Environmental and Urban Economics

Not all of my ideas merit publication in a journal. That's why blogs exist.  In this post, I would like to write about the City of Los Angeles' demand for gasoline.   After seeing our Controller speak about his open data policy, I went to this website  and downloaded every expenditure the City has made since 2011 on gasoline. The data provided the date, the quantity, the expenditure (and thus the price per gallon).  I merged to these data, weekly data for California on the price of gasoline.  From basic supply and demand this price of gasoline changes as world events unfold.    I sought to use these data to test:

1.  Does the City of California pay market rates for gasoline?

2.

When I'm back in LA, I will read and blog about this new article that claims that climate change could impose a trillion dollar loss on our coasts by the year 2100.   Two things I would ask readers to think about.  One is discounting,  at an annual interest rate of 3% this future loss has a present discounted value today of $78 billion dollars.   Second, sit down and read my recent paper .   I would bet $10,000 that the authors of this paper ignore the following points;

1.

Magali Delmas, Stephen Locke and I have just released a new NBER Working Paper.   Stephen is on the rookie job market this year.   I always try to write "original" papers on subjects where I hope that a new literature will emerge.  Let me sketch this paper's big ideas.

As usual, we are thinking about the economics of climate change.

How much do cities suffer from "fat tail" extreme events such as Hurricane Sandy or Katrina?  The LA Times reports today that the Mayor of LA is forming contingency plans for an ugly scenario where an earthquake in Los Angeles disrupts the aqueducts that carry water into the city.  The Mayor is seeking proposals that offer some "bang for the buck" in terms of reducing the probability of disaster per $ spent.   This is wise planning.

At the NY Times, Michael Wines and Jess Bidgood must have studied some economics.  They playfully recast Tiebout "Voting with your Feet" for Cod saying that these fish "Vote with their Fins" as the fish seek out cooler water.  Climate change has heated up the local waters and reduced the catch of local fishermen.   How good are the Cod at adapting to the new Ocean temperature? That's the job of marine biologists to study this.

A Tufts Agricultural Economist named Parke Wilde has nudged me to write out a few more thoughts about the carbon emissions from flying.  First, some assumptions based on this web source.

Assumption #1:

Los Angeles is 2400 miles from New York City and it costs 10 cents per seat mile on a plane with 120 seats to make this flight. So, the total operating cost is:  $30,000.

Assumption #2:

The airline cancels the flight if its revenue does not exceed the operating costs.

Who knew that the LA Times could cover topics unrelated to Kobe Bryant!  In today's LA Times, Severin Borenstein has an excellent piece about the political economy of California's nascent carbon cap & trade market.  Starting in January 2015, gas refiners will be included under the cap and at $12 a ton for carbon dioxide this will raise the price of California gas by 10 cents a gallon.

I have been arguing for five years now that urbanization will protect us from many of the blows that climate change will cause.  Cities (relative farming) have an edge in adapting to climate change. Cities always compete for talent.  Those cities that figure out how to adapt (either due to natural advantage or good ideas) will thrive and will attract talent.   This competition will protect footloose urbanites.

Read Gov. Jerry Brown's piece in today's LA Times.  He is an optimist about the role that carbon regulation plays in stimulating an economy.  I believe that the WSJ would disagree with the following direct quote from his piece.

"Last year, our four governments — the states of California, Oregon and Washington and the Province of British Columbia — reached a landmark agreement to align climate and energy strategies for 54 million Americans and Canadians.