ECON 340/ENVA 300: Final Exam notes

Here's everything remaining about the end of the semester:

The properly formatted document is on the public folders.

1. Final Exam is in the ARC: Sat., May 10, 8:30 – 10:30am
OR Mon., May 12, 11:00 – 1:00pm

2. There is an in-class part of the final exam, and a take home portion (see opposite side). The take home portion must be presented when you take the in-class exam, and must be submitted to Bb before that time. (50 points total)
3. In-Class final exam: closed book, but do bring a calculator. (50 points total).
4. Office hours: Tues, May 6, 3:30 - 5:00 pm
Wed., May 7, noon - 2pm (Econ Barbecue!!), and then until 3pm.
Thursday, May 8, 1pm - 2:30 pm
Friday, May 9, 10:00 - 11:45 am
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Review questions: The final is all about using specific economic and scientific knowledge you’ve gained in the course (or elsewhere). In particular, your job is to separate sense from nonsense, and explain the difference. I will ask questions about the following:

A lead article for Earth Day in the local Times Union (April 21, 2008, p. C1) states:
By 2069, if greenhouse gas emissions continue at the current rate, New York’s climate will resemble Georgia’s.... Even if New York is successful at reining in its emissions by switching to clean technologies, we can still expect gradual warming that will make the weather here similar to Virginia’s ....

The April 28, 2008 issue of Time is labeled a "Special Environment Issue" and the lead article is "How to Win the War on Global Warming." Here is the key excerpt:
The steady deterioration of the very climate of our very planet is becoming a war of the first order, and by any measure, the U.S. is losing. Indeed, if we're fighting at all—and by most accounts, we're not—we're fighting on the wrong side. The U.S. produces nearly a quarter of the world's greenhouse gases each year and has stubbornly made it clear that it doesn't intend to do a whole lot about it....
The rub is, if the vast majority of people increasingly agree that climate change is a global emergency, there's far less consensus on how to fix it..... Money will get us part of the way there, but what's needed most is will.... No one yet has a comprehensive plan for how we could do so again, but everyone agrees on what the biggest parts of the plan would be. Here's our blueprint for how America can fight—and win—the war on global warming.
First, Price the Sky
The most important part of a blueprint to contain climate change is to put a charge on carbon emissions. As long as the sky is free, renewable energy will never beat fossil fuels. But put a price on carbon, and suddenly the alternatives look a lot better. The most feasible way to do this is through a cap-and-trade system .... The effect is that overall carbon levels fall, and there is even money to be made by being greener than the next guy.
National Geographic has a special issue out titled "Changing Climate." The Table of Contents lists the three major articles: Signs of Change
The Science is In, and
Solutions.
Here’s the description of "Solutions":
From wind farms to solar farms, electric cars to light-emitting diodes, the latest green revolution has already begun, what communities are doing to cut their collective emissions, and why a carbon-neutral world might just be healthier, happier, and more profitable for all.

And, a calculation like this: A new wastewater reclamation plant in Orange County (near Los Angeles) has just been completed. Here are the benefits and costs of running it this year and each of the next four years. Should it be operated?
Benefits: $10 million each year.
Costs: $ 8, 9, 10, 11, and $15 million in year’s 0, 1, 2, 3, and 4, respectively.
Evaluate using a 5% discount rate.
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Final Exam: Take home part
The work presented must be entirely your own, and submitted to Blackboard before you take the in-class final. The hard copy of your responses are due at the in-class final exam. Please omit exam questions in your file, as it complicates checking for the originality of your writing.

There have been heated discussions regarding eliminating much of the existing tax on gasoline for the summer "driving season." Evaluate a proposal to reduce gas taxes by 50 cents per gallon for three months, clearly distinguishing equity and efficiency impacts.
Use the technical economic concepts from the course, using appropriate language and organization. Most good responses will include appropriate graphs. You may consult written material on the current controversy, but it must be fully and appropriately cited.

List the benefits and costs from one class project, in a manner consistent with what we learned about benefits and costs in class. Clearly identify the author and subject matter.
(a) Define strong sustainability.
(b) Identify a project which evaluates impacts through the perspective of strong sustainability. Explain how this strong sustainability relates (or should relate) to the author’s evaluation of their policy alternative.

4. (a) Define weak sustainability.
(b) Identify a project which evaluates impacts through the perspective of weak sustainability. Explain how this weak sustainability relates (or should relate) to the author’s evaluation of their policy alternative.

The Park is closed (1st edition)

Foiled. I just wanted to walk on the Hudson.

Away from the traffic.

But one of my favorite agencies, NYSOPRHP, thinks I shouldn't do this after work. CLOSED

Happily, I found a better place. Or open at least.

And this is supposed to be a developed country we live in.

ECON 340/ENVA 300: Exam 2 Review

Exam 2 Review

The exam will be closed book, but do bring a calculator. There will be lots of emphasis on DOING the various examples we've worked on in class. The exam focuses on material since the first exam: see both the original and revised course outline for specifics.
Here is my outline for the exam:
1. Climate footprint: work through a problem on how a change in behavior changes carbon emissions.
2. Why do environmental problems occur? Use the idea of externalities.
3. Discount a stream of future benefits.
4. Complete a simple benefit cost example.
5. Summarize the basic conclusion of the Stern Review of Climate, "mainstream" conclusions in the economics literature on addressing climate change, and Weitzman's critique of the Stern Review.
6. Outline Lomborg's basic argument and rhetorical approach (McKibben helps understand this) that we should not commit to costly policies to reduce climate impacts, at least at this time.
7. Illustrate the idea of increasing abatement costs on a graph.
8. What does the equimarginal principle mean? Illustrate on a graph.
9. What is the basic idea of an emission standard?
10. What is the basic idea of how pollution taxes work?
11. How does cap and trade work?
12. Which policy is not consistent with the equimarginal principle? Consequence?
13. Show behavior under each of these policies given a numerical example (i.e. given an abatement cost schedule for two firms.)
14. Show consequences: cost-effectiveness/efficiency and equity.
15. What do weak and strong sustainability mean? Implications for climate?

ECON 300/ENVA 340

(from OECD Glossary of Statistical Terms)

Weak Sustainability

All forms of capital are more or less substitutes for one another; no regard has to be given to the composition of the stock of capital. Weak sustainability allows for the depletion or degradation of natural resources, so long as such depletion is offset by increases in the stocks of other forms of capital (for example, by investing royalties from depleting mineral reserves in factories).

Strong Sustainability

All forms of capital must be maintained intact independent of one another. The implicit assumption is that different forms of capital are mainly complementary; that is, all forms are generally necessary for any form to be of value. Produced capital used in harvesting and processing timber, for example, is of no value in the absence of stocks of timber to harvest. Only by maintaining both natural and produced capital stocks intact can non-declining income be assured.


Source Publication:
United Nations, European Commission, International Monetary Fund, Organisation for Economic Co-operation and Development, World Bank, 2005, Handbook of National Accounting: Integrated Environmental and Economic Accounting 2003, Studies in Methods, Series F, No.61, Rev.1, Glossary, United Nations, New York, para. 1.27.

The cost of ethanol

More on ethanol from the Freakonomics blog. Bottom line if you read the Technology Review article: if oil is $100/barrel, your government's mandate to produce ethanol will cost you 42 cents per gallon of ethanol. But if oil prices fall to $40/barrel the cost to you rises to a whopping dollar a gallon.

Why? Well one way to get a handle on this is to ask what corn is grown for in this country. The Technology Review article reports that current ethanol mandates will require that about 45% of all corn acreage go to fuel, not food by 2015. Think about the consquences of that! (Or of already using 22% of corn acreage for ethanol.)

(The underlying study on all of this is by Wallace Tyner, an agricultural economist at Purdue University.)

ECON 300/ENVA 340: Link to McKibben

Here is the link to McKibben's review (and others) of Lomborg's Cool It! For Tuesday, March 11 you should provide an analysis of three specific points made by McKibben, using the relevant sections of Lomborg. (Double the usual credit - 10 points).

ECON 340/ENVA 300: Discounting problems for March 6 (edit - now Thursday)

I know you have a ton of midterms coming up, but we need to get some practice and understanding of discounting. Please complete and hand in the following in class Tuesday:

1. Using r=4%, find the PV of $100 received
a. 5 years from now.
b. 10 years from now.
c. 20 years from now.
d. 50 years from now.
e. 100 years from now.

2. Repeat 1, using r=1%

3. Graph PV of the $100 vs. time using your answers from (1) and then from (2). This should be done either using graph paper, or a graphing program such as that in Excel. You should show two curves: the first shows how PV declines with a discount rate of 4%, and the second how it declines with a discount rate of 1%.

4. The best explanation I can find on the discount rate(s) used in the influential Stern Review is in its set of FAQS . Go to these and:

a. In section 8 what specifically does it say about the rate(s) used to discount future costs of climate change to the present? Read very carefully and be very precise in you answer.

b. Using other sections of the FAQS, what temperature change does the Stern Review use in estimating damages, and how large are the damages it estimates from climate change?