Environmental and Urban Economics

Back in 1986, when I was a student at the LSE, I didn't read The Guardian. Flash forward 30 years and I know read it.  Take a look at this piece from Australia.   It wants to tell a PT Barnum "sucker theory" that potential home owners are unaware of the risks that climate change imposes on a specific piece of real estate.  The article hints at an information cover up.

QUOTE:

"The report says there is untapped and unshared data held by regulators, state and local governments, insurers and banks on the level of risk, but that most homebuyers and developers are not told about the data and do not have access to it."

END of QUOTE

If buyers "know that they don't know" what risks a property features and if they are risk averse, they will demand to see the truth.

At a Cincinnati Zoo, a young child was at risk of being attacked by a gorilla.  To reduce this risk, the zoo killed the gorilla.  What do we learn about tradeoffs in this case?  Suppose the value of a statistical life is $6 million and the probability that the gorilla would have killed the kid was p.  Let the value of a living gorilla be G.   A rational risk neutral zoo will kill the gorilla if p*6 million > G.

The Economist Magazine has published a long special piece on Europe and war refugees.   Unless I missed it, this "politics" focused piece didn't investigate market approaches to handling the crisis.  Suppose that different potential refugee destinations differ with respect to how "costly" it is to absorb more refugees.  For example, a nation with an old population may welcome young migrants and thus have a low marginal cost of accepting migrants.

Before the Smart Phone, imagine the following situation.  A restaurant on one side of town has 500 tomatoes delivered and due to unexpectedly low salad demand it only needs 80. In the past, the cost minimizing option was to dump the remaining 420 tomatoes in the garbage.  But, such "trash is gold" if an entity with a comparative advantage in transportation can swoop in and grab the tomatoes and bring them to a demander.  The NY Times reports on such "Uber Style" food delivery trucks.

Back in 2010, I published my Climatopolis book arguing that the economics of climate adaptation becomes the key issue as global GHG emissions will continue to rise because of the global free rider problem and rising fossil fuel consumption.  This is why I started to work on the micro economics of climate change adaptation and the role that cities play in helping us to adapt to climate change.

Early work in environmental and urban economics treated a city's non-market characteristics as fixed and exogenous. So, think of San Francisco's beautiful climate and topography and views.  New work in this field acknowledges that there are also "endogenous amenities" that arise due to the types of industries and people who cluster in a city and the ways they live their lives (i.e smoking propensities).

In a letter to the WSJ today, Thomas Gibson argues that relying on lower cost imports is not always in the importer's best interest. Do we teach our students this point in Econ 101?

"The Wall Street Journal seems to find the American steel industry inconvenient.

I will be teaching Econ 101 at USC this fall. There will be at least 150 students in my class.   There are several Principles textbooks I could use that charge different prices.  Greg Mankiw's book is priced at $219.  Joe Stiglitz's book is priced at $176.  Paul Krugman and Robin Wells' book is priced at $142.  In this "oligopoly", the sellers appear to have some market power.  It appears that they can raise price without losing market share.

An active research topic in macro focuses on "productivity wedges".  Many scholars are building on Hsieh and Klenow's work to measure how large are the differences in the marginal productivity of firms with respect to their use of capital and land.  Intuitively, a benevolent planner would allocate capital across firms until she has equated the marginal product across them.  But, in nations such as China -- the leadership may play favorites and allocate "too much" capital to favored firms.

On the front page of the WSJ today, there is an article about the Congress passing bipartisan legislation intended to reduce consumer exposure to dangerous chemicals.  The tone of the article is optimistic that this new regulation is better than the old TSCA regulation. The interesting part of the piece is the absence of interest group competition. Both product sellers and product buyers appear to support these changes in the rules.