Environmental and Urban Economics

At the 21 minute mark of this video of his Becker-Friedman Institute talk, Bill Nordhaus begins to discuss the impacts of climate change.  He stresses three impacts while emphasizing how difficult it is to predict future adaptation.  Overall, he appears to be an optimist but acknowledges the significant uncertainty!

1. The impact on agriculture ---- he points to the IPCC report and presents a nuanced view of the ability of farmers to adapt.  He presents a graph that farmers can take the heat with losing much output. He is highly optimistic about the ability of the farmers to adapt and slightly mocks the IPCC's doom and gloom.

2.   Species extinction --- here he is more pessimistic.

Alan Dershowitz has retired after serving for 50 years as a faculty member at Harvard Law School.  He talks about his legacy in this piece.   He is quite proud of his teaching accomplishments and his legacy for Jewish students at Harvard.

Every professor must confront the big question of what he/she has done for his institution.    Many of us are free riders who view ourselves as free agents who help the institution by narrowly pursuing our own private research goals.

Human capital is a funky capital stock.  In our diverse world, kids have a vector of cognitive and non-cognitive endowments.  As time passes, investments in own time, parental time and market inputs are made to increment the elements of these vectors.  These investments are actively made by investors (the parents and the person him/herself) who are aware of the market rate of return to these various attributes.

Siqi Zheng and I are finishing a book on pollution progress in urban China.   Capitalism and Society just published a short paper of mine on this subject.

The Chronicle has a lot to say about Thomas Piketty and modern economics.   Piketty has done a great job assembling new data sources to document long run trends in inequality.  As I understand it, his explanation hinges on how the returns to capital and the rate of economic growth evolve over time.   If the return to capital is greater than the rate of economic growth then economic inequality increases as the "rentier" capitalists become relatively richer.

"Years of Living Dangerously" was aired at Harvard Business School recently.  Of course, the creators of this Showtime Show hope to motivate voters to support a carbon tax.  I wish that they succeed.   But the HBS students offer a different pathway for coping with climate change. HBS is full of future corporate leaders in finance, entrepreneurship and management.  Many of these young men and women will work in developing nations where the growth is now taking place.

I'm on a bus heading to Cornell University.  Tomorrow, I will give a talk titled; "Adapting to Climate Change: An Urban Economist's Perspective".  Click on the link to see my slides.   My optimistic talk poses some questions for macro modelers such Prof. Nordhaus and Prof. Weitzman.  For young scholars seeking exciting research questions, I pose dozens of riddles that I expect will set an agenda.

The China Daily  reports that foreign firms in China are seeking out 2nd and 3rd tier Chinese cities that feature blue skies because Beijing is just too polluted.  The introduction of a competitive system of cities would make urban China an even stronger nation.  The centralization of the powerful government in Beijing means that rent seeking firms have had strong incentives to locate in Beijing as they seek to curry favor with the central government.

The NY Times  reports that there are many liberal cities where the median rent divided by the median household income is greater than 30%.  The Times interprets this fact that the middle class can't afford to live in a series of cities ranging from Los Angeles, to Miami to San Francisco to NYC.   Interestingly, College Station Texas also has a high ratio.

Why might liberal cities be increasingly unaffordable?    Recall that the ratio has median rent in the numerator.

An old literature in economics states that only "new news" moves markets.  Do the recent IPCC reports say anything new?  Those who know that climate change is a major challenge "learn" that they were right.  Those who deny that climate change is happening or believe that we will adapt to these new challenges learn little from these reports.