Environmental and Urban Economics

Emily Badger has written an excellent piece for the NY Times.  Perhaps due to space constraints, she does not discuss one key issue.  Most of the challenges of building "high tech" cities emerge because of durable capital.  My proof goes as follows.  Suppose that urban infrastructure only lasts for 1 month and then turns to dust. In this economy, you always have the option to rebuild the city using "modern infrastructure --- including sensors and subways" at the end of the month.  Yes, there would be fixed costs to rebuilding but the city would always be at the technological frontier.

When a city builds a very impressive subway system that is meant to last for 70 years, it is locking into a given technology that will soon be out of date.

At USC this term, I am teaching a new class on "the limits to growth".  My course is a fair fight between Paul Ehrlich and Julian Simon.   My class features 90% non-economics majors and many have never taken a course with an economist before.   I sense that they side with Ehrlich.   Their consensus is that we are on a path to destroy our planet and that only dramatic changes in politics and lifestyles can save us.  It is possible that they are correct.

The WSJ has published a fascinating piece  that points out an inconsistency in the expressed views of the leaders of Oakland's city government.  This coastal city is suing Exxon and other fossil fuel companies for engaging in business that threatens Oakland's future (i.e fossil fuel burning causes sea level rise that will impose costs on Oakland).   Oakland's inconsistency occurs in the municipal bond market.  Oakland seeks to borrow a large amount of $ by selling bonds.