Environmental and Urban Economics

What is the price elasticity of demand for "green" products such as electric cars? We know that there are lots of different companies hard at work on producing electric vehicles. As they conducted their R&D, they must have formed a subjective guess concerning what price they would sell their first generation of vehicles for. No company enjoys losing money.

Now, Nissan has shook up this nascent green market by promising to offer their vehicle to consumers for $25,000 (net of a generous government subsidy). So Nissan will be paid $32,500 for each vehicle and each consumer who buys "a Nissan Leaf" will pay $25,000 and taxpayers such as my wife will finance the subsidy of $7,500.

In this morning's print edition of the New York Times Arts Section (don't ask why I read it), I stumbled upon a brief mention that Freakonomics will be turned into a documentary and this Dubner blog entry fleshes this out.

Now that the door is ajar, what other economics research will squeeze through? General equilibrium would be a hard sell.

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Ignoring uncertainty, households and firms should do projects that have a positive net present value . Many empirical economics papers such as this one examine how a household's decisions are affected by its initial wealth. For example, suppose that you must choose whether to attend UCLA or work at Starbucks.

When I was a teenager, I liked Kurt Vonnegut books such as Slaughterhouse Five . So, when the NY Times writes an article about slaughterhouses I read it. The Times reports a funny story. Apparently, there are gains to trade. There are a number of free market hippies seeking to get rich selling "local food" (pigs, sheep that they raise on their rural farms) to sophisticated nearby big city fancy restaurants. The problem is one that Tony Soprano could appreciate.

Harvard's Rob Stavins asks "Who Killed Cap and Trade?". The NY Times is asking the same broad question .

The recession has not helped the push to internalize the carbon externality. Hummer drivers, meat eaters, electricity consumers, cement makers are all not eager to face higher input prices at a time when their earnings are down.

Over the last month, reporters have been calling academic economists and asking important practical questions. Health economists have been asked how the Obama health care legislation will affect the budget deficit.

Today is a big day in California environmental politics. The Air Resources Board has released its new economic report providing details of its best predictions concerning the likely impact of this important regulation. Details are posted here:

http://www.arb.ca.gov/cc/scopingplan/economics-sp/economics-sp.htm

Jim Sweeney and I published an editorial today in the Los Angeles Times.

Will the Obama Health legislation increase political opposition to immigration? I see an expansion of coverage for 30 million people in the United States. This must be an income transfer to this group and this means that taxpayers will cover this. Now, I do hope that preventative medicine will reduce this group's demand for costly emergency care but I do not know of a NBER quality health economics paper carefully documenting this optimistic claim.

On March 29th, I make my comeback as an environmental economics teacher. To prepare for this big day (and the 200 registered students), I'm vanishing and heading up to Berkeley for 10 days of solar panels and Prius watching and no blogging. I will be thinking about this WSJ piece that debates the consequences of the Congress' refusal to pass credible anti-carbon legislation.

Economists seek to explain and predict human behavior. We believe that people can change their behavior as they receive "new news". Other research fields implicitly assume that people do not change our behavior and thus they predict the future using naive statistical extrapolation methods. The recent swine flu epidemic offers an interesting case study.