Topic: Energy and Environment

The Solution to Congestion

It is distressing, at least to economists, how many problems could be solved by adopting basic free-market principles, yet those solutions are ignored or stridently opposed by the very people who would benefit from them. California’s drought is one of those: California actually has plenty of water, it is just poorly priced.

An even more pervasive problem is traffic congestion, which (according to the Texas Transportation Institute) wasted more than 3 billion gallons of fuel and nearly 7 billion hours of people’s time for a total cost of $160 billion in 2014. Brookings economist Anthony Downs wrote a whole book about congestion that concluded there was no solution to the problem–except, he noted almost parenthetically, congestion pricing which Downs decided was politically impossible. Of course, that’s a self-fulfilling prophecy because if no one argues for something because it’s impossible, it will truly be impossible.

Dumping Money on Fire

A bill before Congress would practically give the Forest Service a blank check for firefighting. HR 167, the Wildfire Disaster Funding Act, proposes to allow the Forest Service to tap into federal disaster relief funds whenever its annual firefighting appropriation runs out of money. It’s not quite a blank check as the bill would limit the Forest Service to $2.9 billion in firefighting expenses per year, but that’s not much of a limit (yet), as the most it has ever spent was in 2006 when it spent $1.501 billion.

The Forest Service puts out fires by dumping money on them.

Having a blank check is nothing new for the Forest Service. In 1908, Congress literally gave the agency a blank check for fire suppression, promising to refund all fire suppression costs at the end of each year. As far as I know, this is the only time in history that a democratically elected legislature gave a bureaucracy a blank check to do anything: even in wartime, the Defense Department had to live within a budget.

Due to rising firefighting costs, Congress repealed the Forest Service’s blank check in about 1978, giving the agency a fixed amount each year and telling it to save money in the wet years to spend in the dry years. The agency actually reduced its costs for about a decade, but then two severe fire years in 1987 and 1988 led the Forest Service to borrow heavily from its reforestation fund. Congress eventually reimbursed this fund, and costs have been growing ever since.

In the 1970s, when firefighting costs were so out of control that Congress repealed the blank check, the agency spent about 10 to 20 percent of its national forest management funds on fire. Today, even though the agency’s budget has kept up with inflation, more than half goes for fire.

Yet there is some restraint on what the agency spends. In severe fire years, it has to borrow money from its other programs, putting a crimp in those activities. Congress eventually reimburses that money, but in the meantime fire managers are aware that their spending is having an impact on other agency projects.

Transportation Bill Steps Backwards

This week’s Congressional passage of the 1,301-page Fixing America’s Surface Transportation (FAST) Act represents, for the most part, a five-year extension of existing highway and transit programs with several steps backwards. Once a program that was entirely self-funded out of dedicated gasoline taxes and other highway user fees, over the past two-and-one-half decades the surface transportation programs has become increasingly dependent on deficit spending. The FAST Act does nothing to mitigate this, neither raising highway fees (which include taxes on Diesel fuel, large trucks, trailers, and truck tires) nor reducing expenditures.

If anything, deficit spending will increase under the FAST Act, which will spend $305 billion ($61 billion a year) over the next five years. Highway revenues, which were $39.4 billion in F.Y. 2015, are not likely to be much more than $40 million a year over the next five years, so the new law incurs deficits of about $20 billion a year. The law includes $70 billion in “offsets”–funding sources that could otherwise be applied to reducing some other deficit–which won’t be enough to keep the program going for the entire five years.

On the Bright Side: The Combined Effects of CO2, Temperature and Drought on Wheat

As the air’s CO2 concentration rises in the years and decades to come, the negative impacts of drought on wheat biomass and grain yield should diminish, a conclusion that can be derived from the recent work of Dias de Oliveira et al. (2015).

The five-member Australian research team noted that “elevated CO2 and high temperature are climate change drivers that, when combined, are likely to have an interactive effect on biomass and grain yield,” leading to three possible outcomes: (1) a “reduced positive effect of elevated CO2,” (2) an “amelioration of the effect of high temperature, or (3) a “synergistic effect where high temperature increases the positive effect of elevated CO2.” They also note that the resultant response “may be influenced by [plant] genotypic differences.” In an effort to study these interactions and possibilities, Dias de Oliveira et al. designed a field experiment to determine the interactive effects of CO2 and temperature, as well as those of a third variable—drought—on two pairs of sister lines of wheat (Triticum aestivum L.) over the course of a growing season, where one of the contrasting pairs of wheat sister lines differed in tillering, or branching (free vs. reduced), while the other differed in early vigor (high vs. low). The experiment was conducted out-of-doors in Western Australia in poly-tunnels under all possible combinations of CO2 concentration (400 or 700 ppm), temperature (ambient or + 3°C above ambient daytime temperature), and water status (well-watered or terminal drought post anthesis). So what did it reveal?

Paris Whopper of the Day: The Sahara Is Expanding

As the hype volume goes into Everest territory at the big climate summit in Paris, we’ll be a bit more succinct and just point out the Whopper of the Day.

Here’s France’s President conferring with African leaders, who told him of the expansion of the Sahara Desert. To wit, from today’s Associated Press story:

“Hollande heard from 12 African leaders who described the Sahara Desert encroaching on farmland…”

Below is the change in planetary greening measured by satellite over the last two+ decades. As you can see, the southern side of the Sahara is getting much greener over time (the northern boundary is the Mediterranean Sea). In fact, that’s the largest “greening” on the entire planet earth! What a whopper Hollande was told in Paris!


Figure 1. Spatial trends in net primary plant productivity, 1981-2006 (source: de Jong, et al., 2011, Remote Sensing of the Environment).

Will Obama Make Housing Affordable?

Property-rights and housing-affordability advocates were surprised and elated that the chair of President Obama’s Council of Economic Advisors, Jason Furman, gave a speech blaming housing affordability problems on zoning and land-use regulation. They shouldn’t be: while Furman is correct in general, he is wrong about the details and the prescriptions he offers could make the problems worse than ever.

There is no doubt, as Furman documents in his speech, that land-use regulation is the cause of growing housing affordability problems. Yet Furman fails to note the fact that these problems are only found in some parts of the country. This is a crucial observation, and those who fail to understand it are almost certain to misdiagnose the cause and propose the wrong remedies.

Citing Jane Jacobs (who was wrong at least as often as she was right), Forman blames affordability problems on zoning that “limits density and mixed-use development.” Such zoning is found in almost every city in the country except Houston, yet most cities don’t have housing affordability problems. Thus, such zoning alone cannot be the cause of rising rents and home prices.

Based on this erroneous assumption, Furman endorses what he calls the administration’s agenda, which is its Affirmatively Furthering Fair Housing program. Rather than making housing more affordable, this program is aimed at ending racial segregation of middle-class suburbs by requiring the construction of multifamily housing in suburbs that are not racially balanced relative to their urban areas. It assumes that multifamily housing is less costly (and thus more affordable to low-income minorities) than single family, but that is only true because units are smaller: on a dollar-per-square-foot basis, multifamily costs more than single family, especially for mid-rise and high-rise apartments. Multifamily also uses more energy per square foot than single family, which means heating bills will be higher.

Government As Scofflaw, On Pollution And Beyond

It’s a familiar libertarian insight that regulation often holds government itself to lower standards than it does private actors. Pension funds for public employees are mostly immune from the federal solvency and funding requirements that apply to their private counterparts; Federal Trade Commission rules against false advertising by profit-seeking companies do not restrain false advertising by government actors on the same topics; the FTC can fine companies massively for data breaches even as the federal government itself suffers gigantic losses of sensitive data to foreign actors with few career consequences for many of those who had dozed; anticompetitive practices per se illegal under antitrust law become legal when states do them, and so forth and so on.

Now David Konisky of Indiana University and Manuel Teodoro of Texas A&M, in a study published by the American Journal of Political Science entitled “When Governments Regulate Governments,” have pulled together some data:

Our empirical subjects are public and private entities’ compliance with the U.S. Clean Air Act and Safe Drinking Water Act. We find that, compared with private firms, governments violate these laws significantly more frequently and are less likely to be penalized for violations.