Environmental and Urban Economics

The New York Times on wednesday had a great article on Russia's newest export to the West --- carbon credits. There is clear evidence that there are gains to trade between Russia's electric utilities and Western nations.

I was taught that good social science explains and predicts human behavior. I figure that this time of year we bloggers are expected to make some predictions for the next year.

My problem is that I can't claim to have any deep insights into where oil prices, interest rates or home prices will go over the next year.

Predictions:

1. The 2006 AEA meetings in Boston will be cold but will be a lot of fun.

It appears to me that the NYC public transit union has lost this strike. How does this outcome affect other NYC public sector unions such as teachers, cops, firemen, and sanitation? Has the Mayor of NYC gained a reputation for playing "hardball" and will this help lower New York City's taxes per dollar of public services?

There is an old Seinfeld episode where George loses the "Upper Hand" in a relationship with some girlfriend. In a similar spirit, the Mayor of NYC now has the "Upper Hand".

After interviewing an embedded reporter (my father) about how New York City’s Public Transit Strike has affected this city's quality of life, I would like to ask some questions and make a few observations.

1. What is the marginal increase in worker's commute times? How does this increase vary as a function of a person's income and commute schedule? My father is a doctor. His day starts at 8AM and usually ends at 9PM. After the first day of the strike, he is not having trouble finding a cab.

A couple of years ago I published a paper in the Journal of Policy Analysis and Management titled "Demographic Change and the Demand for Environmental Regulation". I was interested in what observable attributes of a person such as his education level predict environmentalism. I used a variety of different micro data sets to measure environmentalism.

Here is a new survey based paper on this subject.

When he lives in Berkeley CA, my son drinks organic milk made by the Strauss Family Creamery. Until I looked at the bottle, I didn't appreciate how green a product this stuff is. Ecological economists should be impressed by the "closed loop" nature of this firm's production process. Waste from Cows (an output) is used as an input in the production of electricity. To use a more technical term, this firm transforms "poop into power".

Will a public transit strike in NYC cripple this town? Perhaps Newman from Seinfeld will offer commuters rides on his rikshaw? How would this City adjust to this surprise?

Relative to their next best employment opportunities, public transit workers seem to have a pretty good deal; namely elatively high pay, early retirement (age 55!) and health insurance.

Alberto Alesina has done some interesting work examining how public employment varies by city.

Apparently there are investors who care about more than risk and return. Such investors intentionally constrain their asset choice set avoiding companies who pollute or do other evils. Finance researchers have examined how much expected return SRI investors sacrifice (see http://papers.ssrn.com/sol3/papers.cfm?abstract_id=416380).

I'm interested in a different set of questions focused on environmental issues and socially responsible investing. Permit me to list them:

1.

Time consistency is an important idea in dynamics economics. The 2004 Nobel Prize in Economics was partially awarded for macro research on this topic

( see http://nobelprize.org/economics/laureates/2004/ecoadv.pdf).

But, is time consistency an important idea in environmental economics? The Bolivian poor will soon learn that the answer is “yes” as their water supply’s quality will suffer.

For a big company such as DuPont, is a $17 million dollar environmental fine serious? Is such a company more concerned about the public relations issue that the media may cover the story because the fine is viewed as "big"? From the EPA's perspective does it seek out high profile polluters and try to "make an example" out of them to scare other firms into regulatory compliance?

From an economic perspective, how does the EPA go about calculating what is the "optimal fine".