and quantify things like human connections and what it means to feel safe by their sudden absence.

There is one more step in assigning a value to something, and that is using that value to communicate the need for action. Just as we might use the value of watershed protection to communicate the need for the protection of forests, we can use our new understanding of the value of safety, connection, and hope to advocate for others.  We can remind ourselves that while this feeling was new to us, there are many people who live entire lifetimes where the possibility of tomorrow is not a given.

The value of human experience isn’t measured in a dollar amount but in what we choose to do with it. Let’s make 2022 the year we take what we have learned and use it to make sure that tomorrow is something we all have the opportunity to look forward to.

Quarterly Journal Review

Quarterly Journal Review

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. 

  1. 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. 

  1. 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.   

  1. 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. 

  1. 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.

  1. 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

2020 sucked…but there’s good news

2020 sucked…but there’s good news

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.

Green Economic Recovery

Green Economic Recovery

Michael Surran, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia Commons

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 6th 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 3rd 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.
River Voices

River Voices

A flier that includes information on the publication of the book River Voices published by North Country Press.

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.