Economy

I sent the questionnaire to an email list provided by the client* and received this email:

Started answering but too long. 

I replied:

Thanks for letting me know.

I sent the email on Monday and the current response rate is 36%. The completion rate is 95% so maybe up to 5% of the respondents think the questionnaire is too long.

Here is the distribution of minutes taken to complete the survey:

The median is 8 minutes and the mean is 10. Six respondents took more than 20 minutes to complete it and one took over an hour (i.e., got started, had dinner, and then finished).

The price is 25% of the hardback here.

Some people will get very excited by the title of this post (before the parenthetical) but don’t for one minute think this adaptive behavior isn’t costly (Heating Waters Force Change in Industries That Depend on the Ocean):

In Maine, lobsters are heading north and some lobstermen are moving into kelp farming. …

Marine heatwaves are expected to become stronger and more frequent, according to a consensus of oceanographers and climate scientists.

One of the fastest-warming waters is the Gulf of Maine, forcing lobstermen to change tactics to save their businesses.

Summer surface temperatures between July and September in the gulf have risen four times the global ocean average since 1982. The entire region is warming more rapidly than 97% of the ocean’s surface because of overall climate warming and a shift in local currents, according to the Gulf of Maine Research Institute.

The warming is making life more unpredictable for the $388 million lobster fishing industry in Maine. The U.S. lobster catch has moved 162 miles northward and nearly 70 feet deeper over the past 50 years, according to the National Marine Fisheries Service, as the crustaceans seek refuge in colder water. The Maine lobster catch has fallen 26% since a record catch of 132 million pounds in 2016.

Some harvesters in the state are looking for new species, such as black sea bass, tuna or crabs.

Steve Train, a third-generation lobsterman in Casco Bay, Maine, has become a farmer. He started growing kelp–something still plentiful in the area–offshore of his property to earn money during spring months when lobstering is traditionally slow.

Train says kelp is no substitute for lobsters, still the most lucrative single-species commercial fishery in U.S. waters. But it can help as Maine’s coastal environment changes.

“The people who survive are going to have to be diversified so they can take the cream out of a few different fisheries and have a paycheck year round,” Train said as he pulled up a string of lobster traps onto his 32-foot boat Marcia, a few miles from the Portland wharf where he sells his catch. …

In Casco Bay, Steve Train has watched Maine’s lobster population shift north, driven by changes in bottom water temperatures and the supply of the tiny animals that are the main food of baby lobsters.

Over time, Train has been moving his traps to deeper water and said he has noticed a faster temperature increase in the past five years. “I started setting gear in June where I thought the lobsters would be in August or September,” he said. “Everything the lobsters do is by water temperature.”

Train and other lobster fishermen own licenses that are tied to specific fishing grounds. So there are limits on how far north or offshore they can set their traps.

Train, 56, says his kelp-farming venture isn’t as easy as he initially thought. “Between the moorings, the storms, the tide, and the stretch of the line, there’s a lot of maintenance,” Train said. “But now I have another month or two filled in for cash flow.”

He said he is figuring out the best direction to suspend ropes in the water that are embedded with kelp seeds to avoid tidal currents that could damage his harvest. The seeded ropes mature into an underwater forest. He expects to be profitable this year, while expanding from 4 acres to 10 acres.

Each spring, Train collects wide fronds of brownish-yellow kelp and sells them to Atlantic Sea Farms, a Biddeford, Maine-based company that processes seaweed into kelp burgers, smoothie cubes, and pet-food additives. It has signed up 30 lobster fishermen across Maine since it launched in 2018, and another 19 are in line for a state license, according to CEO Briana Warner.

“We’re building an entirely new market,” said Warner, who sold 30,000 pounds of kelp products last year to grocery and restaurant chains.

Train said lobstermen he has known for decades are beginning to consider a future that will reward adaptability as waters continue to warm. “Even the people that are in denial are a little concerned,” he said.

So, the lesson from this case study is that, yes, people will adapt to climate change but the net benefits of their new behavior is lower with the climate constraint than business as usual pre-climate change. Economists who promote adaptation as a magical fix are doing a disservice. 

*****

And, inexplicably, in the middle of the article someone at the WSJ decided to question whether climate change is happening:

There are other possible explanations in addition to climate change and the El Niño/La Niña cycle. New pollution rules have cut airborne sulfur aerosol particles released by commercial ships over parts of the ocean, clearing the air and allowing more sunlight to reach the ocean surface. That in turn might be heating the water along some shipping routes, although the amount is in dispute, according to several recent estimates.

In January 2022, an underwater volcano near Tonga blasted 50 million tons of water vapor into the stratosphere. Some researchers believe that vapor might be acting as a planet-warming greenhouse gas and nudging up ocean temperatures. Both theories are still under investigation, and their overall impact is up for debate.

From NAAFE:

Marine Resource Economics (MRE) is pleased to present the 2022 Outstanding Article Award to:

Ted E. Gilliland, James N. Sanchirico, and J. Edward Taylor for their article:

A Bioeconomic Local General Equilibrium Assessment of Distributional Consequences of Small-Scale Fisheries Reform in Developing Countries, MRE 37(2): 111-134.

Gilliland, Sanchirico, and Taylor (2022) develop an economic model to assess the short and long-run effects of fisheries reform for local economies in developing nations. Coastal fisheries in many developing nations are characterized by poorly defined property rights and weak collective governance, such that the fish stock is essentially an open access resource – leading to overfishing and a loss of economic value. Prior theoretical and empirical work has demonstrated the potential for fishery governance reforms to recover stocks and increase the economic value of the industry. However, few studies have measured the spillovers of these reforms beyond the fishing sector or have examined how impacts may differ across socioeconomic groups.

The authors address these knowledge gaps by developing a bioeconomic local general equilibrium model and calibrating it using data from a municipality on the island of Palawan in the Philippines. This model explicitly considers the flows of benefits and costs of reform over time as the stock recovers, while also accounting for economic spillovers from the fishery sector to the non-fishery sector. In addition, the authors separately evaluate impacts to poor and non-poor households over 20 years, as well as households participating in fishers versus those that do not participate. The authors find that fishing households eventually benefit from governance reform – despite early losses in harvesting income – with wealthier households securing the largest absolute gains. However, non-fishing households in the local economy are never made better off by the reform due to increases in fish prices and indirect economic spillovers such as reduced spending on non-fish goods during the fishery rebuilding phase.

Editor in Chief, Joshua Abbott of Arizona State University notes: “Fisheries reforms in the Global South are often touted as a form of ‘pro-poor’ conservation policy. However, knowledge of how the benefits and costs of reform are distributed across households is very limited. Gilliland, Sanchirico, and Taylor have made a significant contribution to filling this knowledge gap. Most notably, they have demonstrated that non-fishing households in the local economy may be harmed by reforms – suggesting that additional policy tools beyond the usual scope of fisheries governance may be needed to address these spillovers.”

This annual award recognizes outstanding works published in Marine Resource Economics, with selections made by the associate editors[*], who consider articles published during the award year.

Visit the journal’s Outstanding Article Award webpage https://www.journals.uchicago.edu/journals/mre/oaa for more information about the award and to see the list of previous recipients.

*I am one of those associate editors.

The second edition of the Encyclopedia of Energy, Natural Resource, and Environmental Economics is in the works. Me and Tim have revised our entry on the Contingent Valuation Method. Other than annoying required format changes from the first to the second editions (e.g., adding references), we didn’t do much. But there is one substantive change in the validity section*: 

*ANA and CVM is my theme for the next 12 months.

Yikes.

*Ohio (Come Back to Texas)

I’m doing a small study at Fire Mountain Trails (FMT) in Cherokee, NC: 

The Fire Mountain Trails are Cherokee’s source for big adventure—a multiuse trail system that’s made to mountain bike, hike, or run. The network of trails is more than 11 miles total, so there’s plenty of room for everyone to recreate safely, responsibly…and flowy?

That’s right—if you like your trails with a nice flow of features, with fun berms and quick hits of elevation that are manageable and fun, Fire Mountain is made for you. You’ll find tables, rock gardens, and blinds for those who know, along with single-track and wider sections, spots that are smooth and fast, and trails that invite the more technically accomplished with options for those less so. The trailhead is located at 160 Indian Village Road, about 100 yards from the Oconaluftee Indian Village in Cherokee and shares a parking lot. The trails interlace through the nearby Great Smoky Mountains, so you already know the views and terrain will take your breath away, even if your recreation of choice doesn’t!

The data collection is going to cost less than $250 out of pocket. Right before Memorial Day weekend we put up a sign with a QR code that takes you the online survey. As of the July 4 week we have a disappointing n=23 responses. We have n=96 responses from outreach on social media. The folks at FMT are interested in any economic impacts generated by the trails. I’m interested in collecting data for students and wondering how the two survey modes differ. Real quick, here is the t-test on distance traveled.

Sample 1 is from the QR code and sample 2 is social media. Social media seems to be missing people who travel farther to get there. I’ll be posting the link on the WNC mountain bike trails facebook next week so, in addition to more responses from the QR code, there should be more responses by the end of summer. 

A couple of years ago I did a similar study at Beech Mountain trails but Beech Mountain spent about $600 to pay App State students to hang out and pass out rack cards with the QR code. That generated about n=400 responses. I’m concluding that a passive QR code is no substitute for college students pleading with potential respondents at the trailhead. 

Here is a view from my hike on one of the trails:

American Economic Review Vol. 113, Issue 7 — July 2023:

The authors mention stated preference research in environmental economics (where it all began, right?) a couple of times. First, we get the obligatory CVM critics pat-on-the-back on page 2010:

The advantages of the stated-preference approach come at potential costs, in particular the concern that actual job choices may differ from stated preferences for jobs (Diamond and Hausman 1994; Manski 1999; Hausman 2012).

They could have chosen some better references to the issue of hypothetical bias, but no. See the comment on Hausman 2012 here. 

But, then the second is more positive (page 2011):

More generally, the stated-preference approach has provided valuable evidence for many economic topics, including environmental policy (Carlsson and Martinsson
2001; Carson 2012), consumer preferences (Revelt and Train 1998), labor supply (Kimball and Shapiro 2008), retirement decisions (van Soest and Vonkova 2014),
and long-term care (Ameriks et al. 2015). 

Congrats to Carlsson, Martinsson and Carson for being singled out from the thousands of articles to choose from!

In spite of some warts (e.g, Hausman 2012), this is progress.

References:

Carlsson, Fredrik, and Peter Martinsson. 2001. “Do Hypothetical and Actual Marginal Willingness to Pay Differ in Choice Experiments? Application to the Valuation of the Environment.” Journal of Environmental Economics and Management 41 (2): 179–92.

Carson, Richard T. 2012. “Contingent Valuation: A Practical Alternative When Prices Aren’t Available.” Journal of Economic Perspectives 26 (4): 27–42.

From the inbox:

Join us online July 11 & 12, 2023, 1:00 p.m. ET to 3:30 p.m. ET for Valuing Nonmarket Benefits. Presenters Vic Adamowicz, Cathy Kling, Nic Kuminoff, Dan Phaneuf, Christian Vossler, and John Whitehead will provide a primer of the field including both the theoretical basis and current state of best practice for the most common methods. Core topics include basic welfare theory, stated preference methods, hedonic property value approaches, recreation demand modeling, hedonic wage studies, benefit transfer, the value of risk reduction, and other special topics. 

Description: The development of methods to estimate welfare changes for use in benefit-cost analysis began as a nascent field in the U.S. in the middle of the 20th century to support decision making for environmental investments. It then progressed as part of regulatory impact analyses required under multiple presidential executive orders beginning with EO 12291 issued by the Reagan administration. At the same time, the valuation of ecosystem services and natural capital throughout the European community expanded quickly with the U.K. Treasury “Green Book” and E.U. Water Framework Directive. Methodological improvements followed rapidly for both stated and revealed preference methods, leading to the now relatively mature set of methods available to practitioners.

These methods are being routinely applied to support benefit-cost analysis of regulatory programs, prioritization of conservation spending in government and non-governmental organizations, natural resource damage assessment, and private firm’s analyses of sustainability issues in their sector.

In this workshop, we provide a primer of the field including both the theoretical basis and current state of best practice for the most common methods. Core topics include basic welfare theory, stated preference methods, hedonic property value approaches, recreation demand modeling, hedonic wage studies, benefit transfer, the value of risk reduction, and other special topics. The workshop is intended for professionals and analysts who use the results of these studies in their work and wish to better understand the basics of these methods. The course should also serve as a refresher for those who have been away from the field and applications for some time and are looking for a brief review of the current state of the art.

Explore fees and register now

I’m covering benefit transfer. 

Current air quality. Oof.