Friday, September 30, 2011

More Economics of Climate Change Adaptation and Mitigation

Here is a recent discussion I had with Romesh Vaitilingam for the VoxEU and here is a piece that I just published in the World Financial Review.  Both of these links focus on the microeconomics of climate change mitigation and adaptation.  

Will we "thrive" in our hotter future?   That is up to each us as individuals and firms.  Government is more likely to step up and do its job if it is held accountable for "bad outcomes".  As usual, competition will play a key role here.  If cities have competitive elections, then politicians who do not provide quality of life and services will be thrown out. This threat will nudge them to serve the public.

I think we will continue to "thrive" despite the very real challenge of climate change because of our ability to  solve new problems and to come up with new ways of reinventing our cities and lifestyles.   I do not foresee Atmospheric CO2 levels rising to 1000 PPM.  As I discuss in Climatopolis,  as the threat of climate change becomes apparent we will simultaneously take actions to adapt to this new reality and there will be greater collective willingness to reduce GHG emissions. Initial Green Guinea Pig efforts such as California's AB32 will teach us important lessons concerning what are the most cost effective ways to decarbonize and the diffusion of these ideas will allow GHG emissions to stabilize.  As nations such as China and India grow richer, I predict that they will be more willing to join an international coalition of carbon reducers out of self interest as basic consumption satiation takes place. 

Thursday, September 29, 2011

Business Opportunities Created by Climate Change

Does the anticipation of doom and gloom create new opportunities for forward looking entrepreneurs?  In this piece, I argue that the answer is "yes".   Some of these folks will succeed and their new products will help us to adapt to the emerging threat of climate change.  In my public talks about my Climatopolis, I am always asked about the climate deniers and how they will adapt to climate change.  I challenge the critics here with the following counter-intuitive point.  The existence of Rick Perry and many other deniers actually creates a future market for the forward looking entrepreneurs.  When climate change's blows rev up, these "deniers" will be shocked and will be willing to pay a lot for products that will protect them. 

Do Good Seattle Retail Ideas Succeed in Manhattan?

Starbucks has taken its business model (expensive good coffee) and exported this concept to every major city around the world.  I was just in London and didn't have to walk far to find a Starbucks (namely 300 feet).   There are other Seattle businesses such as Glassybaby that  have not enjoyed equal success in "exporting" to other cities.  This article  offers some insights about the challenges of trying to play in the "big leagues". 
This article interested me because of its relevance to the broad topic of urban real estate. It is important to ask who might demand such real estate and what profits can they earn from leasing it. 

Wednesday, September 28, 2011

A 13 Year Old UCLA Undergrad Publishes His Autobiography

Below, I supply a photo of Moshe (not Buchinsky) Cavalin. He is a 13 year old UCLA student who has just published a best selling autobiography.   At age 13, my autobiography would have been a pinch thin.



web.sh.9.28.kai.pica


While his book may raise the hopes of billions, I find this a pinch silly and I urge Moshe to get back to work.

Tuesday, September 27, 2011

Debating the Short Run and Long Run Consequences of Raising the Marginal Tax Rate

Economists should have something smart to say about the consequences of making our tax code more progressive. Yes, this will make Warren Buffet happy but will it make Jacob Mincer happy?  Will our future society have less human capital and skill because of such a policy change?

A useful debate is now playing out concerning the consequences of changing the tax code. This smart Harvard undergraduate argues in today's Crimson that increases in the marginal tax rate will not discourage work effort.  Did he receive an "A" in Dr. Mankiw's course?   He may be right about short run effects of his policy shift but he is ignoring the long run effects on human capital acquisition.

To quote the author;

"I’ll be taking on one such assumption right now: the claim that higher marginal income tax rates discourage work. Though an article of faith in economic policy, this misguided belief actually stems from inaccurate assumptions made to simplify economic arguments. When compared to the real world, it simply does not hold water."

He argues that; 1. people don't really understand the non-linear tax rates they face, 2. That high earning people do not control how many hours they work and thus can't optimize at the margin even if they wanted to.

He ignores the human capital accumulation issue.  Facing a higher marginal tax rate, will people continue to invest less in  specialized time intensive skills and learning?  Does high tax Europe have a high degree of specialization and investment in human capital?

The Nobel Laureate James Heckman and Pete Klenow have an under-appreciated paper available here.   Read page 44 of their paper, "The progressivity in the tax schedule will tend to discourage human capital investment."  This unintended consequence of raising marginal rates should be incorporated into cost/benefit analysis of tax changes.

At the bottom of page 48, they write; "For the most skilled, both schooling and post-schooling investment is likely to be reduced when taxes are progressive."

They argue that such taxes reduce inequality but also lower the possible growth of the entire economy by reducing the effort of the skilled to invest.

If human capital is the key to long run growth, then is this a wise choice?  We need more empirical work to know the size of this distorting effect on long run incentives.

Monday, September 26, 2011

Nude in San Fran

Are the people of Los Angeles tough on their San Francisco nude associates?

"I brought my out-of-town guests here to show them an ‘only in San Francisco’ experience,” said Maggie Cahill, 53, a technology manager at a bank who stood scrunching her nose at the scene with friends from Los Angeles. “Where are the supermodel types?” she asked. “We want to know why it’s always the people who should not be naked who get naked.”

I respect self confidence.  

Switching subjects, I gave my first lecture of the 2011-2012 Academic Year this morning.  The students are looking rather young. They didn't care when I told them that I've been a professor for 20 years and that I'm starting to understand what I'm doing.   I asked them why I chose to become an economist. I asked them what economists do all day long? I asked them why economics is an exciting field?  I'm waiting for your answers!

Sunday, September 25, 2011

Picking Green Winners; How Did the DOE Evaluate Solyndra's Loan Request?

Everybody now knows that the DOE blew it when it guaranteed roughly $530 million dollars of loans to the "green" solar firm Solyndra.  But, we do not know what criteria the DOE used to judge whether this was (ex-ante) a good use of public funds.   Read this letter sent to Secretary Chu in 2010.  Many people have wondered how the DOE evaluates potentially promising proposals.  A for profit bank will use statistical models to try to predict the probability of default.

In the case of this loan, the DOE had more a complex objective.  It wanted to spur new U.S green economy research and it wanted to stimulate the economy and it wanted to be paid back.    What information did DOE officials receive that allowed them to make a decision?  Did the company provide projections concerning job growth over the short run? How could DOE evaluate the merits of such claims? It is well known in the transportation literature that project boosters always overstate ex-ante the likely ridership of new subway lines to encourage politicians to invest in them (see the work of Don Pickrell and John Kain).

Now Secretary Chu is an expert on energy issues. Has he assembled a team of experts who sat down and thought about how promising was the core strategy of each loan that was being considered?   Other bloggers say that the answer was "no".  Here is a subtle post.  To quote the author; "The difference isn't the nature of the risks, but rather the nature of the investor -- the federal government, straying far from its domain of demonstrated competance.  This is the core issue I see in the Solyndra situation, but one that seems to be getting overlooked.  The Title 17 loan guarantee program, in all of its various forms including a swath of more recent even larger plans to have a federal "Clean Energy Bank", is poorly structured to achieve success.  It puts a handful of largely invisible bureaucrats and advisors in the position of making unprecedented wealth transfers to fund high risk private ventures."

My concern is that the DOE was spending other people's money and thus didn't have sharp incentives to think through the merits of each loan.  I wonder if it was under pressure to get the $ out there to get the Keynesian demand push going.

The DOE should tell us how much time they spent evaluating the Solyndra proposal and who testified in front of them concerning the issue?   Did any congressional members lobby hard?   There is an asymmetry here. The supporters of Solyndra have every incentive to lobby hard but there is nobody representing "the budget". The opportunity cost of investing in a company such as Solyndra is to hold onto that $ and wait to see if a better project comes around.   But, the "winners" from this option are too diffused to be willing to lobby hard for this "patience" strategy.

The NY Times disagrees with my analysis. It's Editorial Page ascribes the Solyndra case to "bad luck".

To quote the article;

"Solyndra made a bad bet, investing heavily in a new type of solar array just as the price of silicon, the main ingredient in competitors’ solar cells, was dropping. Its demise should not spell the end of federal investment in the alternative fuels and energy sources that are critical to reducing greenhouse gas emissions, easing this country’s dependence on fossil fuels and keeping it competitive in the race for clean-energy jobs."

I agree with the second sentence but I believe that the DOE needs to be clear about its criteria it uses to evaluate projects and how it collects "kosher information" to prospectively evaluate these loans rather than engaging in wishful thinking.  

If venture capitalists aren't financing a "green investment" then does that send a bad signal that it may be a very risky  project?  

A final point.  Could the availability of public sector capital actually hurt the company's long run prospects. If a  Green CEO knows that he can rely on the government as his sugar daddy then this may create a moral hazard effect such that he invests less effort in building his prototype which he would have needed to convince Venture Capitalists that his firm is a profitable endeavor.

Saturday, September 24, 2011

My Macro Questions for Prof. Robert E. Lucas

Some things do not change. Back in October 1988, I wasn't the best macro student in Prof. Lucas' class.  This morning I tried to raise my game and read through his interview in today's WSJ.    I didn't think it was a very informative interview.  Here are the questions I would like to ask him.

1.  Your work has highlighted the dynamic game that is played between optimizing consumers, firms and the government.  What "rules of the game" should the government commit to in order to raise long term growth?  Should the marginal tax rate on capital be zero?  Should we have a head tax per worker?

2.  If the policy rules you support exacerbate short run recessions, should government spend considerable amounts of money in the short run to bailout people who are suffering?  Are you a "tough love" guy?  Is that a time consistent policy position for politicians who must face the angry electorate? What stand do you take on unemployment insurance provided by the public sector?   How do you balance compassion for the suffering versus minimizing moral hazard effects?

3.  You and Paul Krugman seem to have very different visions of how our economy works.  Given that you are both Nobel Laureates, how can there be such a divergence in your respective views of the economy?   Are your differences with Prof. Krugman based on "science" or on personal tastes over the equity/efficiency tradeoff?   For example, Krugman appears to believe that there is significant duration dependence with respect to unemployment.  Intuitively, this means that the experience of being unemployed now makes you less likely to be employed in the future because your skills atrophy.  Do you believe this?  In your past work, you have famously argued that the welfare costs of recessions are quite low because the representative agent's consumption falls by about 2%.  Do you still believe your claims?

4.  In your work on rational expectations, you implicitly assumed that everyone agrees on the true probability distributions of future random variables such as the inflation rate or shocks to the economy.  In the real world, people disagree over their subjective assessments of the likelihood of future random variables (i.e what is the probability that unemployment will be 15% in the year 2013).   While it is difficult to incorporate such heterogeneous expectations into formal models, do you believe that this is an important research subject to explore.   Where does "confidence" come from?   How has Hansen and Sargent's work on robust control influenced your thinking about models of business cycles?

5. Building on #4, do you believe in the importance of social interactions across individuals? If my friends are pessimistic about our future, can this have a contagion effect on me such that I become pessimistic and change my investment plans accordingly?  In this case, what role does the media play here?  If we acknowledge this possibility, then do issues of multiple equilibria arise?  Can the government play a role in nudging us to a better equilibria in this case --- if it could "instill confidence"? I see from your piece in the Minneapolis Fed publication that you are thinking about "Bank Runs" and Diamond and Dybvig's JPE paper.  Doesn't this work harken back to multiple equilibria models that we weren't taught back in 1988 with the focus on the one sector growth model?  In graduate school, I recall that you didn't want to engage on the broad topic of self fulfilling prophesies.  What has changed your mind about the importance of this topic?

6.   If the Fed and Ben Bernanke acknowledge that they "know that they do not know" whether their policies such as QE and QE2 will be effective but they say; "we are running an experiment and will see what happens" , how does this influence models of private sector investment.  When the decision makers in the economy acknowledge that they are learning about a moving target,  what is the best response by optimizing consumers and firms to such fundamental uncertainty?   If the answer is delay (due to option value), what is the government's best response to the private sector's best response?   How do macroeconomists avoid being dragged into very messy game theory?

Immigrants and Poison Use in Cities

The NY Times has published a politically incorrect piece  about immigrant purchase and use of poisons in big cities.  Typically living at high density and facing a rodent problem, some immigrants turn to purchasing powerful poisons to solve their problem.  These products (made in China) promise to leave the "cat unemployed".   (This quote made me wonder whether cats are counted in the BLS unemployment statistics?).

In the quote, I reproduce below, the NY Times claims that social networks among immigrants is the reason for the "poison externality".    This is an interesting twist on the usual beneficial social networks story that immigrants arrive and learn and succeed and then tell their friends at the origin about the benefits of moving to a location and this creates path-dependent migration.


"The product at the center of that investigation, which government officials disclosed this week, was sold in a box printed with Chinese characters and an awkward English translation: “The Cat Be Unemployed.” Officials said the substance contained a toxic chemical in a concentration almost 61 times higher than federal regulations allowed.

Though several professional exterminators said they had never encountered the product, they said it was just the latest in a stream of goods that for years had flowed from overseas factories into the supply closets of households and businesses in New York.

City health officials said that since 2005 they had received about 100 reports of poisoning from Tres Pasitos and two other anti-pest products favored by immigrants, Tempo and Chinese Chalk. While there were no deaths, about 40 percent of the victims had to be treated in medical centers, officials said.

Lower prices and language barriers can steer immigrants toward the underground market, immigrant advocates say. So can cultural biases: immigrants become familiar with products in their homeland and import their preferences, and sometimes the substance itself, when they move to the United States. They pass along their knowledge and techniques to neighbors and friends. "

So, how should this problem be solved?  Could educating the community about the consequences of using this product do the trick? I doubt it because each user will view himself as small.  Could rising incomes solve the problem?  Perhaps but enforcement will be needed to curb this density externality.

UPDATE:  Given that the theme of this blog post is politically incorrect, permit me to continue.  There is a long tradition of discussing environmental justice issues in immigrant and minority communities. I have written on this topic.   But, in this case --- the concentration of immigrants is causing the pollution challenge.

Friday, September 23, 2011

California Ends an Innovative Energy Program

This news was not good news.   California is phasing out a surcharge on electric utility customers that was earmarked to subsidizing purchases of energy efficient appliances and for paying for basic research.

There may be a serious lesson here.  Proponents of this charge never convincingly demonstrated that this money was being spent on "good things".  Rigorous cost/benefit analysis of taxes and government intervention plays a crucial role in educating skeptical consumers that they are getting their "money's worth" when they sacrifice private consumption in return for providing a big pot of $ that can be spent on new technology and funding research.

Liberals mock Tea Party members and are shocked by their refusal to "do their share" for the greater good.  I can imagine that Tea Party members would be more likely to support higher taxes and a larger government sector if they believed that this money was well spent on public goods that benefit society. If there is a belief that the increase in public goods financed with new tax dollars is tiny, then most taxpayers will not support such legislation.

So, my point is that society needs to empower the economists to step in and evaluate which government investments are cost effective and which are not.  It is not clear to me that a serious evaluation was ever conducted concerning whether this electricity surcharge yielded net benefits to the people of California.   If I had been asked to conduct such research, I would have examined the following;

1. For the people who purchased energy efficient appliances and received a rebate, would they have purchased similar appliances had they not received rebates?  Were they at the margin?  How much greenhouse gas emissions was abated because of this incentive program?  Valued at $25 per ton, what was the total benefits on this margin?

2.  For the research projects funded by PIER, what did we learn?  What are the major ideas?  Would we have been likely to have learned these ideas if this grants program hadn't existed?

Thursday, September 22, 2011

Declining Deaths from Natural Disasters

2011 has been a terrible year for natural disasters but for those of you who need some optimism, read this report about long run trends in deaths from  natural disasters.  I was happy to see that the author has read my 2005 RESTAT paper the "Death Toll from Natural Disasters".

Green Tea

PERC's Terry Anderson has a smart OP-ED in today's WSJ.  Here is a line from his last paragraph; "
It is not enough to strut your stuff in clothes made of recycled materials while driving your hybrid to an environmental protest. And environmental quality cannot be bought simply by throwing more tax dollars and regulations at problems."

He advocates for a "Green Tea Party (GTP)" .  To quote the article;

"The GTP's platform would be that only prosperity and incentives can drive environmental improvements. The first plank: Wealthier is healthier. From the U.S. to the former Soviet Union, data show that economic growth is necessary for environmental improvement, not its enemy. Such growth requires a strong private sector, not more federal spending and red tape. The second plank: Incentives matter. The GTP would use a carrot instead of the regulatory stick to improve environmental quality, and let energy markets and prices dictate energy sources. A replacement for fossil fuels will be found only when entrepreneurs can make a profit from cheaper, cleaner and more efficient energy."

A Green Bargaining Game and Electric Vehicle Exports

As China's domestic durables market grows, this nation will use its increasing market clout to extract better terms of trade for those multinationals who seek to sell there and seek to qualify for government incentives from the Chinese government.  This article sketches the tradeoffs that General Motors faces as it considers whether it wants to share its "green golden goose" technology with its Chinese counterparts in return for "carrots".

This is an interesting example of intellectual property protection and the rise of the green economy.   Greens would prefer that vehicle growth be slow in China and that if it must happen that the vehicles should not be gasoline vehicles.  Chinese electric vehicles will create GHG emissions because of China's reliance on coal to produce electricity.

If GM is willing to partner with the Chinese, then this will increase China's green car share.  Will GM accept the terms they have been offered?   They would be more likely to do so if they believe that their innovative edge can't be matched by China's engineers.   In fashion, designers move on to the next big thing  as their previous idea is mass produced.   Should we view GM's engineers as fashion designers?

Wednesday, September 21, 2011

But Will the Planet Notice West Hollywood's Fur Ban?

After 25 years away, I returned to the LSE and had a great time.  Both the International Growth Center and the Department of Geography and the Environment were wonderful hosts.  It was great to see old friends at the LSE  Economics Department and to try to recall who I was at the age of 20 as I was starting my research career.

Switching gears, I want to pay homage to my friend Gernot Wagner.  Good PR people are now pushing bloggers to notice his book and I reproduce a quote below that I received.  Today's NY Times has an article that Gernot would have something smart to say about.  West Hollywood is a funky town about 5 miles east of UCLA.  This community (which is LA's Greenwich Village) has banned fur clothing sales.  Could this action set off a chain reaction such that fur creatures are protected?   Gernot and I would say, "no".    The town's leaders know this but they seek to make a statement.


“This is a tiny city, so it’s mostly symbolic,” said Councilman John D’Amico, who sponsored the fur ban. “I think the impact will be heard from here to Fifth Avenue. People will talk about what a fur ban means in a new way.”


So, this is a new case of the "boycott".   Since the coat you wear is observed in public, the people of West Hollywood can use shame and ostracism to enforce this new social norm.  But, I doubt that neighboring Beverly Hills people will change their behavior. In fact, they may buy more fur coats if they think that the price may drop.  

Here is the PR blurb for Gernot's book.

"In But Will the Planet Notice?: How Smart Economics Can Save the World (Oct 2011) Gernot Wagner, an economist at the Environmental Defense Fund, shows that the solution to climate instability will not be found in science, politics, or even activism—guiding market forces in the U.S. and around the world is the only solution. Wagner had a terrific op-ed in the New York Times tied directly to the book, titled “Going Green but Getting Nowhere”. The piece was the Times’ #2 most emailed story that day and has been attracting many reader responses."

Tuesday, September 20, 2011

Forget the Future? Pension Uncertainty and Scaling Back Today's Consumption

When I was an undergraduate, I was taught that in a closed economy that C+I+G=Y.   Given that I'm back at the LSE, I've been pondering this deep macro identity.   Government spending, G, is going to decline as we try to cut the deficit.   I, private investment,  is frozen as firms are puzzled about what will happen next so that leaves "C" --- consumer spending.

Won't consumers be kind enough to spend our way out of recession?   Ricardian Equivalence posits that forward looking consumers anticipate coming tax increases and this expectation that their permanent income is lower than reflected by today's income leads consumers to cut back consumption now and save today.

Now a pinch more bad news.   Today's Daily Telegraph reports that 60% of individuals surveyed in the UK do not believe that their pension will give them enough money to live on in retirement.   Now, I don't know where this expectation comes from but if a substantial percentage of U.S adults of working age believe this then they will respond by scaling back their consumption today to save more for the future.

It is too strong to call this a self fulfilling prophesy but this is an ugly case highlighting how expectations of the medium term influence choices today.

In the Keynesian consumption function, men are monkeys who do not ponder the future.  In that model,  today's consumption is solely a function of today's income.  Would our economy be in stronger shape if we had less of an ability to imagine the future?  Must we evolve into monkeys?

Monday, September 19, 2011

Can Urban Dog Owners Be Shamed Into Scooping Poop?

In my blog post from yesterday, I documented that London has a $150 fine for littering.  Today, as I report below, I see that London is also engaging in "green peer pressure" to nudge dog owners to scoop up their dog's poop.  The photo says;  "What sort of dog owner are you?"  There are two choices.  The "bad" owner leaves the output as shown in the left photo while the "good" owner creates the tidy package displayed on the right panel.  So, Who are You?


Sunday, September 18, 2011

Green Cities and Credible Crime and Punishment

In the late 1960s, Gary Becker published this paper on the economics of deterrence.   Expected fines induce good behavior.   As I was walking in London this morning, I saw this poster and took a picture of it.  While its a pinch blurry, you should see a shoe that just stepped in someone's gum.  Somebody must have thrown this gum down on the ground rather than throwing it out.  The caption says; "If you're caught dropping litter you will be fined 80 pounds."  Now keep in mind that the exchange rate is $1.8 per pound so this is a pretty serious penalty.


Camden-20110918-00049.jpg

What is the probability of being detected littering?  The streets of London are covered with security cameras but I don't know if anyone is monitoring them for litter bugs.

How does this "old school" punishment green London?   I would posit that there will be less litter.  How much less litter?   It would interest me if anyone has tried to quantify this?

As we know, Singapore has been able to enact credible punishments and by raising the expected cost of malfeasance this has induced good behavior.   As someone who wants to see the rise of "Green Cities",  I don't care if cities use carrots or sticks as incentives to achieve these goals.  From a public finance standpoint, sticks (such as littering fines) are cheaper for me than paying people to pick up litter.

How cities balance individuals' rights to privacy (ACLU stuff) versus minimizing individuals' infringement on everyone else's common property (i.e litter, public spitting, dog poop) is an interesting tradeoff we face.

Saturday, September 17, 2011

An American in England

After a 25 year absence, I returned to the LSE campus today.  I couldn't resist entering their bookstore.  When I was 20 years old, I spent a fair bit of $ there.   Now that I'm 45,  I know most of the authors of the books they have in stock.  Paul Krugman and Joe Stiglitz have their own sections at the bookstore and there were columns of Tirole's old IO book piled up and ready to be sold.    Ed Glaeser's Triumph of the City can be purchased there but my Climatopolis is not stocked there.  You get what you deserve!  The school seems to have to have forgotten that I'm proud member of the class of '87.

I went on a 3 hour walk today and walked along the Thames until I arrived at the Government buildings. Take a look at this photo below.   Their Department of Energy is called the "Department of Energy and Climate Change".    Interesting stuff.




Westminster-20110917-00048.jpg

London looks real good to me (it reminds me of Washington DC now that crime is down in our nation's capital) except the weather quickly shifted from sun to heavy rain and I was unprepared. I left my umbrella and raincoat at the hotel.   I was proud of myself that armed simply with my blackberry's Google Map (but no real map), I was able to navigate London's crooked streets and return to my hotel without a taxi or asking anyone for help.

On my red eye flight from LA to London, I didn't get much work done but I did read a good book about commercial real estate (Confessions of a Real Estate Entrepreneur by James Randel).  Now that I'm a real estate Professor, I am determined to really know my stuff.  The 10 hour flight flew by but I only slept for 2 hours and watched parts of 4 different movies (Thor, Limitless, Tomorrow Never Something (Bond movie), and Bridemaids (not a dudes' movie).

In yesterday's UK Independent newspaper, there was a very interesting article that I can't find online.  It said that the UK is revamping its food spoilage date regulation.  Everyone seeks to avoid buying old rancid milk and the dates on the milk help.  Apparently in the UK, there is concern among environmentalists that "good food" is being thrown out prematurely because it has an early expiration date.  This raises an interesting issue. If I understood the article, some foods may no longer present an expiration date.  So, there is a tradeoff --- consumers want to be able to differentiate high quality and low quality food and low quality food is "older food".   Given that sellers are unable to price differentiate on "age" of food, they must prefer to not date the food and instead say; "milk is milk".  If a supermarket can sell 2 week old milk and 3 week old milk it faces less inventory risk from week to week milk demand shocks.  In the past, it would lose if milk demand in week 2 is low because it will be called "bad milk" in week 3.  Now, I can't remember if milk will still be required to be labeled but I stick to my general point.  Economists are big fans of information provision but this appears to be a case where consumers will be given less information.

Thursday, September 15, 2011

New Metrics For Ranking Green Cities

I'm always looking for new ways to track city quality of life.  This article from the NY Post talks about the recent reduction in smoking rates in NYC.  That's a good new indicator.  Two more indicators that I'm having trouble collecting data on are dog poop and public spitting.  Rome would not score high on the doggy criteria.  Some of China's cities wouldn't score great on the spitting.

As usual, an index weights issue would arise.  If a city has lots of smokers but no spitting or dog poop --- is it "green"?

For those researchers looking for an applied micro topic, it would interest me if a good paper can be written on the effects of exposure to 2nd hand smoke using the within city declines in smoking rates to generate some cross city variation.  I realize that exposure and effects are not instantaneous.   In the smoking externality literature, the effect of second hand smoke has been an important factor in determining what is the optimal smoking tax. I don't believe we know this effect?

My Climate Change Adaptation Talk at LSE

Here  is the announcement for my talk at the LSE next Tuesday afternoon.   There's several different ways to approach the broad question of how will Europe adapt to climate change.

1.  You can focus on geography and compare likely scenarios for northern versus southern nations and coastal versus inland nations and nations who have built up along rivers.

2.  You can contrast likely outcomes for the richest nations in Europe versus poorer nations in Europe.  You can also discuss across income groups the issue of how the rich will cope versus how the poor will cope.

3. You can contrast how urbanites will cope versus how agricultural interests will adapt.

4.  You can discuss how the EU and its emphasis on free trade within the zone will help nations to adapt to changing conditions.

5.  You can discuss which nations have the best institutions to allow them to be flexible to adapt to changing circumstances.

I see an important role for geographers here.  There is a real need for specificity and in particular for detailed maps to be made concerning the geography of different European nations.  Which of their cities are at greatest risk of flooding?   Are their citizens aware of these evolving risks?  What "insurance" have these nations purchased through where they locate housing and industry and what types of materials they build with?

A recent example of such specificity is a new paper about California's coastline and climate change adaptation. I will blog about that paper in the future.

As readers of this exciting blog know, I am an optimist.  Human ingenuity is a key asset in helping us to cope with change.  If we know that we face increased threats of extreme heat and cold and floods and other challenges, this "heads up" is a first step to making investments now that will reduce the damage caused by these events when they happen.   My Climatopolis book was meant to start a discussion about how economists view investment under uncertainty.  A surprising number of environmentalists view men and women as helpless doomed individuals who will be knocked out by Mother Nature.  I don't believe that.  We have many strategies available to us to adapt to the very real challenge of climate change and we have the right incentives to do so.

Economists Who Write Letters to Newspapers

I've always liked the letters to the editor that Donald Boudreaux posts to his blog.  He needs to reveal what % are actually published!  In my attempt to make my mom proud of me as a "public intellectual", permit me to point you to My letter in today's LA Times.

CEQA reform

Re "CEQA and the art of the deal," Editorial, Sept. 12

Is California's regulatory red tape inhibiting our growth and ability to make good-land use decisions?

The Times presents the California Environmental Quality Act's nuanced role as both a valuable tool for blocking destructive undertakings and a

vehicle for anti-competitive delays. But what regulator in Sacramento has the Solomon-like wisdom to balance the benefits of economic development against the costs of damage to environmental assets?

Instead, what if developers were required to post a bond to be held in escrow? The developer would lose this money if a panel of experts hired by the state determined that the project caused significant environmental damage. Projects posting this bond would be fast-tracked. Developers would gain certainty over the investment process while being put on the hook for malfeasance.

Matthew E. Kahn

Los Angeles

So, I'm trying to dust off the old idea of backloading expected punishment.  There is an averse selection issue here and moral hazard issue.  We want to implement those development projects that offers  private benefits and relatively low social costs.  Developers will try to emphasize the private benefits (which they internalize) and try to externalize the social costs.  My proposal of posting a bond would lead to developers only selecting those projects that they still believe are worth it despite the expected punishment.  Once they have selected their favorite projects and started implementing them, under my proposal they would have stronger incentives to take care in minimizing environmental impacts because of fear that they will pay for damage.

Now, who are these Ph.D. jurists who I will deputize?  The University of California is filled with honorable people who are experts and could be paid some reasonably low daily fee for serving on this jury.    If you reject my idea, then you believe that a jury and judges are "better judges" of tradeoffs than experts.  I disagree with that.

Wednesday, September 14, 2011

Liberal Cities Do Block Economic Development: The Case of Woodstock NY

This article by Peter Applebome has an excellent lead; "If they had decided to pave paradise and put up a parking lot, the issues might have seemed simpler. Instead, a protracted battle over a 53-unit affordable housing project is dividing this still-crunchy town where mellow ’60s vibes and liberal politics coexist uneasily with real estate prices increasingly out of the reach of the humbler classes."

He concisely sketches the tradeoff that I documented based on California data in this paper for the Journal of Urban Economics.  Here is my paper "boring" abstract

Traditional explanations for why some communities block new housing construction focus on incumbent home owner incentives to block entry. Local resident political ideology may also influence community permitting decisions. This paper uses city level panel data across California metropolitan areas from 2000 to 2008 to document that liberal cities grant fewer new housing permits than observationally similar cities located within the same metropolitan area. Cities experiencing a growth in their liberal voter share have a lower new housing permit growth rate.


In the case of Woodstock,  it seems that its residents seek to zone out the poor and use quality of life concerns as a more politically correct explanation.  To quote the article;



"Nobody would tell you they don’t want these people in our town,” said Jeff Moran, the town supervisor, who has been a conflicted supporter of the rental project. “Instead, they talk about the effect on the quality of life, ramping up the costs of services and those kind of things. But there’s a joke in town that the reason The Woodstock Times costs a dollar is because people don’t want change. People come here and they think they have an investment in the town being a certain way.”

Opponents, particularly in neighborhoods near the project site, said the issue was not Nimbyism or opposition to public housing but practical objections based on Woodstock’s small size (population about 6,000), charmingly Brigadoonish downtown and creaky infrastructure. "


Flipping things around, there hasn't been much discussion that in Republican Texas that it is easy to build and this keeps housing prices low.  As people move to these unconstrained cities, some jobs follow and this allows Gov. Perry to make his point that he is a "jobs creator".  But, how much of this jobs growth is due to relaxed housing development rules?





















Tuesday, September 13, 2011

Competition Between UCLA and USC

The rankings are in and UCLA has lost out to cross-town rival USC in the great US New & World Report Rankings.  As a UCLA faculty member, I view this defeat to be a good thing.   Competition makes us stronger and I believe that UCLA has been complacent.   When I taught at Columbia University in the 1990s, I believed that the rise of NYU would force Columbia to stop relying on its fancy Ivy League status and to raise its game.  Something similar will now play out at UCLA as USC gets serious about more activities than football and engineering.

As UCLA raises its tuition, it needs to provide a higher quality product.  Faculty must do a better job in the undergraduate classroom and the teaching assistants must show up sober and ready to speak clearly to students to help them learn the core material.  In this tough job market, we owe it to our students to teach them how to think and to become better problem solvers.

In return for the faculty investing more effort in continuing UCLA excellence, I believe that our Deans and Administrators must also raise their game.   There appears to be all sorts of money spent on silly things on campus and in the University of California system in general.  Everyone bemoans the growth of "administrators".  The President of the University of California owes an explanation for what the non-teaching, non-researching employees of the university actually do all day long.  

There also should be a stoppage in building construction.  At a time when the faculty is shrinking and the Deans are choosing not to hire full professors (and instead are investing in risky, young assistant professors), there appears to be plenty of money to build new buildings such as UCLA's vaunted future hotel.  This shows strange priorities.  Human capital > Hotel.   Could this equation be wrong?

If USC succeeds at raising $6 billion dollars and succeeds at luring superstar faculty and graduate students to their campus then this will signal to UCLA leaders the power of raising private endowment money and to stop begging Sacramento for spare change that the state doesn't have and doesn't want to provide to the Wizards of Westwood.   USC is honest that this game requires cash and lots of it.    The more money that UCLA can raise it can be generous and redistribute to the less fortunate.  

I wish my Trojan friends well.  Excellence is hard to build but it is certainly worth pursuing!

Monday, September 12, 2011

Green NASCAR?

Does Al Gore watch the Indianapolis 500 race? Millions of people do but do people in Berkeley and Santa Monica?  I don't watch the race.  The thought of watching other people blow out their tires as they race 500 miles doesn't interest me. But, perhaps I am wrong for being such a snob.  Today, the NY Times  reports that NASCAR is going "green".  Given that millions of non-greens watch, this is an interesting cultural experiment.  There hasn't been convincing research studying the "contagion" effect of environmentalism. As I asked many times, "If Dick Cheney moved to Berkeley, would he become an environmentalist?" Does contact with "the other" change your views?  

A Return to the LSE

25 years ago I embarked on spending my junior year abroad at the London School of Economics. I arrived in London in September 1986 not knowing what to expect.  I knew that the LSE was a serious place but I had never met Ph.D. students before or lived in a major city as an adult (I attended rural Hamilton College).   As a 20 year old, I didn't know what "economic research" was or what economists actually did all day long.   I had a great year but I've never been back to England.  Unfortunately, time flies.  25 years have flown by and when I look at the webpages at LSE --- I see that my professors there are no longer there.

Later this week, I make my return.  I'm participating in the IGC's Growth Week and I'm grateful to my friend Enrico Moretti for giving me the opportunity to speak on monday and to my friend Henry Overman     for setting up a seminar for me that tuesday at the Geography and Environment department at LSE.

25 years ago, I played on the LSE's football team and there was a guy on our team who was getting a graduate degree in Geography at LSE and I used to kid him about what and the heck is geography. Was he just studying maps all day long? Little did I know that I would invest my time in working on this very subject.

The LSE was my first chance to see "the Big Leagues" and my experience there nudged me to work harder.  It was excellent preparation for the University of Chicago.  I remember studying econometrics there and arguing with a Ph.D. student in econometrics that the field made little sense because all parametric econometric models were mis-specified. I argued that the analyst could never know the true functional form and thus was estimating the wrong model.     Little did I know that this would be the basis for the rise of non-parametric econometrics.  I was ahead of my time but also a real smug idiot.     Some things do not change!

I remember the student activism at the LSE.  1986 was a time of deep concern about Apartheid in South Africa. I bought my brother a LSE t-shirt with a clenched fist that said ; "The LSE is Revolting".  We laughed at the double meaning.   I have many memories of my great year there.

Sunday, September 11, 2011

A Nice Economist

If you read my quote in tomorrow's Wall Street Journal, I hope that I come across as a nice fellow.   When the WSJ contacted me about their story, I was told that I couldn't mention my own books or Glaeser's Triumph of the City (because he is a co-author of mine).  So, I mentioned some other books that I like.

Travel by Bikes in Cities

On 9/11, I have nothing smart to add to the national discussion so I will change topics. Note the picture below.  It graphs time trends in the share of workers who commute by bike.  There are large differences across liberal cities with respect to biking shares.  I'm guessing that the editors of the Times hope that this salient graph will make New Yorkers feel guilty that Portland and San Francisco have made greater progress on embracing the bike while New Yorkers stay on the subway.



source

In a recent paper, I looked within cities and studied who bikes to work.  See Table 5 of this paper.  This table focuses on California.  Kahn, Matthew E. & Eric A. Morris (2009). Walking the walk: New tests of environmentalism’s association with green travel behavior. Journal of the American Planning Association, 75(4), 389-405.  (Refereed)

Those who live closer to the city center and live in "environmentalist communities" are most likely to commute by bike.   There is a network externality here.  If more people in the community want to commute by bike, the local Mayor has a greater incentive to supply infrastructure to support this choice.  As the Mayor invests public funds in improving biking as a commuting mode, more "bike types" will move to this city and more incumbent commuters will choose to commute by bike.

So, this is really a commons issue of reallocating land away from other uses towards being "bike friendly".  In China right now, the opposite trend is taking place.  Public space that was used by bikes is now being grabbed by cars.   Now , can't "we all get along"?  This is an open question given that cars and bikes move at different speeds and that the laws of physics are well understood.

As the U.S population ages, will older Boomers in Berkeley travel by bike?  Or will solar powered motorcycles be in demand?

Saturday, September 10, 2011

The End of Baldness?

Forget "The End of History",  new Yale research makes the claim that the end of baldness is near.   Tyler Cowen will need to amend his Great Stagnation book to acknowledge this coming triumph. This ranks up there with the airplane and clean water!


"Yale researchers have uncovered chemical triggers that could restore hair growth in bald men. Bald men have stem cells in their hair follicles, a known fact that the new Yale study, led by assistant biology professor Valerie Horsley, used to discover a way to reactivate these cells. After the team identified that a precursor to hair growth is the growth of a layer of fat in the scalp, they then identified the stem cell responsible for that fat growth."

So, if our economy remains in deep recession but we are no longer bald;  has our standard of living improved or not?

Friday, September 09, 2011

Google Trends Delivers a Verdict on Which Economist the Public Cares About

A non-random sampling of blog posts suggests that Paul Krugman is our "public intellectual".  To test this claim, I asked Google Trends to provide me with the data with a head to head competition between Larry Summers and Paul Krugman.    I figure that these Cambridge Titans have a long running friendly competition so let's take a look at look at the facts from 2004 until the present.

The data suggests that Krugman wins by knockout. He is in the blue trunks and Summers is graphed in the Crimson color.  I take such "search results" seriously because it is a quick revealed preference test of what the masses who use Google care about.  This isn't "cheap talk".    Matthew Kotchen and I have used this tool in our own environmental research.

Now, Dr K. shouldn't get too cocky.  He doesn't compete that well against Lady Gaga.


New UCLA Research Demonstrates that Scientist's Short Run Climate Predictions are Improving

Information about the future is valuable stuff. Do you remember "Biff" in Back to the Future? He became a zillionaire because he knew who would win the Superbowl and World Series before they were played (thanks to Michael J. Fox's mistake) and this allowed him to make a fortune betting.

But, now consider the increasingly likely scenario that scientists can make progress predicting future weather patterns.  Farmers are likely to find this to be useful information in making planting decisions.   Adaptation to climate change will be easier if we have a better sense of what challenges we are facing with 12 months to get ready for the scenarios we are likely to face.  Futures markets will reflect this new information and self interested people and firms will respond earlier.  This example highlights how climate science and capitalism work together to protect us from this evolving challenge.


Can scientists look at next year's climate?

Stuart Wolpert, swolpert@support.ucla.edu
310-206-0511
           
Is it possible to make valid climate predictions that go beyond weeks, months, even a year? UCLA atmospheric scientists report they have now made long-term climate forecasts that are among the best ever — predicting climate up to 16 months in advance, nearly twice the length of time previously achieved by climate scientists. 

Forecasts of climate are much more general than short-term weather forecasts; they do not predict precise temperatures in specific cities, but they still may have major implications for agriculture, industry and the economy, said Michael Ghil, a distinguished professor of climate dynamics in the UCLA Department of Atmospheric and Oceanic Sciences and senior author of the research. 

The study is currently available online in the journal Proceedings of the National Academy of Sciences (PNAS) and will be published in an upcoming print edition of the journal. 

"Certain climate features might be predictable, although not in such detail as the temperature and whether it will rain in Los Angeles on such a day two years from now," said Ghil, who is also a member of UCLA's Institute of Geophysics and Planetary Physics. "These are averages over larger areas and longer time spans." 

Long-term climate forecasts could help predict El Niño events more than a year in advance. El Niño is a climate pattern characterized by the warming of equatorial surface waters, which dramatically disrupts weather patterns over much of the globe and strikes as often as every second year, as seldom as every seventh year or somewhere in between. 

A major issue addressed by Ghil and his colleagues in the PNAS research is the difficulty of separating natural climate variability from human-induced climate change and how to take natural variability into account when making climate models.

For the study, Ghil and his UCLA colleagues Michael Chekroun and Dmitri Kondrashov of the department of atmospheric and oceanic sciences analyzed sea-surface temperatures globally. To improve their forecasts, they devised a new algorithm based on novel insights about the mathematics of how short-term weather interacts with long-term climate. Weather covers a period of days, while climate covers months and longer. 

As is customary in this field, Ghil and his colleagues used five decades of climate data and test predictions retrospectively. For example, they used climate data from 1950 to 1970 to make "forecasts" for January 1971, February 1971 and beyond and see how accurate the predictions were. They reported achieving higher accuracy in their predictions 16 months out than other scientists achieved in half that time. 

The research was federally funded by the U.S. Department of Energy and the National Science Foundation. 

Extreme climate, extreme events 

Ghil also led a separate, three-year European Commission–funded project called "Extreme Events: Causes and Consequences" involving 17 institutions in nine countries. In a recent paper on extreme events, published this summer in the journal Nonlinear Processes in Geophysics, Ghil and colleagues addressed not only extreme weather and climate but extreme events such as earthquakes and other natural catastrophes, and even extreme economic events. Their study included an analysis of the macro-economic impact of extreme events. 

"It turns out, surprisingly, that it is worse when catastrophes occur during an economic expansion, and better during a recession," Ghil said. "If your roof blows off in a hurricane, it's easier to get somebody to fix your roof when many people are out of work and wages are depressed. This finding is consistent with, and helps explain, reports of the World Bank on the impact of natural catastrophes." 

Ghil spoke this past July about a mathematical theory of climate sensitivity at the International Congress on Industrial and Applied Mathematics, in Vancouver, a quadrennial event that showcases the most important contributions to the field over the preceding four years.  

Wednesday, September 07, 2011

Why Do So Many NBA Players Practice at UCLA?

This article celebrates the fact that dozens of pro NBA players hang out at UCLA to scrimmage.   Why are they here?  To take my class?  To salute the long UCLA tradition of basketball excellence?  To find dates?   There may be some truth to each of these but I believe that urban economics offers a simpler explanation.   UCLA is located in Westwood and Westwood is in West Los Angeles.  These rich guys tend to live around West LA and to hang out around here so it is natural to play ball here.  

When I taught at Stanford, there was a woman in my class who went on to become a WNBA star.  She was often asleep in my class but she told me that the reason for this was because they practiced so early in the morning. Given my track record for training superstar athletes, I encourage the NBA players to audit my fall environmental class. Given that there won't be a NBA season, it is time for these guys to invest again in their human capital.  Skill begets skill baby.

Tuesday, September 06, 2011

Drought in Texas and Water Prices

The NY Times writes an interesting article  about drought in Texas but manages not to mention water prices.   The article goes on and on about the death of "green lawns" but why do we have a fixation with green grass?  I understand that it is fun to play sports on but many lawns are not used for sports but simply to "fit in" with the rest of the neighborhood.  If you are a fan of conformity, that's okay with me but if the actions we take to "fit in" are resource intensive then we need to find new ways to signal our willingness to conform.

Texas could offer us an excellent preview concerning how climate change adaptation takes place but prices must be allowed to rise to reflect scarcity.  I argue in Climatopolis  that government intervention can impede adaptation if it takes well meaning actions that limit "price gouging" but price signals are exactly what we need for capitalism to help us to adapt to drought and other climate challenges.   To paraphrase John Lennon, give the price system a chance!

California's AB32 and Local Job Growth

Joel Fox has written an interesting piece  about his hope that California will roll back some environmental regulations.  He quotes a piece I wrote several years ago when I was asked to give my prospective views on the likely impacts of AB32.   He is correct that I assumed that while California would be an environmental leader with respect to enacting carbon dioxide mitigation legislation that I thought that the rest of the country would be ramping up its regulations.

But, now we sit in 2011 and California continues to gear up for AB32 while the rest of the nation has not stepped up. Is California putting itself at a strategic disadvantage during a time when we all want "more jobs"?

The good news here is that the California Air Resources Board understands the political realities that it faces.  I would say that the ARB is being very cautious in rolling out AB32. It has delayed introducing the cap and trade piece of AB32 and it is being quite generous to industry in terms of "tip toeing" into the water.   Industry will only slowly face serious carbon prices and has plenty of time to adjust.

A liberal state such as California has both environmental regulation and labor regulation.  We also do not have strong public schools.  A serious researcher would seek to disentangle these 3 effects in understanding why firms might leave California to go to other places.   Exactly what types of "small business" jobs is California likely to lose due to AB32?  What is the mechanism? How much will this well meaning regulation raise their costs of doing business? Why can't they pass these costs on to consumers?  Why can't these firms adapt by changing their production processes?  Why are these firms so "high carbon"?    I'd like to see answers to these questions and then I would be more sympathetic to Mr. Fox's key arguments.

David Brooks Disses Green Jobs

Can Uncle Sam pick green winners?  David Brooks doesn't think so.  Industrial policy appears to go through fashion cycles. It was in vogue but now during this time of deficits, the urge to offer strategic subsidies is declining.

A year ago, I started to write an event study focused on understanding the stock price dynamics for "green" companies that are publicly owned.   I wanted to test whether such companies earn abnormally high returns when the public believes that Federal Carbon Legislation (i.e Waxman and Markey) would be enacted.

My set of "green tech" firms included those listed below.  For each firm (and a control group of "dirty firms" such as ExxonMobil), I studied how each company's excess returns (the percent change in the daily stock price for a company - the percent change in the daily Dow Jones Index) correlated with the Intrade probability that Federal Cap and Trade Carbon Legislation would be passed and the price of gasoline.  I found that the green companies earned higher returns when the probability of Federal legislation increased and the price of gasoline was higher.  But, now the probability of such legislation is zero.

Here are the companies I was studying. Have you invested in any of them? How many jobs have they created?  How many jobs would they have created had we enacted Waxman/Markey?

NON-CALIFORNIA HEADQUARTERED

Alliant Energy Corporation
“Alliant Energy Corporation operates in electric and gas utility businesses in the United States...In addition, Alliant Energy Corporation has investments in environmental consulting, and engineering and renewable energy services businesses.”—Yahoo Finance
American Superconductor Corporation
American Superconductor Corporation is a power technologies company that provides wind turbine designs and electrical control systems primarily in North America, Europe, and the Asia-Pacific. Its Power Systems segment produces a range of products to enhance electrical grid capacity and reliability. It also licenses proprietary wind turbine designs to manufacturers of such systems and provides consulting services to the wind industry.—Yahoo Finance

Amtech Systems, Inc.
“Amtech Systems, Inc., through its subsidiaries, engages in the design, assembly, sale, and installation of capital equipment and related consumables used in the manufacture of wafers, primarily for the solar and semiconductor industries.”—Yahoo Finance

Ascent Solar Technologies, Inc.
“Ascent Solar Technologies, Inc., a development stage company, focused on commercializing flexible photovoltaic (PV) modules using its proprietary technology ...The company plans to serve the building integrated photovoltaic market, as well as specialty markets, such as defense, portable power, transportation, and electronic integrated photovoltaic markets.”—Yahoo Finance

A123 Systems, Inc.
“A123 Systems, Inc. develops and manufactures advanced lithium-ion batteries and energy storage systems that deliver high power and energy density, long life, and excellent safety performance. The company’s game-changing technology enables customers to commercialize innovative products for the transportation, electric grid and commercial markets.”—Company Website

Baldor Electric Co.
Baldor Electric Co. engages in the designing, marketing and manufacturing of industrial electrical motors, mechanical power transmission products, drives and generators. 

Broadwind Energy Inc.
Broadwind Energy Inc. provides wind towers, gears for energy and infrastructure markets and services primarily oriented to the wind energy market in the United States. Services include assembly, maintenance and repair of wind towers. —Yahoo Finance

Brooks Automation Inc.
“A leading worldwide provider of automation, vacuum and instrumentation solutions to the global semiconductor and related industries.  Our products and services are meeting the needs of customers across a broad spectrum of applications and industries and the global semiconductor manufacturing sector is our largest served market.”—Company Website

BTU International Inc.

“BTU International is a leading global supplier of advanced thermal processing equipment and processes to the alternative energy and electronics assembly markets. BTU equipment and know-how are used in solar cell, nuclear fuel and fuel cell manufacturing as well as in the production of printed circuit board assemblies and semiconductor packaging.”—Company Website

Calpine Corp.
“Calpine Corporation, an independent wholesale power generation company, engages in the ownership and operation of natural gas-fired and geothermal power plants in North America. It generates electricity and produces steam from natural gas-fired combustion and renewable geothermal facilities.”—Yahoo Finance

Emcore Corporation
“EMCORE Corporation provides compound semiconductor-based components and subsystems for the fiber optics and solar power markets.”—Yahoo Finance

Energy Conversion Devices, Inc.
Energy Conversion Devices, Inc. deals with the design and manufacturing of photovoltaic (PV) products. It also deals with design, development and installation of rooftop solar systems.

Ener1, Inc.
“Ener1, Inc., together with its subsidiaries, engages in designing, developing, and manufacturing rechargeable lithium-ion batteries and battery systems for energy storage in the United States and South Korea…The Battery segment offers lithium-ion batteries for hybrid, plug-in hybrid, and electric vehicles, as well as for buses, trucks, and other alternative transportation vehicles.”—Yahoo Finance

Evergreen Solar, Inc.
“Evergreen Solar, Inc. develops, manufactures, and markets solar power products primarily in the United States and Europe. The company manufactures String Ribbon solar panels utilizing its proprietary wafer manufacturing technology, which involves a process to produce multi-crystalline silicon wafers by growing thin strips of silicon that are cut into wafers. Its products include wafers, which are flat pieces of crystalline silicon that can be processed and assembled into solar cells; cells, devices made from silicon wafer and convert sunlight into electricity by means of a process known as the photovoltaic effect; and panels, which are assemblies of solar cells that are electrically interconnected and laminated in a durable and weather-tight package.”—Yahoo Finance

First Solar, Inc.
“First Solar, Inc. designs, manufactures, and sells solar electric power modules using a proprietary thin film semiconductor technology. It also designs, constructs, and sells photovoltaic (PV) solar power systems.”—Yahoo Finance

Fuel Systems Solutions, Inc.
“Fuel Systems Solutions, Inc. engages in the design, manufacturing, and supply of alternative fuel components and systems for use in the transportation, industrial, and power generation industries. Its components and systems control the pressure and flow of gaseous alternative fuels, such as propane and natural gas used in internal combustion engines.”—Yahoo Finance

Gaiam, Inc.
Gaiam’s “solar segment offers turnkey services, including the design, procurement, installation, grid connection, monitoring, maintenance, and referrals for third-party financing of solar energy systems. This segment also sells renewable energy products and sustainable living resources; and offers residential and small commercial solar energy integration services.”—Yahoo Finance

GT Solar International, Inc.
GT Solar is a leading global supplier of polysilicon production equipment, crystalline ingot growth systems and related PV manufacturing equipment for the solar industry.—Company Website

Hexcel Corp.
Hexcel Corp. engages in the manufacture and development of composites for aerospace and industrial applications. Moreover, Hexcel Corp. is a world leader in prepregs, composites, fiber reinforcements, laminates and gel coats for wind energy applications.

Hoku Corporation
“Hoku Corporation is a diversified clean energy products and services company with three business units: Hoku Materials, Hoku Solar and Hoku Fuel Cells. Hoku Materials plans to manufacture, market, and sell polysilicon for the solar market from its plant currently under construction in Pocatello, Idaho. Hoku Solar markets, sells and installs turnkey photovoltaic systems in Hawaii. Hoku Fuel Cells has developed proprietary fuel cell membranes and membrane electrode assemblies for stationary and automotive proton exchange membrane fuel cells.”—Company Website

Johnson Controls, Inc.
This business produces lead-acid batteries, as well as offers absorbent glass mat and lithium-ion battery technologies to power hybrid vehicles. It also engages in building efficiency, automotive experience, and power solutions.

Kaydon Corporation
“Kaydon Corporation designs and manufactures custom engineered and performance-critical products primarily in the United States. The companys Friction Control Products segment offers anti-friction bearings, split roller bearings, and specialty balls used in alternative energy, specialized robotics, medical, aerospace, defense, security, electronics, material handling, construction, and other industrial applications.”—Yahoo Finance

MasTec, Inc.
“MasTec, Inc. operates as a specialty contractor in the United States. It involves in the building, installation, maintenance, and upgrade of utility and communications infrastructure. The company builds wind farms, solar farms, and underground and overhead distribution systems.”—Yahoo Finance

MEMC Electronic Materials, Inc.
“MEMC Electronic Materials, Inc. designs, manufactures, and sells silicon wafers for the semiconductor industry worldwide….Its customers comprise semiconductor device manufacturers, including the memory, microprocessor, and applications specific integrated circuit manufacturers, as well as foundries, solar cell and module manufacturers, semiconductor device and equipment makers, and flat panel and other industries.”—Yahoo Finance

NextEra Energy, Inc.
Nestera Energy, Inc. engages in the generation, transmission, distribution and sale of electricity in North America. Through its subsidiaries it generates power from wind and sun in North America.

Ormat Technologies, Inc.
« Ormat Technologies, Inc. is a leading vertically integrated company dedicated to providing solutions for geothermal power, recovered energy generation (REG) and remote power.”—Company Website

Owens Corning
The Composites segment manufactures, fabricates, and sells glass reinforcements in the form of fiber; and manufactures and sells glass fiber products in the form of fabrics, mat, veil, and other specialized products. Its products are used in pipe, roofing shingles, sporting goods, computers, telecommunications cables, boats, aircraft, defense, automotive, industrial containers, and wind-energy applications in power and energy, housing, water distribution, industrial, transportation, consumer, and aerospace/military markets.—Yahoo Finance

Quanta Services, Inc.
Quanta Services, Inc. specializes in contracting services in North America. Among these services are the design, installation, upgrade, repair, and maintenance of electric power transmission and distribution networks, substation facilities, and wind turbine facilities and solar arrays.

Real Goods Solar, Inc.
“Real Goods Solar, Inc. operates as a residential and commercial solar energy integrator in California and Colorado. The company offers various turnkey services, including design, procurement, permitting, build-out, grid connection, financing referrals, and warranty. It installs residential and small commercial solar energy systems that are between 3 kilowatts and 250 kilowatts output, as well as larger commercial projects of up to 5MW output.”—Yahoo Finance

Spire Corporation
Spire is the leading global solar company providing capital equipment to manufacture PV modules & cells, turnkey solar manufacturing lines and PV systems. Spire has provided innovative solar technologies for over 30 years.”—Company Website

Tenneco Inc.
“Tenneco Inc., together with its subsidiaries, designs, manufactures, and sells automotive emission control and ride control systems and products worldwide. The companys emission control systems include catalytic converters and diesel oxidation catalysts to reduce harmful gaseous emissions; diesel particulate filters to eliminate particulate matter emitted from diesel engines; burner systems, which combust fuel and air inside the exhaust system; and hydrocarbon vaporizers and injectors to add fuel to a diesel exhaust system in order to regenerate diesel particulate filters.”—Yahoo Finance

The AES Corporation
AES Corporation operates as a global power company, which operates power plants to generate and sell power to wholesale customers, such as utilities and other intermediaries. It generates electricity through various sources, which include coal, gas, hydroelectric, biomass, wind, and solar energy.

Thomas & Betts Corporation
Thomas & Betts Corporation operates in three segements: Electrical Equipment; Steel Structures; and Heating, Ventilation and Air-Conditioning (HVAC). Through its steel structures segement Thomas & Betts Corporation manufactures wind powered turbines and wind structures. —Yahoo Finance

Trinity Industries, Inc.
Trinity’s Energy Equipment Group includes leading manufacturers of structural wind towers and petroleum tanks in North America.—Company Website

UQM Technologies, Inc.
“With more than 35 years of experience in developing and applying electric power systems to advanced vehicles, UQM Technologies is a technology leader in the development and manufacture of high-performance, power-dense and energy-efficient electric motors, generators and related power electronics.”—Company Website

Veeco Instruments Inc.
Veeco is a world leader in process equipment technology. It operates in two segments: LED & Solar Process Equipment and Data Storage Process Equipment.

Woodward Governor Company
Woodward is an independent designer, manufacturer, and service provider of energy control and optimization solutions used in global infrastructure equipment.  We serve the aerospace, power generation and distribution, and transportation markets. Our systems and components optimize the performance of commercial aircraft; military aircraft and other equipment; industrial gas, wind and steam turbines; reciprocating engines; and electrical power systems.—Company Website

Zoltek Companies, Inc.
Zoltek Companies, Inc. engages in the development and manufacturing of carbon fiber for various applications. One of these applications is in the use of wind towers and turbines.




CALIFORNIA HEADQUARTERED

AeroVironment, Inc.
AeroVironment, Inc. engages in the design, development and production of unmanned aircrafts and energy efficient systems. In addition, the company produces industrial productivity and clean transportation solutions for commercial and government customers. It is currently developing electric vehicle charging systems for passenger and fleet vehicles, as well as testing plug-in hybrid vehicles.

Akeena Solar, Inc.
“Akeena Solar, Inc., doing business as Westinghouse Solar, engages in the design, manufacture, integration, and installation of solar power systems under the Westinghouse name. It offers its solar power systems for residential and commercial customers. The company also designs and distributes solar panels with integrated micro inverters (called as AC solar panels).”—Yahoo Finance

Ameron International Corporation
Ameron International Corporation manufactures and sells engineered products and materials for the chemical, industrial, energy, transportation, and infrastructure industries. Included in its business is the supply of large wind towers for the United States wind-energy market.

Applied Materials, Inc.
“Applied Materials, Inc. provides nanomanufacturing technology solutions for the semiconductor, flat panel display, solar, and related industries worldwide. Its Silicon segment provides a range of manufacturing equipment used to fabricate semiconductor chips or integrated circuits…[the Energy and Environmental Solutions segment] also provides manufacturing solutions for wafer-based crystalline silicon, and glass-based thin film applications to enable customers to increase the conversion efficiency and yields of solar PV devices.”—Yahoo Finance

Capstone Turbine Corp.
“Capstone Turbine Corporation develops, manufactures, markets, and services turbine generator sets and related parts for use in stationary distributed power generation applications. Its stationary distributed power generation applications include cogeneration combined heat and power (CHP), integrated (CHP), resource recovery, and secure power, as well as combined cooling, heat, and power; and its products are used as battery charging generators for hybrid electric vehicle applications.”—Yahoo Finance

Clean Energy Fuels Corp.
“Clean Energy Fuels Corp., together with its subsidiaries, provides natural gas as an alternative fuel for vehicle fleets in the United States and Canada. It designs, builds, finances, and operates fueling stations; and supplies compressed and liquefied natural gas. The company also produces renewable biomethane, which could be used as vehicle fuel.”—Yahoo Finance

Cypress Semiconductor Corporation
“Cypress Semiconductor Corporation operates as a semiconductor company in the United States and internationally.”—Yahoo Finance

DayStar Technologies Inc.
“DayStar Technologies, Inc., a development stage company, engages in the development, manufacture, and marketing of solar photovoltaic products to the grid-tied and ground-based photovoltaic markets. The company offers solar photovoltaic modules to convert sunlight into electricity.”—Yahoo Finance

Ecotality, Inc.
“ECOtality, Inc., through its subsidiaries, provides clean electric transportation and storage technologies in the United States and internationally. It offers electric vehicle infrastructure products and solutions that are used in on-road grid-connected vehicles, material handling, and airport electric ground support applications. The company engages in the development, manufacture, assembly, and sale of specialty solar products, battery systems, and hydrogen and fuel cell systems.”—Yahoo Finance

Enova Systems, Inc.
Enova Systems Inc. produces drive trains and similar components used in electric and hybrid electric buses, medium and heavy duty commercial vehicles, stationary power generation systems, train locomotives, transit buses, and industrial vehicles, as well as for light, medium, and heavy duty trucks.

KLA-Tencor Corporation
“KLA-Tencor Corporation is the world's leading supplier of process control and yield management solutions for the semiconductor and related microelectronics industries.”—Company Website

Maxwell Technologies Inc.
Maxwell Technologies Inc. is a leading developer and manufacturer of ultracapcitors used in renewable power, back up energy and hybrid automotives. 

Power-One, Inc.
“Power-One, Inc. designs, manufactures, and markets power conversion and power management solutions for the renewable energy, communications infrastructure, and other high technology markets…The company also provides renewable energy products, which convert solar or wind energy into useable grid connected power for use in residential and commercial solar panels and wind turbine farms; and smart motor control and other products that are used primarily in appliances, such as clothes washers and dryers, and air conditioners.”—Yahoo Finance

Quantum Fuel Systems Technologies
Quantum Fuel Systems Technologies is a leader in plug-in hybrid electric vehicle powertrain systems, hydrogen and natural gas power systems and wind and solar renewable energy generation projects.

SunPower Corporation
“SunPower Corporation, together with its subsidiaries, designs, manufactures, and markets solar electric power technologies…The Components segment manufactures and sells solar power products, including solar panels and inverters, which convert sunlight to electricity compatible with the utility network. This segment sells solar components for use in residential and commercial applications to installers and resellers, including its third-party global dealer network.”—Yahoo Finance

Tesla Motors Inc
“Tesla Motors, Inc. engages in the design, manufacture, and sale of electric vehicles and advanced electric vehicle power train components.”—Yahoo Finance

Ultra Clean Holdings, Inc.
“Ultra Clean Holdings, Inc. develops and supplies critical subsystems to the original equipment manufacturers of semiconductor capital equipment in North America, Europe, and Asia.”—Yahoo Finance