Does anyone know what is the date when the Swedes choose the new Nobel Laureate in Economics? The actual winners will be announced in about 2 weeks. The recent market turmoil raises the likelihood that Richard Thaler and Robert Shiller will share the Nobel. My claim is that the Swedes have been nudged as recent events encourage them to reward two great scholars and to simultaneously make a political statement about neo-classical economics.

While I will congratulate the winner of this year's prize, I would like to see a nobel prize in environmental economics. Perhaps a windfall profit tax on the Nobel could collect enough revenue to bail out Wall Street?

Rob Shimer raises a number of key points in his post . I have a dumb question. If Wall Street firms who want to participate in the bailout must submit all of their assets to sale to the Treasury (rather than the subset that they want to sell) would this solve the Lemons problem? So, my solution is to introduce a randomization device. Each asset would be assigned a unique ID and the Treasury would pre-commit to draw from a random number generator (like the Lotto). If Asset B owned by firm j's number is drawn then it is sold to the government. I will leave it to smarter guys to figure out what the price should be. I like this proposal by Lucian Bebchuk of Harvard to set up an internal Treasury competition among fund managers who have the right incentives to maximize returns.

Congress cares about what the voters want. The median voter is a home owner. Home owners want their key asset to go up in price. Chris Mayer proposes a solution to reduce defaults and prop up home prices. He wants to lower interest rates down to their historical spread. If people could borrow at these interest rates (financed with "bail out" $), then demand for housing would rise, home prices would rise and defaults would slow down.

His proposal would redistribute income to the middle class at the expense of the poor and the rich. Why? The poor are renters so they would now face higher prices for housing and they are tax payers and part of their taxes would go to subsidizing the interest rates of home buyers. The rich would face higher taxes due to the progressive nature of the tax code and the rich will want "Jumbo" loans (greater than $700,000) and thus won't qualify for these subsidies that Mayer proposes.


I must admit that there is a key detail in all of this that I don't get. Suppose that the Treasury took the set of homes where the owners have defaulted on their mortgages and auctioned them off to new buyers at lower prices. Yes, Wall Street would take a loss but how much capital has been destroyed?

So, suppose that 3 million homes are in foreclosure. That sounds quite large.
Suppose that they were worth $400,000 each and now are worth $200,000 each. That's a whopping 50% decline in average prices.

that is "destruction" of 600 billion dollars. Where does 700 billion come from? That's the bailout number.

I'm not a macro economist. What "multiplier effect" am I ignoring?

Here is Chris Mayer's plan.


New York Times
September 27, 2008
Op-Ed Contributor
Help Housing
By CHRIS MAYER

A T the heart of the financial crisis is an unprecedented decline in house prices. Yet the government response so far has been to try to prop up insolvent financial institutions while doing nothing about the underlying housing problem. The proposed Wall Street bailout would not stop the next wave of defaults, which are coming from the rapidly rising delinquencies in near-prime mortgages.

The government needs to directly stabilize the housing market. This is equivalent to treating the infection with antibiotics, instead of applying a cold compress for the fever. Both the fever and the infection need treating.

The first step should be to reduce mortgage interest rates. In a normal mortgage market, rates are about 1.6 percentage points above the interest rate for 10-year Treasury notes. Recently, the difference has been closer to 2.5 percentage points.

The government is in a great position to cut rates by about a point: Through Fannie Mae, Freddie Mac and the Federal Housing Administration, it now controls nearly 90 percent of all mortgage originations. These lower rates would apply to most home buyers who take out a loan under $729,750 for a house that they will live in.

Along with lower rates, the government should provide temporary down-payment assistance for buyers. The government could, for example, match the amount of money that buyers use for a down payment, up to $15,000. Because the government now controls the bulk of all mortgage financing, this money could be provided directly at closing. Homeowners who refinance their current mortgages could also receive assistance, allowing them to avoid foreclosure.

Programs like these would draw buyers into the housing market and reduce the backlog of unsold and vacant homes. Investors and speculators would be ineligible and would face the full cost of their mistakes.

By stabilizing house prices, these programs would benefit the bulk of Americans, who own a home but did not get involved in the subprime mortgage market. Price stability would more directly achieve the goals of the Wall Street bailout: increase the value of mortgage-backed securities (by increasing the value of the underlying houses) while injecting government capital into the financial system.

Some in Congress have suggested allowing homeowners to go to bankruptcy court to lower their mortgage payments. But this would only make credit more expensive by reducing the willingness of companies to lend money. It would also worsen the current problems by letting bankruptcy judges reduce mortgage balances — imposing even greater losses on the owners of the mortgages, whose problems are at the heart of the financial crisis. Such a program would also be limited to only the most indebted and, in some cases, financially irresponsible homeowners.

Some might argue that propping up house prices is what got us into this mess. But with the recent decline in house prices, my calculations suggest that the cost of owning a home today, relative to renting, is about 10 percent lower than its average over the past 20 years.

The credit crisis will not be over until house prices stop falling. Direct assistance for home buyers and homeowners is the best, and the fairest, way to make that happen.

Chris Mayer is a professor of real estate and the senior vice dean of Columbia Business School.

Everyone loves rankings. But a B-? UCLA's Green Report Card What are these guys smoking?

If I had to objectively discuss whether UCLA is green or not, I'd make the following points;

1. The campus is beautiful. So we are green on aesthetics. This is a nicer campus than any other University in the US including Stanford and Princeton.

2. Given the perfect weather, our electricity bills must be lower than more humid areas

3. California's electric utilities are greener than any other state's (perhaps Oregon is close). So the power we use doesn't add up to too much co2 especially after LA DWP stops buying from the out of state coal fired power plant.

4. There is little need for winter heating like at the Ivy League schools.

5. The UCLA Institute of the environment is actively engaging the students, see www.ioe.ucla.edu

6. Investments are being made to make the campus more energy efficient.


Now on the "Brown" Front;

1. faculty do live far away from Westwood because West LA is quite expensive, so the carbon footprint from commuting must be large relative to Harvard's or other schools such as Tufts

2. the graduate students receive large scholarships to attend here and they buy Hummers and create a lot of CO2 as they drive around (I'm kidding about this point).


Returning to this brilliant report card,

Apparently, we received an "F" for the subcomponent called "Shareholder Involvement".

This sounds like a silly category.

Overview

The Shareholder Engagement category examines how colleges conduct shareholder proxy voting. As investors, colleges have an opportunity to actively consider and vote on climate change and other sustainability-related shareholder resolutions. Forming a shareholder responsibility committee to advise the trustees allows schools to include students, faculty, and alumni in research and discussion of important corporate policies on sustainability. In addition, such committees offer exceptional educational opportunities at the intersection of policy, business, and sustainability. Points were awarded to schools that had formed such committees as well as for past votes on sustainability-related proxy resolutions (when such records were available).


Key Findings

* Approximately one in nine schools has an advisory committee on shareholder responsibility. Eleven percent of schools have a committee of multiple stakeholders (e.g. students, faculty, staff, alumni) to help inform the trustees’ decisions on shareholder proxy resolutions.



* The average grade for the Shareholder Engagement category was “D-.” For a summary of grade distribution for this category, please refer to the chart on the right.

Each day UCLA emails me a news blast highlighting important new work by UCLA faculty. Below I report one that examines whether a Los Angeles police effort has reduced crime.

The full report is available here:

http://www.law.ucla.edu/docs/did_safer_cities_reduce_crime_in_skid_row.pdf

If you are an intellectual who likes to read and think, please contrast that paper
with this paper:

http://www.people.hbs.edu/rditella/papers/AERPoliceCrime.pdf


In "Causality studies", the usual issue is imputing the counter-factual; what would have happened in the absence of the treatment. You must decide which paper has the more convincing empirical design.


Study finds police crackdown in skid row did not reduce serious, violent crime


Lauri Gavel, gavel@law.ucla.edu

310-206-2611

Sara Wolosky, wolosky@law.ucla.edu

310-206-2221



Two years after the city of Los Angeles launched the Safer Cities Initiative (SCI), representing one of the most targeted concentrations of police resources in the world outside of Baghdad, a UCLA School of Law study has found that the effort has failed to reduce serious or violent crime in the city's skid row area.



"While there was a reduction in overall crime in skid row, it was strikingly similar to the reduction seen in areas outside the initiative's focus," said UCLA law professor Gary Blasi, who conducted the study. "Importantly, our study shows there was no statistically significant effect on serious, violent crime in Skid Row, with the exception of a very small effect as to the crime of robbery."



Serious, violent crimes are defined by law-enforcement officials as homicide, rape, robbery and aggravated assault. A UCLA School of Law report released last year — "Policing Our Way out of Homelessness?" — noted that during the first seven months of the initiative, just 0.7 percent of the arrests by the 50 officers assigned to the Safer Cities Task Force were for serious, violent crimes.



"Our study shows that the Safer Cities Initiative did not cause the overall decline in skid row crime," Blasi said. "Even if we attribute the decline in skid row robberies to the SCI, each additional officer was responsible for a reduction of just under one robbery per year. One can argue that the same 50 officers might have had much more impact on serious or violent crimes in other parts of Los Angeles with higher rates of such crimes."



According to Blasi, the additional police officers assigned to the 50 square blocks of skid row cost the city general fund about $6 million, more than was spent on shelter for the homeless across the entire city. When the Safer Cities Initiative was announced in 2006, it was supposed to include two components: increased enforcement and increased services.



"The enforcement component was delivered swiftly, with 50 additional patrol officers and 25 to 30 additional narcotics officers and mounted police assigned to the 50 blocks of skid row," Blasi said. "However, the enhancement part of the equation — more shelter, drug treatment and services for homeless people with mental disabilities — never materialized, and we are all worse off as a result."



The new study — "Has the Safer Cities Initiative in Skid Row Reduced Serious Crime?" — is available at www.law.ucla.edu/docs/did_safer_cities_reduce_crime_in_skid_row.pdf.



"Policing Our Way out of Homelessness" (2007) can be found at www.law.ucla.edu/docs/policingourwayoutofhomelessness.pdf.



The UCLA School of Law, founded in 1949, is the youngest major law school in the nation and has established a tradition of innovation in its approach to teaching, research and scholarship. With approximately 100 faculty and 970 students, the school pioneered clinical teaching, is a leader in interdisciplinary research and training, and is at the forefront of efforts to link research to its effects on society and the legal profession.

In today's New York Times, there were some subtle ideas in this "H" section on the environment and business. Today, I learned about the existence of the New York Times "Green Blog" . After visiting this site, I like it but I'm hoping that they will add some "meat" to this blog by including actual statistics and statistical research. They face no "page limits" so why can't such a blog be more sophisticated with respect to how evidence is presented and analyzed? Data sets could be posted or linked there to allow other people to download such information for replication and to show people in developing countries what might be useful information to collect in nations just starting to engage in formal measurement of the "green economy".

Switching subjects

People who know me know that I'm a free rider who isn't very engaged in anything.
This is ironic given my work on social capital;
http://press.princeton.edu/titles/8734.html

But, here is a "grass roots movement" that I'm willing to participate in;
A petition I will sign.

http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm

I see that Dr. Luttmer has signed. If he's in, then I'm in.

Obama has lost votes in some parts of the country because he has been tagged as an ivy league elitist. Yet, there is a flip side to this point. Being an ivy league graduate who worked at the University of Chicago, won't he appoint "the best and the brightest" to his cabinet and leading White House posts? Would he tolerate political hacks? If the "best and the brightest" (such as a Larry Summers sequel at the Treasury) make fewer mistakes in office, shouldn't our risk averse masses be swayed a pinch? Who will be John McCain's "Dream Team"? It would interest me if the candidates could pre-commit and announce now who their cabinet and white house staff would be if they are elected.

Before the Super Bowl, the sports columnists break down the two teams comparing the QB, running backs, coaches, defensive line and grading them against each other. Should these candidates do the same thing? They both made strange choices for Vice President. In his biography of JFK, Ted Sorenson makes a big deal about how JFK sought out the best and brightest for his team. His set of economists at CEA was pretty good.

If an Ivy League East Coast Obama wins, will we get a test of the theory that the Ivy League can govern during these troubled times? Did Bill Clinton's Administration really test this theory?

Who says that UCLA is about sunshine and basketball? Below, I report some serious research and I didn't even do it! Forgot Iraqi Bond prices, if you want to know whether the surge works turn to the Satelites. "By the launch of the surge, many of the targets of conflict had either been killed or fled the country, and they turned off the lights when they left." So local deaths can decline either because the probability of death declines or because the number of people at risk for the event declines. The second explanation can happen due to self protection as scared people flee. The pentagon has claimed that theory #1 explains the facts while my "light tracking" geography colleagues here at UCLA claim that theory #2 can explain the facts.


For Immediate Use

Sept. 19, 2008



UCLA study of satellite imagery casts doubt on surge's success in Baghdad



Meg Sullivan, msullivan@support.ucla.edu

310-825-1046



By tracking the amount of light emitted by Baghdad neighborhoods at night, a team of UCLA geographers has uncovered fresh evidence that last year's U.S. troop surge in Iraq may not have been as effective at improving security as some U.S. officials have maintained.



Night light in neighborhoods populated primarily by embattled Sunni residents declined dramatically just before the February 2007 surge and never returned, suggesting that ethnic cleansing by rival Shiites may have been largely responsible for the decrease in violence for which the U.S. military has claimed credit, the team reports in a new study based on publicly available satellite imagery.



"Essentially, our interpretation is that violence has declined in Baghdad because of intercommunal violence that reached a climax as the surge was beginning," said lead author John Agnew, a UCLA professor of geography and authority on ethnic conflict. "By the launch of the surge, many of the targets of conflict had either been killed or fled the country, and they turned off the lights when they left."



The team reports its findings in the October issue of "Environment and Planning A," a leading peer-reviewed academic journal that specializes in urban and environmental planning issues.



The night-light signature in four other large Iraqi cities — Kirkuk, Mosul, Tikrit and Karbala — held steady or increased between the spring of 2006 and the winter of 2007, the UCLA team found. None of these cities were targets of the surge.



Baghdad's decreases were centered in the southwestern Sunni strongholds of East and West Rashid, where the light signature dropped 57 percent and 80 percent, respectively, during the same period.



By contrast, the night-light signature in the notoriously impoverished, Shiite-dominated Sadr City remained constant, as it did in the American-dominated Green Zone. Light actually increased in Shiite-dominated New Baghdad, the researchers found.



Until just before the surge, the night-light signature of Baghdad had been steadily increasing overall, they report in "Baghdad Nights: Evaluating the U.S. Military 'Surge' Using Night Light Signatures."



"If the surge had truly 'worked,' we would expect to see a steady increase in night-light output over time, as electrical infrastructure continued to be repaired and restored, with little discrimination across neighborhoods," said co-author Thomas Gillespie, an associate professor of geography at UCLA. "Instead, we found that the night-light signature diminished in only in certain neighborhoods, and the pattern appears to be associated with ethno-sectarian violence and neighborhood ethnic cleansing."



The effectiveness of the February 2007 deployment of 30,000 additional U.S. troops has been a subject of debate. In a report to Congress in September of that year, Gen. David Petraeus claimed "the military objectives of the surge are, in large measure, being met." However, a report the same month by an independent military commission headed by retired U.S. Gen. James Jones attributed the decrease in violence to areas being overrun by either Shiites or Sunnis. The issue now figures in the U.S. presidential race, with Republican presidential candidate John McCain defending the surge and Democratic hopeful Barack Obama having been critical of it.



Reasoning that an increase in power usage would represent an objective measure of stability in the city, Agnew and Gillespie led a team of UCLA undergraduate and graduate students in political science and geography that pored over publicly available night imagery captured by a weather satellite flown by the U.S. Air Force for the Department of Defense.



Orbiting 516 miles above the Earth, Satellite F16 of the Defense Meteorological Satellite Program, Operational Linescan System (DMSP/OLS) contains infrared sensors that calculate, among other things, the amount of light given off in 1.75-square-mile areas. Using geo-referenced coordinates, the team overlaid the infrared reading on a preexisting satellite map of daytime Iraq created by NASA's Landsat mapping program. The researchers then looked at the sectarian makeup in the 10 security districts for which the DMSP satellite took readings on four exceptionally clear nights between March 20, 2006, when the surge had not yet begun, and Dec. 16, 2007, when the surge had ended.



Lights dimmed in those neighborhoods that Gen. Jones pointed to as having experienced ethno-sectarian violence and neighborhood ethnic cleansing in his "Report of the Independent Commission on the Security Forces of Iraq."



"The surge really seems to have been a case of closing the stable door after the horse has bolted," Agnew said.



Long-term obstacles to meeting Baghdad's power needs may have contributed to the decrease in night lights in the city's southwestern parts, the researchers acknowledge. But Baghdad's shaky power supply does not fully account for the effect, they contend, citing independent research showing that decaying and poorly maintained power plants and infrastructure were meeting less than 10 hours of Baghdad's power needs prior to the fall of Saddam Hussein.



"This was the part of the city that had the best sources of connection and the most affluent population, so they could actually generate power themselves, and they were in the habit of doing so well before the U.S. invasion," said Agnew, the president of the American Association of Geographers, the field's leading professional organization. "But we saw no evidence of a widespread continuation of this practice."



In addition to casting doubt on the efficacy of the surge in general, the study calls into question the success of a specific strategy of the surge, namely separating neighborhoods of rival sectarian groups by erecting concrete blast walls between them. The differences in light signatures had already started to appear by the time American troops began erecting the walls under Gen. Petraeus's direction, the researchers found.



"The U.S. military was sealing off neighborhoods that were no longer really active ribbons of violence, largely because the Shiites were victorious in killing large numbers of Sunnis or driving them out of the city all together," Agnew said. "The large portion of the refugees from Iraq who went during this period to Jordan and Syria are from these neighborhoods."



Previous research has used satellite imagery of night-light saturation to measure changes in the distribution of populations in a given area, but the UCLA project is believed to be the first to study population losses and migration due to sectarian violence. The outgrowth of an undergraduate course in the use of remote sensing technologies in the environment, the UCLA project was inspired by a desire to bring empirical evidence to a long-running debate.



"We had no axe to grind," said Agnew. "We were very open. If we had found that the situation was different, we would've reported it. Our main goal was to bring fairly objective and unobtrusive measures to a particularly contentious issue."



The study will be available Sept. 19 at www.envplan.com/abstract.cgi?id=a41200.



UCLA is California's largest university, with an enrollment of nearly 37,000 undergraduate and graduate students. The UCLA College of Letters and Science and the university's 11 professional schools feature renowned faculty and offer more than 300 degree programs and majors. UCLA is a national and international leader in the breadth and quality of its academic, research, health care, cultural, continuing education and athletic programs. Four alumni and five faculty have been awarded the Nobel Prize.

Along the Venice Canals in West LA, Dora and I toured a $2 million dollar home on a 2,000 square foot lot. That's not a lot of land my friends. With such expensive land, how do people respond? You can't build up due to building codes. You can't afford more square footage so there is only one direction to go. Down.


http://www.latimes.com/features/home/la-hm-builddown20-2008sep20,0,6560616.story

From the Los Angeles Times
TRENDS

Homeowners dig down for more space

With more limits on the height and footprint of homes, particularly in beach cities, the underground area adds footage for such extras as theaters and wine cellars.

By Janet Eastman
Los Angeles Times Staff Writer

September 20, 2008

COME ON DOWN, Stefan Lemperle says. Here, 13 feet under the ground, there's sunlight and fresh air, an open-to-the-sky patio with a rock-lined pond, a high-ceilinged lounge and a media room large enough to host dozens of friends.

Lemperle's new glass tower of a home in La Jolla comes with a swank subterranean space that's anything but the dank basement of eras past. "It's beautiful," says Lemperle, "and it's a bonus."

At 1,800 square feet, this level of the house is longer and wider than any of the three stories that sit above-grade. But to city planners here who are meticulously calculating whether a home is too big for its lot, basements are like carports: These square feet simply don't count.

In beach cities with strict restrictions about the height and footprint of homes, residents and architects are digging down to get the most out of small lots. Building down can yield a bigger home that draws less attention from the street and fewer sneers from neighbors tired of maxed-out mansions rising next to modest bungalows.

The trend is particularly strong in affluent communities such as Coronado Island and La Jolla, which have some of the most expensive land in the state.

"Almost every new home we see now includes a basement," says Lee McEachern, permit chief for the San Diego office of the California Coastal Commission. "It's been increasing for the last several years until now I can't think of an application for a new home that doesn't have plans for underground space."

The phenomenon is less common in Malibu because that city includes some basement space when calculating a home's size, says Craig George, manager of the city's Environmental and Building Safety Division. But Charles Posner, a California Coastal Commission planner, says he's seeing requests to build basements on small lots in Venice and Marina del Rey.

The trend is clearly strongest in pricey San Diego County, where Harry Jackman says every house erected on Coronado Bay in the last five years has a basement.

As construction managerof the Coronado-based planning, design and construction company the Jackman Group, he carved 4,300 extra square feet underneath an 8,000-square-foot lot. One client in Bonita will have two basements: one in front of the house, with light wells to illuminate bedrooms, and one in back of the house for parking cars.

San Diego architect Steven Florman devised a below-grade museum and diorama space for a La Jolla homeowner to spread out his battalions of miniature soldiers.

Across from the Hotel del Coronado, contractor Fred Perry has built a house with 2,000 square feet of sub space to hold 6,000 bottles of wine as well as the homeowner's car collection and occasional houseguest.

Critics might question why anyone needs 6,000 bottles of wine, let alone an underground space to store them. But McMansion backlash notwithstanding, some homeowners simply want their space, and despite the complications and expense, basements are seen as an increasingly attractive option for Southern Californians.

"Footage is footage," Perry says. "You can't tell you're underground."

INDEED, the new basements just may represent the future of design for densely built, space-starved communities, says San Diego architect Jonathan Segal, who is not shy about declaring his plan for Lemperle as an example of "the new generation of ocean-front architecture."

Building underground is urban, he says, and more exciting than suburban sprawl. It's also practical -- perhaps the best way to offset "unforgiving land costs" -- $4 million for this 4,200-square-foot, pie-shaped lot, half of which must be reserved for patios or landscape to meet building restrictions. Adding the basement created 72% more living space, expanding the home to 4,300 square feet total.

"Basements are the new baseline, what has to happen to make the project make sense financially," Segal says. "If you could imagine that house without a basement, you'd have a 1 1/2 -bedroom house. And it would not be valued at $10 million, as it is now."

Though Lemperle declined to reveal his final outlay for construction, his contractor, Randal Howard, did say the basement cost 50% more to build than the other floors.

Excavation took a year: Workers drilled 30 holes, each 30 feet deep, to drop in support beams. Imagine writing a check for $25,000 to move telephone lines -- temporarily -- to accommodate a 70-ton crane.

After digging about 6 feet, crews hit water -- a series of underground streams trickling toward the ocean. They could have just built a giant concrete barrier to keep out the water, but they decided to collect and filter the water too -- about 1,000 gallons a day -- so what was pumped to the storm drain contained fewer pollutants.

Few visiting Lemperle's subterranean patio would know that the pump lies beneath the wood deck and that the water splashing a stack of rocks is actually some of that filtered runoff. The water is so clean, Lemperle jokes, he should bottle it.

The three stories of glass walls are matched with glass floors that allow sunlight to flood the basement. Natural light also comes in from the below-grade patio, about the size of a single-car garage.

Fresh air streams in from two sliding doors that lead to either the lounge (with a stainless-steel bar and Bontempi bar stools) or the media room (with the classic white Barcelona chair and ottoman).

Lemperle, a surgeon and inventor of medical devices, selected the finishes and furnishings himself. For the underground rooms, he found two faux-pony-skin Paul Klee chairs, a Hamilton sofa chaise lounge and leather tables by Minotti, and an Eero Saarinen walnut table and white tulip chairs from Knoll.

Custom cabinets made by Jacobs Woodworks of San Diego envelope the Gaggenau appliances and Dornbracht faucet in the underground dining room. Below the glass ceiling hangs metal sculpture by local artist Matt Devine.

Lemperle moved into the house in December, and since then he's been figuring out how to live in it. Surfers wave while waiting for a ride. Helicopters sometimes fly a little too close. But shutting them out is easy. He just walks downstairs.

"I'm totally happy," Lemperle says. "I have plenty of space, and I get a good workout running up and down four floors."

home@latimes.com


--------------------------------------------------------------------------------


If you want other stories

Economists like data and numbers. California's Air Resources Board is now offering some firm predictions concerning the benefits to our state's economy from enacting AB32. I hope they are right but are they right? More AB 32 Economics .

I would like to see the Air Resources Board convene a panel of California academic economists to sit down and in public discuss and debate what we know and what we don't know about the economic consequences of this legislation. The ARB appears to be surprisingly certain about their consequences of their regulatory actions. I respect people who can see the future.

If we are honest about what we don't know (such as how residential energy consumers will respond to higher prices), this would help to shape academic research such that California's environmental economists would be working on research that truly informs policy making. I do not need to be named to this panel of "wise people" but I would be happy to suggest 10 to 15 people who would do a great job. These people are not politicians or professional consultants, they are academics.


http://www.arb.ca.gov/newsrel/nr091708.htm

Release 08-80
FOR IMMEDIATE RELEASE
September 17, 2008
Stanley Young
916-322-2990 w
916-956-9409 m
www.arb.ca.gov


ARB analysis finds that reducing greenhouse gas pollutants also provides net benefit to California's economy and public health
Economic analysis sees continued robust growth; public health analysis forecasts health benefits

SACRAMENTO-The Air Resources Board today released two reports that highlight how implementing AB 32, California's pioneering climate change law, will provide net benefits to both California's economy and public health.

"The facts are in. These reports support the conclusion that guiding California toward a clean energy future with reduced dependence on fossil fuels will grow our economy, improve public health, protect the environment and create a more secure future built on clean and sustainable technologies," said Mary Nichols, ARB Chairman.

The reports analyze the economic and public health impacts of the recommended measures in the draft Scoping Plan, the State's policy framework that outlines how California will reduce greenhouse gases 30 percent by 2020, as required under AB 32.

The economic analysis indicates that ARB's strategy will create jobs and save individual households money. And, California will achieve those benefits while enjoying a net benefit in economic growth between now and 2020, compared to the "do-nothing" scenario where California continues to rely heavily on fossil fuels as it does today.

The public health analysis demonstrates that implementing the recommendations to reduce greenhouse gas emissions will build on existing air pollution programs that reduce smog-causing chemicals and toxic soot, providing significant additional public health and environmental benefits.

The economic analysis compares the recommendations in the draft Scoping Plan to doing nothing and shows that implementing the recommendations will result in:

Increased economic production of $27 billion
Increased overall gross state product of $4 billion
Increased overall personal income by $14 billion
Increased per capita income of $200
Increased jobs by more than 100,000
The public health analysis shows that programs under AB 32 will improve on existing air pollution cleanup programs. As a result, in 2020:

An estimated 300 premature deaths statewide will be avoided
Almost 9,000 incidences of asthma and lower respiratory symptoms will be avoided
53,000 work loss days will be avoided
The recommended approach that was analyzed includes a mix of strategies that combines market-based regulatory approaches, other regulations, voluntary measures, fees, and other policies and programs to reduce greenhouse gas emissions. The economic analysis used analytical models that measure economy-wide impacts of those policies and measures.

The analysis indicates that the bulk of the economic benefits are the result of investments in energy efficiency that more than pay for themselves over time. Additionally, the results in the economic analysis may underestimate many economic benefits since the models do not include lower costs from innovation and improved technologies expected under a market-based program.

ARB is seeking public comment on both reports. Those comments will be considered in the development of the proposed Scoping Plan prior to it being presented for adoption to the Air Resources Board at its November hearing.

ARB is the lead agency for implementing AB 32, the Global Warming Solutions Act of 2006, and is part of an administration-wide effort to address climate change and mitigate the most severe projected impacts of global warming by reducing greenhouse gas emissions statewide.

Both reports, with appendices, can be found at http://www.arb.ca.gov/cc/cc.htm.

The Air Resources Board is a department of the California Environmental Protection Agency. ARB's mission is to promote and protect public health, welfare, and ecological resources through effective reduction of air pollutants while recognizing and considering effects on the economy. The ARB oversees all air pollution control efforts in California to attain and maintain health based air quality standards.

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