Environmental and Urban Economics

Hurricane Katrina may lead to some new regulations for FEMA. 9/11 changed more than a few government regulations. Unexpected shocks affect interest group politics. While this statement is easy to state and is intuitive and there are case studies to back it up, it is pretty difficult to formally test the hypothesis that disasters cause new regulations to be enacted.

In a new empirical history paper, Louis Cain and Elyce Rotella's paper titled Epidemics, Demonstration Effects and Municipal Investment in Sanitation Capital provide historical city level evidence supporting the "salience hypothesis". Over the period 1899 to 1929, they document that a mortality shock in a city was often closely followed by a notable expenditure increase on water supply improvements in that city.

On October 10th 2005, somebody will win the Nobel Prize in economics. I hope my wife wins it this year. Excluding my immediate family, I'd like to take a look at the possibility set. I apologize if I excluded you from this elite list.

1. Nobel prize in environmental economics to Weitzman, Nordhaus

2. Nobel prize in trade theory to Bhagwatti and Dixit

3. Nobel prize in President Bush praising to Krugman and David Brooks

4. Nobel prize in behavioral stuff to Richard Thaler

5.

Public health researchers are always looking for “natural experiments” to study how environmental quality impacts health. Researchers examined how much hospitalization rates fell by in the vicinity of a dirty steel plant when its unionized workers went on strike. Other researchers tested for how much did air pollution decline when the 1996 Atlanta Olympics started.

A recent World Bank Study (see World Bank Policy Research Working Paper 3712, September 2005) has the ambitious goal of quantifying which cities around the world are “well run”. A revealed preference test might study whether home prices are high and whether net migration flows are positive. But such evidence would only be suggestive because the locality might be booming despite the public sector not because of the public sector.

The New York Times has been doing some high frequency econometrics to study how Americans have responded to higher gasoline prices. “For three straight weeks, Americans have been buying less gasoline than they did a year ago. Consumption is dropping at a rate not seen since drivers were waiting in gas lines back in the early 1980's. And people are turning to mass transit in record numbers in some cities.” (Go Ahead and Drive Less, if You Can By DANNY HAKIM and JEREMY W.

Environmental economists have convinced themselves of the benefits of raising gasoline taxes. Politicians seem to be slow to embrace this proposal. Why? New Yorker magazine’s James Surowiecki has a good explanation. The New Yorker has better cartoons and sometimes better analysis than the American Economic Review!

PUMP PRESSURE James Surowiecki on why the gas tax won’t budge.

My Tufts colleague Bill Moomaw is pursuing an unusual goal. He wants his total net annual energy consumption for his home to equal zero. This distinctive business week article tells you about Bill's plan but I couldn't find any discussion in the article concering how costly it is to make your house so "productive".

As usual, I'm interested in the question of heterogeneity.

Below I report a Figure showing how the Murder Count has evolved over the last 20 years in center city Chicago. Why did murder soar in the late 1980s and fall so fast in the 1990s? Can legalized abortion explain these wild dynamics? Unleaded gasoline? Crack Cocaine? The 1990s economic boom? Michael Jordan and the Bulls winning those NBA titles? This picture is hard to read but the murder count peaks in the low 900s in 1991.

I don't think that I can answer those questions.

In response to rising gasoline prices, Ford Motor Company is greening its fleet. If gas prices stay high, even Dick Chaney may buy a fuel efficient car. But, there is a second social incentive that could encourage people to buy green cars. As the quote below highlights, CEO Ford believes that his company can distinguish itself from other car makers by "going green". Economists are always interested in cases when competition leads to a "race to the top".

We all know that over the last 100 years, people and jobs have suburbanized as transportation costs have declined and household incomes have increased. How has this trend affected center city governance in the United States? In an editorial in the 9/21/2005 New York Times, Joel Kotkin points out “Democrats have long drawn their moral, economic and electoral strength from the cities. Yet this urban dominance has its negative side.