Environmental and Urban Economics

I have never understood why Occidental Petroleum had their headquarters in Westwood Village (located .75 miles from UCLA).   Now it has been announced that it is moving to Houston.    The news is saying that LA is only home to 3 of the Fortune 500 companies while New York City has many more.  Why was OP in LA? I have the feeling that the answer was that Armand Hammer enjoyed living here.  Should the new Mayor of LA worry that this signals that our great city is not sufficiently business friendly?  I don't believe that Fortune 500 companies are the wave of our future.  LA needs to position itself so that startup Internet companies view this as an exciting place to locate.

Was China's One Child Policy a binding constraint?  The NY Times reports that for some households the answer is "no".  Consider a simple urban economics model where apartments are very expensive in Superstar Cities such as Beijing and Shanghai and where both university educated spouses work full time with ambitious career goals.  Such power couples may choose "quality" over "quantity" of children.

On Wednesday, the UCLA Institute of the Environment and the Anderson School of Management will co-sponsor an event on Green Buildings.  We expect that 400 people will show up.  I will speak for ten minutes and I will present these slides.   The program also features a Keynote by KB Home's CEO Jeffrey T. Mezger   and an all star panel.   

If you look at my slides, you will see that I focus on long run trends in "green building" and a few ideas about the supply and demand for green buildings.

Today, I published a short popular piece on this topic and its relevance for Californian home owners.  Here is a more academic piece I wrote on this subject back in 2009 called "Urban Growth and Climate Change" and here is a recent Albouy et. al. paper that further examines some of the key issues.    One of my favorite papers on this subject studied the winners and losers among competing ski resorts.

When you walk in Italy's cities, you see and smell a lot of dog poop.  For years, I have been asking my wife whether authorities could trace the DNA sample (i.e the poop) back to the supplier and hold its owner accountable.   Today, the NY Times reports that Naples is implementing this idea.  This is an example of how "big data" and credible punishment work together to reduce a nasty urban externality.

It appears that Gov. Brown didn't study economics when he attended UC Berkeley.  My state is suffering from a drought.  Anyone who has slept through Econ 101 knows that drought is the equivalent of shifting in the supply curve so water prices should rise to signal scarcity and the "magic of the market" will take care of the "crisis".  Read through this press release .  I see no reference to raising water prices.

For the many climate change adaptation pessimists out there, read this and think.     Investment under uncertainty will remain an active economics research topic.  While we may retreat from assuming that investors have rational expectations, the new work on robustness suggests that forward looking investors who know that they don't know the exact risks they will face will build in "slack" to protect themselves from emerging fat tail risk.

Nils Kok and I have released a new NBER Working Paper studying the electricity consumption of Wal-Mart stores.   We received no funding from Walmart.   Walmart has made a concerted effort to be "sustainable".   The corporate social responsibility literature tends to have "mushy" benchmarks.  Our focus on electricity consumption per square foot has obvious implications for greenhouse gas production.

Nils and I think we have identified an interesting piece of fixed cost and scale economics.

Yale Press sent me a copy of Bill Nordhaus' The Climate Casino.   Here is Paul Krugman's highly favorable review.  Here are glowing quotes from Larry Summers and Jeff Sachs.

"Nordhaus is the world’s clearest, best informed and most serious thinker on climate change policy. There is more insight and good sense advice in this volume than in many libraries. This book should be as central to climate policy debates as climate change is to humanity’s future."—Lawrence H. Summers, Charles W.