Environmental and Urban Economics

In this new 8 minute YouTube video,  I talk through one of the most important insights in modern transportation economics.   John Kain and Don Pickrell and Peter Gordon consistently pointed out the bad incentives that urban politicians face for "just saying no" to irreversible, highly costly infrastructure projects.   For those who wonder what is the source of my ideas, let me tell you a secret.  Listen to this 2005 live Cream concert and your mind will just flow.

The WSJ reports that Chinese investors are building residential housing in New York City targeted to Chinese mainland buyers.   This doesn't appear to be ethnic favoritism.  Instead, the developers want less risk where the risk is that they will build a building that will remain vacant and commitment by Chinese buyers to purchase units both reduces risk for the developer and creates a Chinese community  in the new building.  This is an example of endogenous attributes in differentiated products.

Academic economists are well paid by their universities but many superstar academics do additional consulting.   If President Obama raises the marginal tax rate on the high earning economists,  some of these economists will act like economists and will substitute away from discretionary consulting as the after tax wage from consulting declines.

The NY Times reports that the great drought is causing the Mississippi River to retreat and this means that big boats can't use it to ship goods because they will hit the ground on the bottom of the river.  As the self appointed world's leading optimist about how capitalism evolves to help us cope with climate change's consequences, permit me to offer a few thoughts.

First, let's not forget increasing returns to scale.

This is a blog post about climate adaptation and a spatial separating equilibrium played out in a sequential game.  In this game, government must make a choice to either embrace benevolent paternalism or engage in tough love.   There are two types of people.  One type is called "Mr. Spock" and the other is called "Homer Simpson".

Academic geographers use remote sensing techniques to measure the "footprint" of growing cities.  From outer space, you can identify how much land area a metropolitan area such as Cairo or Boston takes up and how this changes over time.  Researchers such as Yale's Karen Seto track these footprints.

Today's NY Times has an article focused on urban growth in the Amazon Brazil's new cities.  In this case, there is a significant global environmental externality associated with urban growth.

Self interested people have an incentive to form their best guesses about the probabilities and impacts of different future scenarios.   Climate change poses some trouble here because it creates a "non-stationarity" in the sense that the random variables (the impacts of climate change) have means and standard deviations that change over time.

There are three very good articles in today's NY Times focused on climate change adaptation.  First, there is an article on how to use solar power as a backup electricity provision technology when power lines fall down. Second, the Arts section discusses several ideas related to flood barriers.   Finally, the Science Section discusses engineering solutions using balloons to protect the under ground subways from future flooding.   I see endogenous innovation and experimentation taking place.

The World Bank's core mission is to foster equitable economic growth in the developing world.   I have always assumed that its research team were fans of free markets and capitalism's amazing ability to provide opportunities and possibilities.   But, I have now read this report on climate change's impacts and I can't find a single sentence focused on how capitalism will help LDC nations to adapt to climate change.