Environmental and Urban Economics

The media keeps running articles that Greta Thunberg and a majority of the world's young people worry that "society is doomed" because of climate change. I understand that they seek to create a political movement to enact a global carbon tax. I support the carbon tax but do they really believe their rhetoric?  Are they really such adaptation pessimists? What are the implications of their mindset for their mental health and their investment in themselves at this key point in their life-cycle?

Joel Slemrod is a top economist at the University of Michigan.  In 1986, he published a paper that today only has 40 citations. It was titled; "Savings and the Fear of Nuclear War" .   The point of this blog post is to rehabilitate his paper in a new context.

The Washington Post has published a piece stating that the Secretary of Transportation, Peter Buttigieg, is the big winner of the Biden Infrastructure Bill as he will be attending many ribbon cutting ceremonies as grateful local mayors shake his hand. 

Economic research offers many insights here about the efficiency and equity effects of this multi-billion dollar investment.

Point #1:  This is an irreversible investment.

Bill Gates argues that we were insufficiently prepared for COVID-19.  Does our failure to adequately prepare for this crisis portend a future under-investment to invest in self-protection to reduce our exposure to climate change risk?

In the case of COVID, we had enjoyed 100 years of little exposure to vast contagion.  This certainly played a role in lulling us into a complacent mindset.

A few thoughts about the pending Infrastructure Bill.

What Criteria Will be Used to Allocate the Money?

An efficiency criteria would state that it should be allocated to those places and on those projects within such places that offer the greatest economic and quality of life impact.

Imagine if there is an infectious disease that spreads within cities but not across cities.   Throughout the COVID crisis, the city specific infection rate has varied across cities at each point in time.  In a city facing a rising infection rate, people can adapt by either engaging in costly self protection (self isolating) or through public health interventions --- such as vaccinating the local population.  In this case, public health substitutes for private health protection investments.

My wife and I own a well known Electric Vehicle that monitors our driving in Southern California. The car company knows how many miles we drive and the car company knows that Dora is a safe driver based on her average speed and the braking she engages in and the fact that she doesn't engage in stop and go driving.  While I have a driver's license, I do not drive.

Politico reports on the policy challenge that the Biden Administration faces.  There are thousands of Haitian immigrants living in squalid conditions under the Del Rio International Bridge.

A dynamic incentives issue arises.  If the Biden Administration engages in humane policies to help these immigrants then this will attract more immigrants to move to the area as they will anticipate that they will be treated well.

The Biden Administration has made an announcement that it seeks to protect outdoor workers from extreme heat exposure.   What does the theory of compensating differentials in real estate markets and labor markets teach us about exposure to high temperatures.

I maintain two assumptions.

Assumption #1:  The apartment rental market is perfectly competitive and an area's heat risk is common knowledge. If heat risk rises in a location, all market bidders are aware of this.