Energy planning is not easy, and when governments shop around for energy sources, they must balance costs and benefits of available options.
Whether fossil fuels, nuclear energy or alternative sources, a sensible energy policy must also take into account a reliable mix of energy generation to support economic growth, promote the environment and also reduce dependence on imported fuels from possibly unstable exporting countries.
Previous editions of Projected Costs of Generating Electricity, published by the OECD Nuclear Energy Agency (NEA) and the International Energy Agency (IEA), provide generation cost estimates for over a hundred power plants that use a variety of fuels and technologies. These include coal-fired, gas-fired, nuclear, hydro, solar and wind plants. Cost estimates are also given for combined heat and power plants that use coal, gas and combustible renewables.
The study shows that the competitiveness of alternative generation sources and technologies ultimately depends on many parameters: there is no clear-cut “winner”. Major issues related to generation costs addressed in the report include: descriptions of state-of-the-art generation technologies; the methodologies for incorporating risk in cost assessments; the impact of carbon emission trading; and how to integrate wind power into the electricity grid.
The 2004 World Energy Outlook (see page 39) predicts that in 2030 wind power will be the second-largest source of renewable electricity after hydroelectricity. The key here is supply flexibility, says Projected Costs of Generating Electricity, as there will only be wind power when there is wind. However, construction costs are competitive with both nuclear and coalfired power plants, ranging between $1,000-2,000 per kilowatt, but less so with gas-fired plants, which cost between $400-800 per kilowatt to build.
None of the traditional electricity-generating technologies can be expected to be the cheapest in all situations, warns Projected Costs of Generating Electricity. Furthermore, the best source of electricity will depend on the specific circumstances of each project.
ISBN 9264-008268. See the New Publications pages or www.oecdbookshop.org for ordering details.
The OECD Observer ww.oecdobserver.org
During World War II, a military airport was built inside the city of Reykjavik. This airport then became the centre of domestic aviation for the whole country. Today, 50 years later, the airport tract has become valuable for urban development. The city government therefore wants the airport relocated. Four different sites have been considered. The first alternative is to maintain the airport in the same place. A second alternative is based on reclaiming land alongside the present airport. A third possible site is in a rugged lava field south of Reykjavik, and the fourth alternative is to move the domestic traffic to Keflavik International Airport about 60 km away. The relocation has become a hot issue in the country. The people living in the countryside want to keep the airport in the same place. On the other hand, people living in Reykjavik see the airport land as valuable potential for urban development close to the city centre. To approach this debate in an orderly fashion, the four sites have been studied from an environmental and socio-economic point of view. The four alternatives are classified by four different categories: (1) economy and capital investment, (2) social impacts, (3) direct environmental consequences, and (4) public safety. Firstly, the last three categories were evaluated and weighted, and all four alternatives graded according to their environmental quality. Secondly, using the results of a separate cost-effectiveness study, a Pareto optimality solution is suggested. Finally, sensitivity analysis was carried out to investigate how the “environmental” factors through their variation can influence the final selection.
Keywords airport relocation - environmental evaluation - quality indexing - Pareto optimality solutions - robust planning
by Júlíus Sólnes 1 and Ágúst Þorgeirsson 2
(1) Department of Civil and Environmental Engineering, University of Iceland, Hjardarhagi 2-6, 107 Reykjavik, Iceland; email:
(2) University of Iceland, 107 Reykjavik, Iceland; email:
Environmental Modeling and Assessment via SpringerLink www.springerlink.com
ISSN: 1420-2026 (Paper) 1573-2967 (Online)
Volume 11, Number 1; February 2006; pages 59-68
The analysis of climate change is confronted with large uncertainties that need to be taken into account to arrive at meaningful policy recommendations. The main contribution of economics to this interdisciplinary task is to provide formal frameworks and techniques for analyzing climate policy in the context of uncertainty. This paper will give an overview of existing approaches and findings to provide a broad picture of what economics can contribute to the debate.
Keywords climate change - uncertainty - survey - modeling
by Sonja Peterson; Kiel Institute for World Economics, 24100 Kiel, Germany; Email:
Environmental Modeling and Assessment via Springerlink www.springerlink.com
ISSN: 1420-2026 (Paper) 1573-2967 (Online)
Volume 11, Number 1; February 2006; pages 1-17
For 100 years, the Salton Sea has been a sanctuary for birds and poor farmers alike. But now pollution threatens both - and conflict is hampering the desperate race to avert a catastrophe
The Salton Sea is an incongruous salty lake the size of Dartmoor in the middle of the Californian desert. It has become one of the world's most important bird feeding and breeding grounds, used by hundreds of species migrating between the Arctic and South America.
Today though, the lake's very existence is in grave danger, as the water that feeds it is drying up, threatening to leave an almost lifeless salt sump surrounded by a vast toxic dust bowl. Such an event would be a global environmental and public health catastrophe.
A team has now been given until the end of this year to come up with a workable plan to avert this crisis. Its mission is a struggle of our times: a battle to protect nature from the modern agriculture and development, a contest between human gratification and the natural world on which we depend.
The pressure is on because the sea is expected to reach crisis point by 2017, says Chuck Keene, who has worked in the state government's Salton Sea office longer than anybody. 'It will get to the point very quickly, in perhaps less than 10 years after 2017, where the sea will not function biologically in the same way as it has in the past,' says Keene. 'Fish will die, birds - at least fish-eating birds - will cease to come to the sea. So there's a sense of urgency: if we don't do anything we'll basically lose the Salton Sea as we know it today.'
The Salton Sea shouldn't exist. A century ago engineers trying to build a canal for the Colorado river underestimated the power of the water behind temporary gates; it broke through and for two years flooded the Salton Trough, a valley on the San Andreas fault.
It was not the first time that the valley had filled with water; for centuries the Colorado periodically flowed this way to the Pacific, before changing course again. This time, though, there was no outlet to the ocean and the sea remained.
As almost every inch of California's wetlands has been taken over by developers and farmers, the Salton Sea has become essential to the birds' survival. 'For many species, sustaining the sea is a matter of life or death,' claims a report by the Redlands Institute research centre.
It is not just birds that have prospered here. This desert is one of the driest places on earth, with only two inches of rain a year. But by drawing water from the Colorado and warmed in winter by relatively higher sea temperatures, the surrounding Imperial County has become one of the most productive farming areas in the world and America's chief supplier of winter vegetables, melons and date palms. 'The first water melons, broccoli, cauliflower, carrots, all come up at the time when they are not available from other parts of the US,' says Al Kalin, who with his brother Carson farms 2,000 acres at the southern end of the sea.
Farming is the lifeline of the county, where two out of 10 adults are unemployed and nearly half the children live in poverty. Half a million acres are under cultivation, supporting at least half of all the jobs, generating up to $3bn (£1.7bn) a year.
Farming is also the greatest threat to the Salton Sea. A century of fertiliser and pesticide-rich water pouring in off fields has created a salty chemical stew in which algal blooms thrive and strangle other life. In the Fifties and Sixties the sea attracted more visitors than Yosemite National Park, to sail, swim, fish and birdwatch. But mass fish and bird deaths and the sulphurous stench of oxygen-starved water drove most tourists away. Along the shore they have left derelict homes, hotels and diners. 'They had big dreams of building resorts along the sea,' says Keene.
Since then, the sea's problems have built up. Every year, Several million tonnes of salt is added to the water, which is now saltier than the Pacific. Nitrates, phosphates and magnesium, have accumulated to dangerous levels, feeding the proliferating algae. Starved of oxygen, three of the four main fish species appear to have disappeared. The only native fish, the desert pupfish, whose eggs can survive years waiting for the waters to come is critically endangered.
The sense of crisis now hanging over the sea, however, was precipitated by an agreement three years ago to cut drastically the amount of water farmers use and thus the amount going into it. In 1922, the seven states through which the Colorado flows carved up its water rights: California won the lion's share - just over a quarter of the 4,477 billion gallons a year which should flow to the Gulf of California.
Already parts of Imperial County record particulate air pollution more than 10 times the maximum federal standard, the county has the worst childhood asthma rate in the state, and more than half the population report asthma-like symptoms. Heart disease, stroke, diabetes, and tuberculosis are all also higher than the state averages, though it is harder to prove a link to the pollution.
Campaigners now fear unless something is done they could suffer the fate of the Aral Sea in Uzbekistan and Kazakhstan, where dust clouds can be seen on satellite pictures.
Many have tried and failed to save the sea. There is a renewed sense of urgency though, and the state government, led by governor Arnold Schwarzenegger, has promised to put up much of the funding and set an ambitious timetable to agree a solution by the end of this year. The group has considered 260 proposals over three years. They have rejected most, including expensive schemes to pump water from the Pacific or build a desalination plant to take out the salts. Last December the group whittled the list down to five, which should be approved for more detailed studies this month.
The five ideas all more or less involve building barriers to save a smaller sea and allow the rest to dry up. But conflicts remain between those giving priority to economic regeneration, or natural habitat or public health. Should the northern part of the sea - better for recreation - be saved? Or the southern, where there is more wildlife?
And what of the cost of building a barrage which would use a 'mountain' of rock, according to Keene? The bill for the shortlist is for up to $10bn (£5.6bn) capital costs, plus $160m (£90m) a year expenses. A study in 1999 estimated a restored sea would support a $6bn (£3.4bn) annual economy, but a dead sea would represent a $1.5bn (£800m) yearly loss.
It is little surprise that some people are questioning the worth of spending billions of dollars preserving something that was an artificial creation in the first place. But most agree with Keene, who says: 'It should be preserved because it provides benefits for wildlife that nowhere else in the world provides.'
by Juliette Jowit
FOR FULL STORY GO TO
The Observer http://observer.guardian.co.uk
Managers of the Sinclair Oil refineries in Casper and Sinclair expect them to begin producing cleaner-burning diesel fuel in May.
The low-sulfur fuel is mandated by the U.S. Environmental Protection Agency. Starting June 1, allowable sulfur levels in highway diesel fuel must be reduced by 97 percent.
The EPA said that in terms of a benefit to the environment, the new rule stands to have the same effect as removing 13 million trucks from roads.
Kevin Brown, executive vice president of Sinclair, said he expects volatility in diesel prices as refineries shut down to make changes so they can produce the new diesel.
Brown said EPA has estimated the new diesel will increase production costs by 3 to 5 cents a gallon.
The Billings Gazette www.billingsgazette.com
As tourism is becoming one of the most important sectors of the world economy, the number of small islands trying to develop a competitive tourist activity is increasing and this strategy appears as growth enhancing. In most cases, it is built on the environmental quality of the destination but also on lodging infrastructures and related services that tourists deserve in order to enjoy a good experience. This paper explores the inter-temporal trade-off between tourist investments and environmental quality preservation needed to ensure population revenues in the long run. It highlights possible cyclical evolution of environmental quality, tourist infrastructures, investments and tourist frequentation.
JEL Classification: O1, L83, Q26
Keywords: Tourism, Environment, Lifecycle, Islands
by Marie-Antoinette Maupertuis IDIM Università di Corsica and Sauveur Giannoni IDIM Università di Corsica
Fondazione Eni Enrico Mattei (FEEM) www.feem.it
Working Paper 145.05
MIND is a hybrid model incorporating several energy related sectors in an endogenous growth model of the world economy. This model structure allows a better understanding of the linkages between the energy sectors and the macro-economic environment. We perform a sensitivity analysis and parameter studies to improve the understanding of the economic mechanisms underlying opportunity costs and the optimal mix of mitigation options. Parameters representing technological change that permeates the entire economy have a strong impact on both the opportunity costs of climate protection and on the optimal mitigation strategies, e.g. parameters in the macro-economic environment and in the extraction sector. Sector-specific energy technology parameters change the portfolio of mitigation options but have only modest effects on opportunity costs, e.g. learning rate of the renewable energy technologies. We conclude that feedback loops between the macro-economy and the energy sectors are crucial for the determination of opportunity costs and mitigation strategies.
JEL Classification: O41, Q40, Q43, Q55, C61, D99
Keywords: Endogenous technological change, Climate change mitigation costs, Integrated assessment, Growth model, Energy sector, Integrated assessment
By Kai Lessmann Potsdam Institute for Climate Impact Research (PIK),Ottmar Edenhofer Potsdam Institute for Climate Impact Research (email@example.com, P.O. Box 60 12 03, Potsdam, Germany), Nico Bauer Paul ScherrerInstitute (PSI)
Fondazione Eni Enrico Mattei (FEEM)
Working Paper #150.05
Business reviews of the forest industry in British Colombia, Canada, typically portray an unequivocally positive picture of its financial and economic health. In doing so, they fail to consider the following six categories of social impacts and costs: (1) direct and indirect subsidies; (2) government support through investment; (3) community dependence; (4) the maintenance of public order; (5) aboriginal title; and (6) the overestimation of employment. Robert and Fred Gale find that conventional economic and financial accounting methods inflate the industry's net contribution to the economy. The authors make a number of recommendations to address this shortcoming to improve future accounting and reporting procedures.
Keywords: Social impacts; Social costs; Industrial forestry; Sustainability accounting; British Columbia
by Robert Gale 1 and Fred Gale 2
1. Institute of Environmental Studies, University of New South Wales, Sydney, NSW 2052, Australia
2. School of Government, University of Tasmania, Launceston, Tasmania 7250, Australia
Environmental Impact Assessment Review via Elsevier Science Direct www.sciencedirect.com
Volume 26, Issue 2; March 2006; pages 139-155
All economic activities impact on the environment but not all environmental impacts are assigned values and taken into consideration in development budgets. At project level, the environmental consequences of proposed economic activities have to be evaluated by conducting an environmental impact assessment. Threshold levels in physical terms are outlined in corresponding laws and regulations. Projects fulfilling the necessary environmental assessment requirements (threshold levels) tend to be permitted without predicting the expected environmental impacts in monetary terms. The economic valuation of environmental impacts tends to be affected by uncertainties. The following example of indirect monetary valuation of environmental impacts uses the Ecological Footprint (EF) concept to calculate the total land use of projects. According to the strong sustainability concept it is assumed that every additional direct or indirect utilisation of land caused by a project requires corresponding offset areas. The offset areas required by different project alternatives are valued with relevant regional guide land values.
Keywords: Indirect environmental impact valuation; Environmental impact assessment; Ecological footprint; Strong sustainability; Guide land values
by Michael Knaus 1, Dirk Löhr 2, and Bernadette O'Regan 3
1. Institute for Applied Material Flow Management, Umwelt-Campus Birkenfeld, Site of the University of Applied Sciences Trier, PO 1380, 55761 Birkenfeld, Germany
2. Institute for Applied Material Flow Management, Umwelt-Campus Birkenfeld, Site of the University of Applied Sciences Trier, PO 1380, 55765 Birkenfeld, Germany
3. Centre for Environmental Research, University of Limerick, Limerick, Ireland
Environmental Impact Assessment Review via Elsevier Science Direct www.sciencedirect.com
Volume 26, Issue 2; March 2006; pages 156-169
Four strain gauge balances were installed into a milking robot after careful inspection of the positions of the legs of all 40 cows from a herd. It was found that 90% of the cows would have all the legs on the balances at least during every second milking. The balances were connected to a four channel amplifier and the data were targeted to a personal computer using a dedicated computer program. From the data, the dynamic weight or load of each leg can be measured. The average weight, the weight variation of each leg, the total weight, the number of kicks, the frequency of kicks and the total time in the milking robot were calculated. The changes in values of each cow were followed and the leg health of cows was observed. Preliminary analysis of the data gives evidence that limb and hoof disorders can be detected with the system. It is also possible to analyse the step and kick behaviour of the cow during milking and during the different stages of milking, washing, milking and disconnecting. In this way it is also possible to monitor the activity level of the cow and how it changes.
by M. Pastell 1, H. Takko 1, H. Gröhn 1, M. Hautala 1, V. Poikalainen 2, J. Praks 2, I. Veermäe 2, M. Kujala 3, and J. Ahokas 1
1. Department of Agrotechnology, P.O. Box 28 (Koetilantie 3), FI-00014 University of Helsinki, Finland
2. Estonian Agricultural University, Kreutzwaldi 64, 51014 Tartu, Estonia
3. Faculty of Veterinary Medicine, P.O. Box 66, FI-00014 University of Helsinki, Finland
Biosystems Engineering via Elsevier Science Direct www.sciencedirect.com
Volume 93, Issue 1; January 2006; pages 81-87
Although gas prices are below the heart-aching levels they reached last year, nationwide they are still high enough to make many drivers wonder if they should trade in their SUVs or larger cars for more fuel-efficient vehicles.
And what if you owe more on your car than you can get selling it privately or trading it at a dealership?
That's the predicament facing Tom Hungate, who lives in Pullman, Wash. Hungate bought a used 2000 Ford Expedition. He wanted it for its roominess and because he does a fair amount of driving in poor weather conditions.
He said he began to second-guess his vehicle choice when gas prices started to rise significantly last year.
Hungate has tried to sell the Expedition privately, but he can't get enough to pay off his loan. He's in a situation a lot of car owners find themselves in these days. He's upside-down on his loan, meaning he owes more on it than the SUV is worth.
Hungate wrote to me hoping I could help him figure out what to do. He wanted to know if he should get something more fuel-efficient or keep his "gas-gobbling machine," although it now sits on the sidelines most days.
When faced with this type of financial dilemma, there are a number of factors you should consider (fuel economy, maintenance costs, interest rates, insurance, reliability, which car will hold its value better, environmental impact, etc.). But in this case, let's just look at the one overriding factor that makes Hungate want to get rid of the Expedition -- high fuel costs.
Hungate said the Expedition gets about 14 miles per gallon in the city and 17 miles per gallon on the highway.
With that in mind, I did a little computing to see if he should trade or keep his Expedition.
Hungate estimates that he'll pay about $100 a month for fuel at current gas prices. So with a $370 car note, his car expenses for a month (excluding maintenance and insurance) are $470.
He's just three years into a six-year car note, so he'll pay that for the next 36 months if he keeps the Expedition. To make the calculation easier, I kept gas prices constant. Obviously, though, gas prices go up and down, and experts are predicting continued jumps in fuel costs in coming years.
So let's look at the costs Hungate would incur if he traded in the Expedition for another vehicle.
He's considering a Hyundai Tucson with the four-cylinder engine, a compact SUV with better fuel economy (22 miles per gallon in the city and 27 mpg highway by government estimates, which many critics say aren't accurate).
Hungate figures that he would spend about $50 a month on gas for the Hyundai, for a yearly savings of $600.
With options, he expects to pay about $22,000 for the Hyundai. However, he may end up financing $24,000, not including tags, taxes and fees. (I'm trying to keep things simple here.) The extra $2,000 represents the negative equity from the Expedition.
His monthly payment on the Hyundai would then be about $547, based on a 48-month loan at 4.5 percent interest.
Including gas, his new monthly vehicle costs would be $597.
So Hungate's real costs would go up $127 a month if he purchased the Hyundai.
Let's take this example out for three years (again, keeping everything constant for simplicity). Over three years, he'll spend an extra $4,572 if he trades in the Expedition for the more fuel-efficient Hyundai.
Getting rid of the Expedition also means another year of car payments, which would total $6,564.
Hungate would save on gas driving the Hyundai, but when you consider the extra car expense for the first three years and the additional 12 months of payments, it would take him almost 19 years to break even ($11,136 divided by $600). In other words, he'll see savings on gas after he drives the Hyundai for close to 19 years.
I know this example is super simplified. It is unlikely that Hungate would keep the Hyundai for almost two decades. And he might not mind the extra money on the purchase if it means being more fuel-efficient, which is great for the environment.
· On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online athttp://www.npr.org.
· By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.
FOR FULL STORY GO TO:
The Washington Post www.washingtonpost.com
Since 2004, private companies have pledged about $35 billion to build and operate toll roads across Texas and the United States, a Star-Telegram review of proposals shows.
That's more than the $34 billion in federal highway aid that Congress disbursed nationwide last year.
The value of the projects, many of which are still being negotiated, astonishes even those who support toll roads. The proposals include the Trans-Texas Corridor toll road from Dallas-Fort Worth to San Antonio and toll express lanes on Northeast Loop 820 and Airport Freeway.
At least 17 states are pursuing privatization of highways at some level, a compilation of reports by the Federal Highway Administration and the Reason Foundation shows. Supporters say this may be the beginning of a trend that forever changes how America pays for roads.
Private investment in roads is common in Europe. So far, much of the private money for U.S. roads has come from European and Australian companies with access to large pension and insurance accounts, looking for a place to invest money for 50 to 100 years, said Tom P. Rousakis, vice president of municipal finance for Goldman Sachs & Co.
Efforts to build private U.S. toll roads began percolating a few years ago, when state and federal laws started to change as transportation officials looked for funding alternatives to the gasoline tax.
Thirty-eight cents per gallon of every gasoline purchase in Texas goes toward state and federal gas taxes. The taxes yield about $4.4 billion a year for Texas, not enough to keep up with statewide transportation demands.
Two projects got the attention of transportation planners nationwide:
# The Trans-Texas Corridor: In December 2004, a Spanish/U.S. consortium was hired to create the $6 billion toll road to relieve gridlock on Interstate 35 between Mexico and Oklahoma. Madrid-based Cintra and San Antonio-based Zachry Construction are the lead partners. Cintra-Zachry agreed not only to build the road at no direct cost to taxpayers but also to pay a $1.2 billion concession fee that the state can use as it wishes on other transportation needs. Cintra-Zachry will collect tolls for 50 years.
# The Chicago Skyway: Chicago needed money for various programs and in late 2004 offered to lease the Skyway, a 7.8-mile elevated toll road. Another consortium led by Cintra stepped up and offered $1.8 billion to collect tolls and maintain the road for 99 years.
By GORDON DICKSON
FOR FULL STORY GO TO:
Fort Worth Star-Telegram www.dfw.com
With winter winds and blowing snow across Minnesota’s open fields and land, snow removal can become common and expensive.
Two local highway employees have separate opinions on what is the best way to cure drifting snow along county roads.
“Any time there is a prolonged wind period in the winter, anything is helpful in reducing snow and increasing visibility,” according to Steve Meyer from the Wright County Highway Department.
Mike Halterman of the Meeker County Highway Department disagreed by stating, “It would be of better benefit if more effort and energy would be spent on designing better roads instead of living snow fences to deter the problem.”
“Not many farmers are willing to give up land for living snow fences,” Halterman said.
Natural wind breaks or living snow fences can be a good alternative to prevent drifting snow from collecting in unwanted areas such as roads and driveways.
There are many different types of living snow fences including shrubs, trees and rows of corn.
According to the Minnesota Extension Service, the Minnesota Department of Transportation estimates 4,000 problem areas throughout the state totalling 1,000 miles that needs “snowdrift protection.” The majority of these areas are in western and south western Minnesota.
There are compensurate programs for participants with living snow fences. For example, Mn/DOT will pay an extra $1.50 per bushel than the current corn prices to farmer who are willing to leave eight rows of corn stalk standing over the winter snow drift areas.
MnDot has done cost benefit analysis and for every dollar spent on living snow fences, they recieve a $17 return. This includes reduced crashes, increased travel time, and less maintenance on roads, according to Jim Stoutland of MnDot.
For those interested, contact the local Farm Services Office or visit the web site, http://www.fsa.usda.gov/dafp/cepd/crp.htm.
For more information on living snow fences, and standing corn rows, contact District 8 regional supervisors in the Hutchinson area, (320) 234-2590 or (877) 682-8249 or the web site, www.livingsnowfence.dot.state.mn.us.
By Kristen Miller
Herald-Journal Enterprise Dispatch www.herald-journal.com
AS the toll of American dead and wounded mounts in Iraq, some economists are arguing that the war's costs, broadly measured, far outweigh its benefits.
Studies of previous wars focused on the huge outlays for military operations. That is still a big concern, along with the collateral impact on such things as oil prices, economic growth and interest on the debt run up to pay for the war. Now some economists have added in the dollar value of a life lost in combat, and that has fed antiwar sentiment.
"The economics profession in general is paying more attention to the cost of lives cut short or curtailed by injury and illness," said David Gold, an economist at the New School. "The whole tobacco issue has encouraged this research."
The economics of war is a subject that goes back centuries. But in the cost-benefit analyses of past American wars, a soldier killed or wounded in battle was typically thought of not as a cost but as a sacrifice, an inevitable and sad consequence in achieving a victory that protected and enhanced the country. The victory was a benefit that offset the cost of death.
That halo still applies to World War II, which sits in the American psyche as a defensive war in response to attack. The lives lost in combat helped preserve the nation, and that is a considerable and perhaps immeasurable benefit.
Through the cold war, economists generally avoided calculations of the cost of a human life. Even during Vietnam, the focus of economic studies was on guns and butter - the misguided insistence of the Johnson administration that America could afford a full-blown war and uncurtailed civilian spending. The inflation in the 1970's was partly a result of the Vietnam era.
Cost-benefit analysis, applied to war, all but ceased after Vietnam and did not pick up again until the fall of 2002 as President Bush moved the nation toward war in Iraq. "We are doing this research again," said William D. Nordhaus, a Yale economist, "because the Iraq war is so contentious."
Mr. Nordhaus is the economist who put the subject back on the table with the publication of a prescient prewar paper that compared the coming conflict to a "giant role of the dice." He warned that "if the United States had a string of bad luck or misjudgments during or after the war, the outcome could reach $1.9 trillion," once all the secondary costs over many years were included.
So far, the string of bad luck has materialized, and Mr. Nordhaus's forecast has been partially fulfilled. In recent studies by other economists, the high-end estimates of the war's actual cost, broadly measured, are already moving into the $1 trillion range. For starters, the outlay just for military operations totaled $251 billion through December, and that number is expected to double if the war runs a few more years.
The researchers add to this the cost of disability payments and of lifelong care in Veterans Administration hospitals for the most severely injured - those with brain and spinal injuries, roughly 20 percent of the 16,000 wounded so far. Even before the Iraq war, these outlays were rising to compensate the aging veterans of World War II and Korea. But those wars were accepted by the public, and the costs escape public notice.
Not so Iraq. In a war that has lost much public support, the costs stand out and the benefits - offsetting the costs and justifying the war - are harder to pinpoint. In a paper last September, for example, Scott Wallsten, a resident scholar at the conservative American Enterprise Institute, and Katrina Kosec, a research assistant, listed as benefits "no longer enforcing U.N. sanctions such as the 'no-fly zone' in northern and southern Iraq and people no longer being murdered by Saddam Hussein's regime."
Such benefits, they found, fall well short of the costs. "Another possible impact of the conflict, is a change in the probability of future major terrorist attacks," they wrote. "Unfortunately, experts do not agree on whether the war has increased or decreased this probability. Clearly, whether the direct benefits of the war exceed the costs ultimately relies at least in part on the answer to that question."
The newest research was a paper posted last week on the Web (www2.gsb.columbia.edu/faculty/jstiglitz/cost_of_war_in_iraq.pdf) by two antiwar Democrats from the Clinton administration: Joseph E. Stiglitz of Columbia University and Linda Bilmes, now at the Kennedy School of Government at Harvard. Their upper-end, long-term cost estimate tops $1 trillion, based on the death and damage caused by the war to date. They assumed an American presence in Iraq through at least 2010, and their estimate includes the war's contribution to higher domestic petroleum prices. They also argue that while military spending has contributed to economic growth, that growth would have been greater if the outlays had gone instead to highways, schools, civilian research and other more productive investment.
The war has raised the cost of Army recruiting, they argue, and has subtracted from income the wages given up by thousands of reservists who left civilian jobs to fight in Iraq at lower pay.
JUST as Mr. Wallsten and Ms. Kosec calculated the value of life lost in battle or impaired by injury, so did Mr. Stiglitz and Ms. Bilmes - putting the loss at upwards of $100 billion. That is more than double the Wallsten-Kosec estimate. Both studies draw on research undertaken since Vietnam by W. Kip Viscusi, a Harvard law professor.
The old way of valuing life calculated the present value of lost earnings, a standard still used by the courts to compensate accident victims, generally awarding $500,000 a victim, at most. Mr. Viscusi, however, found that Americans tend to value risk differently. He found that society pays people an additional $700 a year, on average, to take on risky work in hazardous occupations. Given one death per 10,000 risk-takers, on average, the cost to society adds up to $7 million for each life lost, according to Mr. Viscusi's calculation. Mr. Stiglitz and Ms. Bilmes reduced this number to about $6 million, keeping their estimate on the conservative side, as they put it.
By LOUIS UCHITELLE
FOR FULL STORY GO TO:
New York Times www.nytimes.com
Cayce sent the State House a $21.4 million bill Friday to recoup money spent on repairs to a water plant damaged in a 2000 chemical spill.
The spill, which state officials called one of South Carolina’s worst environmental disasters, disrupted Cayce’s water operations for two years.
Cayce’s request came a few hours after Circuit Judge Larry Patterson awarded the city that amount in a judgment against Tin Products, the chemical maker that caused the spill.
The amount covers costs for importing water from neighboring communities and setting up a new water source after the spill poisoned the creek that once supplied Cayce’s water.
Getting anything from the company, which closed in 2001, is unlikely, Wilkerson said.
While the court victory is largely symbolic, it is a necessary step for Cayce to seek state or federal payback.
In addition to Cayce’s damage, the spill damaged a county sewer plant, contaminated a 12-mile stretch of two creeks, killed thousands of fish and forced water use limits that summer.
Cayce was forced to buy water from West Columbia and Lexington County for two years while building a new supply line and fixing its plant. It supplied water to 7,700 homes and businesses when the spill occurred.
Much of the contamination in waterways dispersed naturally. The U.S. Environmental Protection Agency oversaw a $1 million cleanup of the 45-acre Tin Products plant near the town of Lexington from 2001-2002.Two company executives were imprisoned and a worker put on probation for the spill.
By TIM FLACH
TheState.com www.thestate.com (South Carolina)
Battery chargers for cordless tools and appliances are the latest products eligible to earn EPA's Energy Star label. The labeling program identifies energy efficient products. Americans use some 230 million products with rechargeable batteries, and Energy Star chargers will be at least 35 percent more energy efficient.
"Expanding the Energy Star Label to battery chargers is the next step in promoting energy efficiency," EPA Acting Assistant Administrator for Air and Radiation Bill Wehrum said. "By using more energy efficient battery chargers, Americans can save money on their energy bills and help prevent greenhouse gas emissions."
Battery charging systems recharge a wide variety of cordless products, including power tools, small household appliances, personal care products like electric toothbrushes and electric shavers, and garden tools such as weed and hedge trimmers.
In the United States alone, more energy efficient battery chargers have the potential to save Americans more than 1 billion kilowatt hours (kWh) of energy per year, saving Americans more than $100 million annually while preventing the release of more than one million tons of greenhouse gas emissions—equivalent to the emissions of 150,000 cars. On average, Energy Star qualified battery chargers will use 35 percent less energy than conventional models.
More and more consumer products are becoming cordless and portable, requiring battery chargers and power adapters. This is a timely opportunity to capture energy savings associated with these common household products. Battery chargers -- even when not actively charging a product -- can draw as much as 5 to 20 times more energy than is actually stored in the battery. Energy Star guidelines for battery charging systems focus on "non-active" modes of recharging, including battery maintenance mode (charger is connected to a fully charged product), and standby mode (charger is plugged in, but no product is connected).
EPA is promoting the most efficient charging systems since they are commonly bundled with so many popular consumer products and appliances. Some products, such as portable floor vacuums, and even some power tools, may spend as much as 90 percent of their operating time in battery maintenance mode, where lots of energy can be consumed by an inefficient design.
These new guidelines complement EPA's existing Energy Star external power adapter specification, announced in January 2005. Power adapters are devices that convert high voltage power from a wall outlet into low voltage power for devices such as notebook computers, monitors and other electronics. To date, more than 20 external power adapter manufacturers have joined Energy Star and are producing energy-efficient models, which are available with mobile phones, digital cameras, and other products.
Battery charging systems join the more than 40 categories of products that can earn the Energy Star mark, including lighting, appliances, office equipment, consumer electronics, and heating and cooling equipment. Last year alone, Americans, with the help of Energy Star, saved $10 billion dollars on their energy bills and enough energy to power 25 million homes, and avoided the greenhouse gas emissions equivalent to those of 20 million cars. Learn more about Energy Star battery charging systems at: http://www.energystar.gov/index.cfm?c=battery_chargers.pr_battery_chargers For additional information on the Energy Star program, visit: http://www.energystar.gov
Contact: John Millett, 202-564-4355 /
U.S. Environmental Protection Agency www.epa.gov
1200 Pennsylvania Avenue Washington, DC 20460; 202-564-4355
State regulators announced settlements Thursday with owners of hundreds of contaminated sites - from gas stations to a china factory - as part of a program to force polluters to reimburse the public for lost natural resources.
The owners will pay a total of $5.2 million and donate 81 acres of land as part of their settlements.
The biggest settlements were with pharmaceutical giant Merck & Co., and Motiva Enterprises LLC/Shell Oil Co.
Merck agreed to pay $2.4 million, donate 10 acres next to the Rahway River and fund a $30,000 restoration project in the Passaic River watershed for contamination at four of its properties, including mercury deposits at the site of the former Calgon plant in Hawthorne.
To resolve potential claims against 400 Shell and Pennzoil-Quaker State gas stations and Jiffy Lube franchises, Motiva agreed to pay $2.2 million. The conglomerate also agreed never to develop 51 acres along the Woodbridge River as mitigation for sediment and wetland contamination at its Sewaren Terminal in Woodbridge.
Payments for pollution
The DEP settled natural resource damage claims with nine companies for contamination of soil, groundwater or surface near their facilities:
# Merck & Co., $2.4 million, for sites in Rahway, Linden, Hawthorne and Branchburg.
# Motiva Enterprises LLC/Shell Oil Co., $2.2 million, for 400 service stations and oil change facilities statewide and its Sewaren terminal in Woodbridge.
# Eco Pump, $64,000, former manufacturing plant in South Plainfield.
# Ethicon Inc., $390,024, plant in Bridgewater Township.
# Kinder Morgan Liquids Terminal, LLC, $90,000, terminal in Carteret.
# Northend Industrial Park, $108,000, South River Borough.
# Litton Systems, $54,242, former plant in Passaic.
# Reichhold Inc., $39,997, for a former plant in Elizabeth. Reichhold Inc. also paid $50,234 for a site in Newark.
# Lenox, based in Galloway Township, $7,000, for three sites in Atlantic County, two in Galloway and one in Egg Harbor Township.
Seven smaller companies agreed to pay a total of $803,497 and donate 20 acres.
Natural resource damages are intended to compensate for the public's lost enjoyment of a resource, such as fish-filled stream or a once-pure aquifer. They are different from cleanup costs and fines, which the DEP can order companies to pay.
In all, more than $35 million and 5,200 acres in land donations have been won in such settlements in the past four years as payment for fouled water, tainted sediments or harmed wildlife at more than 1,600 locations statewide.
In addition to the settlements, 65 lawsuits have been filed by the Attorney General's Office or the three private law firms assisting the state against companies that have resisted settling. State officials say they are poised to file 50 others, while settlement talks are under way with about 50 more companies responsible for about 100 contaminated sites.
Merck and Motiva/Shell were among the companies that voluntarily came to the table rather than face lawsuits. A Merck spokesman said the company considered the DEP's strategy a fair one that would bring environmental benefits. "It's a whole lot more positive than a legal route," said the spokesman, Patrick Whitmer.
Some advocates credit the DEP for wringing compensation from polluters in cases that could have been costly to pursue in court. But others say the agency has settled for sums that are too small and say the state has yet to take on the big cases that will truly determine the program's success.
Governor Codey just gave the program a new lifeline, extending by 18 months a Jan. 1 deadline to file lawsuits - a deadline that had threatened to let 2,000 polluters off the hook.
That will leave the Corzine administration to face the first real battles with the deep-pocket companies, such as Exxon Mobil, that have chosen to not to settle.
Campbell said it has been an enormous challenge to pull together the information needed to pursue thousands of claims.
One challenge was simply to reconstruct old DEP records of spills. It was also difficult to identify the responsible parties, since so many industrial sites had changed ownership or been swallowed up by conglomerates.
"On the positive side, we've been helped by a number of companies willing to open settlement talks," he said. "We've also had a fair number of responsible parties that have chosen to stay in the weeds and hide from their obligation. We're pursing them."
Among the achievements of the program the DEP cites is the $17 million Honeywell agreed to pay for chromium contamination in Jersey City, the largest monetary award. DuPont agreed to preserve 1,875 acres of land, including some in Passaic County
Money won in settlements will be spent on land conservation and restoration of damaged wetlands and watersheds. The largest project so far is a planned $10 million restoration of marshland in Liberty State Park, officials said.
Although he concedes preparing cases has taken longer than expected, Campbell said he thinks much of the groundwork is done and that the agency under incoming DEP Commissioner Lisa Jackson will be able to meet the new deadline.
But challenges lie ahead, say both supporters and critics.
"They are going to find that it's a lot easier to settle these cases than it is to litigate them," said attorney Richard Ricci, whose firm is representing several companies now in negotiations with the DEP.
Ricci thinks the companies that have come to the table have done so because their culpability was more clear-cut. The tougher legal cases are still looming.
One sign of the legal battles to come is the lack of response to notices the DEP sent to 66 property owners along the Passaic River back in September 2003, when Campbell announced a push to collect natural resource damages to pay to restore the heavily polluted watershed.
None of those companies has responded to the DEP's request for settlement talks, said John Sacco, acting administrator of DEP's Office of Natural Resource Recovery. Those cases will be difficult because of the long history of pollution on the river and the "intermingling of contaminants."
Another issue likely to continue generating controversy is a formula the DEP uses to calculate how much a company should pay for polluting groundwater. The formula has been challenged by industries that argue that an untapped aquifer that will be cleaned before it is ever needed is not a lost resource.
State statutes and DEP regulations, however, consider groundwater property of the public, even if it's under private property.
Wolfe said the agency has been afraid to litigate on this point, and has instead accepted settlements he considers too low.
Meanwhile, industry groups have complained that the groundwater formula, and the natural resource damage program as a whole, have never been written into regulations and subjected to public review.
"Campbell has chosen regulation through intimidation," said Hal Bozarth, secretary of the Chemistry Council of New Jersey.
The Chemistry Council was one of six business groups that sued the DEP last year and got a judge to order the agency to get to work on the regulations. Those rules have yet to be written.
By COLLEEN DISKIN
FOR FULL STORY GO TO:
Here’s the background question: do the property taxes paid by homeowners actually cover the cost of the services provided by a municipality?
Here’s the $64,000 question: can the Town of Chesterton afford to annex more unincorporated property slated for residential development?
At a special meeting Thursday afternoon, the Town Council tackled both, with the help of its contracted financial consultant, John Julien of H.J. Umbaugh & Associates.
Julien’s answers to those two questions were roughly these:
•In the past business and industry shouldered a far greater property-tax burden than homeowners did.
•Court-ordered reassessment, though, has gone far in distributing that burden more evenly.
•Nevertheless, it still costs a municipality more—how much more exactly is unclear—to provide services to homeowners than to business and industry.
•A municipality always has the option of seeking an excess levy appeal—an increase in the total levy greater than that permitted by state statute—to pay for the costs associated with providing services to annexed property.
•Yet even an annexation which, on paper, promises to cost a town more in services than it would recoup in property taxes may still be worth pursuing, if it were part of a comprehensive strategy of growth and economic development.
Julien’s analysis is by no means academic. The council will shortly be considering at least two petitions for annexation: the first of the Duneland Community Church of the Nazarene for the annexation of 12 acres on C.R. 1100N, east of 23rd Street and west of Rose Hill Drive; the second of Larry and Christine Wright for the annexation of 39 acres in the area of C.R. 1050N and Ind. 49. Both acreages are located in unincorporated Liberty Township.
Hence the court-ordered reassessment. “The dust has now settled,” Julien said, and “residential is now making up a larger portion of the pie than it used to.”
Even so, Julien hastened to add, the services provided to a residential subdivision—police and fire protection, road maintenance, snow removal, stormwater drainage—are still likely to cost a municipality more than those provided to a commercial mall or industrial park of the same acreage. Not, however, because the demand for services is greater among homeowners than it is among business and industry, but because the density of a residential subdivision is much less.
That is, a municipality is providing the same quantity and quality of service in a subdivision but to fewer people.
The long and the short of it: x number of acres slated for residential development will cost the town more after annexing than the same number slated for commercial or industrial development.
So the key to weighing the costs and benefits of any annexation is the fiscal plan, Julien told the council. Much of any fiscal plan is boilerplate: a description of the area proposed for annexation, its current zoning and land use, and existing utilities. But under Indiana Code a fiscal plan must also include the following: cost estimates of planned services to a newly annexed area; the methods of financing those planned services; new revenues—real and personal property taxes, COIT, CEDIT, building permit fees, sanitary sewer user fees—which would be collected or could be increased as a result of annexation; a plan for the organization and extension of services; an accounting of non-capital services to be provided, such as police and fire protection; and an accounting of capital improvements to be provided, such as street and sewer construction.
FOR FULL STORY GO TO
The Chesterton Tribune www.chestertontribune.com
Boeing Co. has agreed to pay $30 million to settle a lawsuit alleging that pollutants from the company's nuclear research site in Ventura County caused many nearby residents to get cancer.
The settlement, agreed to in September but not immediately disclosed, ends an 8-year battle with neighbors of Boeing's Santa Susana Field Laboratory.
The settlement included a confidentiality agreement between Boeing and the remaining 133 plaintiffs in the case.
But one plaintiff, Margaret Ann Galasso, provided settlement documents to the Los Angeles Daily News, which first reported the story on Wednesday. Galasso, who now lives in Florida, complained that plaintiffs' attorneys took home 60 percent of the settlement, or $18 million, in fees and costs.
Barry Cappello, lead attorney for the plaintiffs, said he could not comment on the settlement details and called Galasso's revelation "destructive."
Initially about 300 individual lawsuits were filed against Boeing and the lab's former owner, Rockwell International Corp.
The plaintiffs said dozens of years of nuclear and rocket engine testing at the hilltop lab were responsible for a wide range of cancers, auto-immune disorders and tumors afflicting nearby residents.
The suit alleged that a partial nuclear meltdown at the lab in 1959 released more radiation than originally estimated. The accident was not widely publicized until 20 years later.
For years, Boeing said the meltdown posed no danger to its workers or the public.
But disclosure in 1989 of lingering low-level contamination from past nuclear projects created an uproar, and pushed the company to halt nuclear research there the following year.
Experts also found links between chemicals used in rocket tests and nuclear research and numerous illnesses of people living in Simi Valley and the neighboring western San Fernando Valley, according to documents.
Individual payouts were based on specific illnesses, a person's age, economic loss and other factors, according to one plaintiff.
By Associated Press
FOR FULL STORY GO TO:
North County Times www.nctimes.com
Marginal abatement cost curves in general equilibrium: The influence of world energy prices
by Gernot Klepper and Sonja Peterson
Marginal abatement cost curves (MACCs) are a favorite instrument to analyze international emissions trading. This paper focuses on the question of how to define MACCs in a general equilibrium context where the global abatement level influences energy prices and in turn national MACCs. We discuss the mechanisms theoretically and then use the CGE model DART for quantitative simulations. The result is, that changes in energy prices resulting from different global abatement levels do indeed affect national MACCs. Also, we compare different possibilities of defining MACCs—of which some are robust against changes in energy prices while others vary considerably.
Alternative intertemporal permit trading regimes with stochastic abatement costs
by Hongli Feng and Jinhua Zhao
Hongli Feng and Jinhua Zhao examine the social efficiency of alternative intertemporal permit trading regimes. The role of uncertainty and information asymmetry is discussed. For banking to be welfare improving, uncertainty itself does not matter, while information asymmetry does. Three effects of banking are identified: externality effect, information effect, and total permit effect. In the absence of total permit effect, banking is welfare improving if information effect is positive and dominates the externality effect. The relative efficiency of banking regimes with different intertemporal trading ratios is affected by the slope of the benefit and damage functions and the covariance of the shocks.
Renewable resource regulation and uncertain prices: The role of financial structure and bankruptcy
by Richard Damania and Erwin H. Bulte
Richard Damania and Erwin H. Bulte analyze the interaction between regulatory policies and the financial structure of a fishery and show that firms with debts may respond differently to regulations than firms that have not accumulated debts. There are conditions where more stringent regulation is counterproductive, providing a perverse incentive to increase harvesting effort. We show that optimal regulation depends on the sector's financial structure, and demonstrate that there are cases when intervention is counterproductive, or too costly to implement. There are also cases where successful regulatory intervention can only be implemented when accompanied by a sufficiently large subsidy.
Russian exports of emission permits under the Kyoto Protocol: The interplay with non-competitive fuel markets
by Cathrine Hagem and Ottar Maestad
The paper analyses optimal strategies for a country that has market power in an international market for emission permits at the same time as a domestic fuel producer participates in a non-competitive fuel export market. In particular, the effects of coordinating fuel and permit exports are explored. We show that such coordination may either increase or reduce the optimal mark-up on permits, depending on the degree of substitution between alternative fuels.
When the fuel market is oligopolistic, coordination of permit and fuel exports may lead to a strategic disadvantage in the fuel market, which makes such coordination unprofitable. However, illustrative numerical simulations suggest that Russia will benefit from coordinating its permit exports with its oil and gas exports during the Kyoto commitment period.
Environmental quality, the macroeconomy, and intergenerational distribution
by Ben J. Heijdra, Jan Peter Kooiman and Jenny E. Ligthart
The paper studies the dynamic allocation effects and intergenerational welfare consequences of environmental taxes. To this end, environmental externalities are introduced in a Blanchard–Yaari overlapping generations model of a small open economy. A rise in environmental taxes – taking into account pre-existing distortionary taxes and endogenous labor supply – is shown to yield an efficiency gain if agents care enough for the environment. The benefits are unevenly distributed across generations because agents are heterogeneous in their capital ownership. An accompanying debt policy can be designed – prescribing debt accumulation at impact and debt redemption in the new steady state – to ensure everybody gains to the same extent. With lump-sum recycling of environmental tax revenue, aggregate employment is unaffected in the short run, but falls in the long run. Furthermore, it raises environmental quality more in the long run than in the short run. Recycling revenue through a cut in labor taxes, however, is shown to yield a rise in employment in the short run, which disappears during transition. In the new steady state, environmental quality is higher at the expense of a lower level of employment.
Resource and Energy Economics via Elsevier Science Direct www.sciencedirect.com
Volume 28, Issue 1, pages 1-104 (January 2006)
Agricultural activities, especially reclamation, are considered major threats to the wetland ecosystems in Sanjiang Plain, the largest concentrated area of the freshwater wetlands in China. In the past decades, the area of the cultivated land and its grain production have been increased at the cost of wetlands shrinkage. The large-scale land reclamation severely affected the ecosystems in this region. However, such effects at the regional scale are seldom evaluated quantitatively. We used three datasets of LANDSAT MSS and/or TM imagery to estimate the area changes and the transition of land use types from 1980 to 2000. We also valued changes in ecosystem services delivered by each land category using value coefficients published by Costanza et al. [Nature 387, 1997, 253–260]. Sensitivity analysis suggested that these estimates were relatively robust. Finally, the contribution of various ecosystem functions was ranked to the overall value of the ecosystem services in this study. According to our estimates, the total annual ecosystem service values in Sanjiang Plain have declined by about 40% between 1980 and 2000 ($156284–182572.18 million in total over 20 years). This substantial decline is largely attributed to the 53.4% loss of wetlands. For individual ecosystem functions, waste treatment, water supply and disturbance regulation account for more than 60% to the total ecological values. During those two decades, the contribution of disturbance regulation, cultural and recreation decreased, while the contribution of water regulation, nutrient cycling, food production, raw materials and climate regulation increased during the same period. We also put forward a few proposals concerning the future land use policy formulation and sustainable ecosystems. They are adjusting the ‘food first’ agricultural policy, establishing more nature reserves for wetlands, creating systems for the rational use of water, harnessing the degraded cultivated land and encouraging eco-tourism.
Keywords ecosystem services - land use change - remote sensing - Sanjiang Plain - China - wetland reclamation
by Zongming Wang, Bai Zhang, Shuqing Zhang, Xiaoyan Li, Dianwei Liu, Kaishan Song, Jianping Li, Fang Li and Hongtao Duan all of Department of RS and GIS, Northeast Institute of Geography and Agricultural Ecology, Chinese Academy of Sciences, Changchun, Jilin Province, China
Environmental Monitoring and Assessment via SpringerLink www.springerlink.com
ISSN: 0167-6369 (Paper) 1573-2959 (Online)
Volume 112, Numbers 1-3; January 2006; pages 69-91
Employers are failing to optimize their financial returns when crafting employee health plans, according to a study published today in the American Journal of Health Promotion. The study, by Partnership for Prevention, indicates that employers could substantially increase workforce productivity and health plan cost-effectiveness by extending coverage to include preventive services such as tobacco cessation, influenza vaccination and alcohol-problem offerings.
Despite their acknowledged cost-benefit, lifestyle modification preventive services are currently offered by fewer than 20 percent of employers -- and only four percent of employers offer optimal tobacco cessation services. Successful tobacco cessation programs, however, have the potential to not only lower employee health costs, but also increase productivity through fewer breaks and absences.
"Employers must begin to realize that a healthy workforce fosters a healthy bottom line," explains John M. Clymer, president of Partnership for Prevention. "Transforming the U.S. health system from one that spends 95 cents of every dollar on treating disease into one that invests in preventing disease makes smart business sense."
For many working Americans, clinical preventive services coverage largely depends on their employer-sponsored health plan and employer size. Almost half of large employers require health plans to cover some clinical preventive services, and they are also more likely than smaller employers to provide financial incentives to employees who use the services.
Regardless of health plan or size, most employers are likely to experience short-term health premium increases as a result of offering clinical preventive services to employees. To minimize these costs and maximize the return on investment, the study suggests employers prioritize the most cost- effective preventive services -- tobacco cessation services, influenza vaccination and alcohol-problem prevention.
About the Survey
The National Survey of Employer-sponsored Health Plans 2001, conducted by Mercer Human Resource Consulting, Inc. from May to August 2001, provided the data for the study. The Mercer Survey collects information on employer health benefits from a nationally representative sample of public and private employers that provide health insurance to at least 10 employees.
About Partnership for Prevention
Partnership for Prevention is a nonprofit organization that develops evidence-based solutions to major national health challenges. For more information, please visit the Partnership for Prevention Web site at http://www.prevent.org.
Source: Press Release from Partnership for Prevention via PR Newswire via Yahoo Business
Federal agencies have long been required to conduct benefit-cost analyses to determine whether the merits of regulations justify the costs of their implementation. In 2003, the U.S. Office of Management and Budget (OM instituted a new requirement: for any major regulation (with costs or benefits greater than $100 million) that affects health or safety, agencies must also estimate its cost-effectiveness.
At the request of OMB and several federal agency sponsors, the IOM Committee to Evaluate Measures of Health Benefits for Environmental, Health, and Safety Regulation developed guidance on how best to conduct cost-effectiveness analyses in the regulatory context.
The report of the committee, Valuing Health for Regulatory Cost-Effectiveness Analysis, reviews and makes recommendations for using integrated measures of morbidity and mortality (such as quality-adjusted life years, or QALYs); reporting cost-effectiveness ratios; and data and research needs to improve regulatory cost-effectiveness analysis. It also considers the ethical implications of using cost-effectiveness analysis, and integrated measures of health impact, in regulatory policy development.
Institute of Medicine National Academy of Sciences www.iom.edu
A new paper recycling program has turned into a financial burden for schools in eastern Newfoundland, with academic budgets being tapped to cover the costs of a mandatory environmental program.
The provincial government requires employers with 25 workers or more in the St. John's area to recycle all of its paper.
Schools in the Eastern School District come under the pilot program – which came into effect in September – although their budgets have not been amended to cover the new expense.
Schools must rent or buy recycling bins, and then pay to have materials hauled away.
"We estimate the monthly cost to be somewhere between $500 and $960," said Norm Catto, a member of the school council at Beaconsfield junior high school in St. John's.
"So, over the course of the school year, that could be as much as $10,000."
FOR FULL STORY GO TO http://www.cbc.ca/nl/story/nf_schools_recycling_20060111.html?ref=rss
CBC News www.cbc.ca
The Tampa Bay economy receives more than $7 million a year in savings and direct income from the operation of the Physical Oceanographic Real-Time System (PORTS®), according a new NOAA sponsored study. The report details the first study of the navigational aid, which is in operation at 13 major ports across the United States. (NOAA image of PORTS® system. Please credit “NOAA.”)
Tampa's PORTS® system provides accurate real-time oceanographic information tailored to the specific needs of the 6,700 commercial vessels transiting Tampa Bay each year.
"The PORTS® system is a good example of how research and observing system development expertise can be applied to support safe, efficient and environmentally sound marine transportation," said retired Navy Vice Admiral Conrad C. Lautenbacher, Jr., Ph.D., undersecretary of commerce for oceans and atmosphere and NOAA administrator.
"Tampa Bay PORTS® is an excellent example of NOAA'S creativity and technological expertise," said Richard Wainio, Port director and chief executive officer of the Tampa Port Authority. The Tampa Bay maritime users have realized enhanced navigational safety while transiting the long channels of the harbor. This has resulted in more efficient loading logistics, enhanced vessel traffic management, and better protection of the environment and citizens of the Tampa Bay region. It is especially helpful for both planning and maintaining the flow of maritime commerce, during periods of disturbed weather conditions."
"This study validated what we have been hearing for some time," said Mike Szabados, director of the NOAA Ocean Service Center for Operational Oceanographic Products and Services. "It quantified the benefits as being far greater than the cost of the system and demonstrates that the system provides valuable support for the safe and efficient maritime commerce necessary for a healthy economy. The benefits are not just good, they are impressive."
The most significant change in maritime shipping operations in the bay in the 1990s occurred when Harbor pilots onboard vessels began using portable computers to access PORTS® in real-time. During this time, groundings decreased by half. With tankers accounting for 2,200 transits per year, the 50 percent reduction in groundings translates into a conservative estimate of $2.8 million in avoided costs annually. The PORTS® system was installed in Tampa in 1990.
The system provides real-time data available to load ships to drafts 12 inches or more above what had been considered the safe guideline. The additional capacity for the phosphate trade alone in Tampa Bay could equal an increased benefit of $1.1 million each year.
Even though hazardous chemical spills in Tampa Bay are rare, at a conservative estimate the additional efficiency and accuracy of applying these data would avoid nearly $1.8 million per year in losses.
PORTS® data are used to enhance area weather and coastal marine forecasts, particularly coastal flooding. Tampa Bay is considered one of the most storm surge threatened areas in the country because of its large coastal population and its geography. Applying PORTS® data risk formulas for forecasts in the area gives it an estimated yearly value of $2 million.
Recreational boaters, using better real-time information available through PORTS®, may make more excursions, bringing an estimated $946,000 to the economy each year. Fishermen looking for water temperature and tidal data to improve their catch contribute another estimated $150,000 per year in port area income.
The report was authored by Hauke Kite-Powell, Ph.D., of the Woods Hole Oceanographic Institute Marine Policy Center, who designed the method of identifying as well as collecting and quantifying the data. The Tampa study was the first application of the methodology, which NOAA plans to use in evaluation of PORTS® systems in Houston and New York in 2006.
PORTS® systems also operate in San Francisco Bay; Chesapeake Bay, which serves Delaware, Maryland and Virginia; Narragansett Bay, Rhode Island; Soo Locks, Mich.; Los Angeles/Long Beach, Calif.; Delaware River and Bay; Tacoma, Wash.; Port of Anchorage, Alaska; New Haven, Conn., and the Lower Columbia River, bordering Oregon and Washington.
NOAA, an agency of the U.S. Department of Commerce, is dedicated to enhancing economic security and national safety through the prediction and research of weather and climate-related events and providing environmental stewardship of the nation's coastal and marine resources.
Through the emerging Global Earth Observation System of Systems (GEOSS), NOAA is working with its federal partners and nearly 60 countries to develop a global monitoring network that is as integrated as the planet it observes.
Relevant Web Sites
NOAA Physical Oceanographic Real-Time System (PORTS®)
NOAA Ocean Service
Ben Sherman, NOAA Ocean Service, (301) 713-3066
National Oceanic and Atmospheric Administration (NOAA) www.noaa.org
The county of San Diego concedes its discretionary permit review process is out of control and is trying to do something about it.
The county admits it now takes an average of 45 months -- or nearly four years -- to process an environmental impact report and an average of 14 months to process a negative declaration.
Last month, the San Diego County Planning Commission set a goal to bring the figures down to 22 months for an EIR and nine months for a negative declaration.
The county expects its plan to reduce holding costs for private projects subject to review of environmental studies. The county estimated the review reduction would amount to 4.5 staff years, or, at present hourly rates, $441,000 a year. Private land developers are charged those costs as plans move through the review process.
FOR FULL STORY GO TO
Yahoo News http://news.yahoo.com
Objectives: The objectives of this study were to examine the relationship between health insurance (HI) and number of missed workdays (MW), and how it is modified by level of access to care (AC) and healthcare use (HC). Methods: The authors conducted a retrospective study of 1996-1999 Medical Expenditure Panel Survey of U.S. employees.
Results: Of 25,676 individuals, 13,957 (54%) reported MW (mean [standard deviation] = 4.3 [0.092]). Having HI was significantly associated with decreased likelihood of MW. Higher level of AC was significantly associated with greater number of MW. HC was significantly associated with increased likelihood of and greater number of MW.
Conclusions: Having HI any time over the year is significantly associated with decreased likelihood of and smaller number of MW. HC use is an important explanatory variable and appears to be a confounder between HI and MW. The benefits to employers of ensuring that employees have health coverage should be explored.
by Lofland, Jennifer H. PharmD, MPH, PhD; Frick, Kevin D. PhD
Journal of Occupational & Environmental Medicine www.joem.org
Volume 48, Number 1; pages 13-21, January 2006
From 1 January 2005 onwards the European Union has launched the first large-scale international carbon emissions trading program. As the EU Emissions Trading Scheme (EU-ETS) covers only part of domestic carbon emissions, it implies a segmented environmental regulation scheme: Each EU Member State must specify additional domestic abatement policies for the sectors outside the EU-ETS in order to meet its emissions budget under the EU Burden Sharing Agreement. Christoph Böhringer, Tim Hoffmann, and Casiano Manrique-de-Lara-Peñate highlight the generic problems of segmented carbon regulation in terms of information requirements for international carbon prices and domestic abatement costs of sectors outside the EU-ETS. Based on numerical simulations for Germany, the authors quantify the excess costs of segmented carbon regulation and conclude that inefficiencies can be much better explained by lobbying of influential EU-ETS sectors than by information problems.
Keywords: Emissions trading; National allocation plans
JEL classification: D61; H21; Q48
by Christoph Böhringer 1,2, Tim Hoffmann 1 and Casiano Manrique-de-Lara-Peñate 3
1. Centre for European Economic Research (ZEW), P.O. Box 10 34 43, 68034 Mannheim, Germany
2. Department of Economics, University of Heidelberg, Germany
3. Department of Applied Economic Analysis, University of Las Palmas de GC, Spain
Energy Economics via Elsevier Science Direct www.sciencedirect.com
Volume 28, Issue 1; January 2006; pages 44-61
At first blush, the various global "green" initiatives that will regulate how manufacturers must build and dispose of their products seem comparable to the corporate and IT mayhem caused by the Year 2000 bug and the Sarbanes-Oxley Act.
Existing restrictions on hazardous substances and waste from electrical and electronic equipment alone will force companies in the high-technology sector in particular to spend collectively between $10 billion and $20 billion. And like Y2K or Sarbanes-Oxley, the costs of noncompliance may involve criminal allegations, jail time and large monetary fines.
A single component or process that jeopardizes compliance will negatively impact every company that helped bring that product to market.
That's in addition to sales bans, product recalls and potentially damaged brand reputations resulting in millions of dollars in lost sales and lost market share.
But unlike its predecessors, environmental compliance is not solved by crossing a well-defined finish line. The rules are still evolving and may be interpreted or enforced differently in various global regions. Nor is it a challenge whose solution is fully within the resource of a single company to solve.
So many high-volume consumer technology brands have embraced outsourced business models that strategic functions such as design, procurement, manufacturing, logistics and reporting wind up beyond a company's direct control. AMR Research revealed, for example, that many original equipment manufacturers found nearly half of their supplier certification information to be incorrect. No matter: The OEM is still on the legal hook for compliance.
A single component or process that jeopardizes compliance will negatively impact every company that helped bring that product to market. But there is a silver lining.
By Chris Smith, Chief Executive River One
FOR FULL STORY GO TO
CNET News.com http://news.com.com
Separate federal and state reports on a proposed crackdown on coalbed methane pollution say the rule could slow development, potentially costing the industry and state coffers hundreds of millions of dollars.
The reports come as the state Board of Environmental Review mulls tougher regulations for the industry.
The proposed rules would require that water withdrawn from wells be injected back into the aquifers. If that's not possible, because of the geology, the water, which is often high in saline, would have to be treated before being discharged into rivers and streams for irrigation.
The rule could cost the industry anywhere from $600 million to roughly $1.5 billion over the next 30 years, according to an economic impact analysis from the state Department of Environmental Quality.
The industry could lose as little as 6 percent of expected profits, or as much as 74 percent, depending upon a number of variables such as natural gas price, the report concluded.
Under the worst-case scenarios, the state would lose up to $271 million in tax money from the industry, according to the report.
Benefits of the rule, the report said, include less risk of polluted rivers, streams and land. Also, the proposed rule could ensure more availability of well water to future generations.
Associated Press via Billings Gazette www.billingsgazette.com
Pressure Systems International (PSI), developer of automatic tire pressure systems, is making the Federal Motor Carrier Safety Administration’s Commercial Motor Vehicle Tire Pressure Sensors tech brief available to interested industry participants.
The objectives of the FMCSA’s project covered by this report were to develop and document the impacts of tire inflation maintenance practices on commercial motor vehicle operating costs and safety, and to provide a quantitative estimate of the potential benefits of tire pressure monitoring sensors and automatic inflation systems.
Debra Moore, regional sales manager for PSI, said, “We are making this comprehensive report available because we obviously agree with the findings – that proper tire inflation is a safety as well as an economic advantage for trucking fleets. With many costs associated with operating heavy duty vehicles escalating, knowing that there’s a way to make some cost reductions is worthwhile information.” The report includes data that enables truck operators to evaluate the costs and benefits of tire inflation systems.
To obtain a copy of the Commercial Motor Vehicle Tire Pressure Sensors tech brief, send an e-mail to or call Pressure Systems International at (210) 222-1926.
A model of economic impacts of public gardens on their communities is developed stressing the roles of visitors as well as staff and suppliers in creating impacts. The model is implemented for four different gardens using a combination of survey and normal business data from the gardens with a well-known impact model system.The gardens selected span the major types in terms of metropolitan-nonmetropolitan locations and walk-in vs. destination facilities as well as being located in different regions of the U.S. The results show significant direct and multiplier effects which vary systematically with the typed of facility. The model can be applied to other facilities using a workbook available from the authors.
Keywords: Public Gardens, Economic Impact, Economic Development Policy
JEL: O18 R11 R58
By William R. Latham (Department of Economics,University of Delaware) and
Research Papers in Economics http://d.repec.org
"As economies get richer, they can afford to question the need for further riches. In a country where people are starving, economic growth remains regarded as a vital objective to overcome hunger and other poverty problems."
Traditionally, economists and others measure a nation's progress and prosperity by looking at Gross Domestic Product (GDP), that is, the total output of good and services a country produces for its own inhabitants or for sale to other nations. There is a growing tendency, however, for economists to consider another measure, Gross National Happiness.
"For the wealthy countries of the world, though not the developing countries, our instinct is that it would be a mistake in the twenty-first century to focus excessively on ways to raise the level or growth rate of GDP," write David Blanchflower and Andrew Oswald in Happiness and the Human Development Index: The Paradox of Australia (NBER Working Paper No.11416). "The industrialized countries should … use a broader conception of well-being than the height of a pile of dollars." As economies get richer, they can afford to question the need for further riches. In a country where people are starving, economic growth remains regarded as a vital objective to overcome hunger and other poverty problems.
One of the best-known attempts to move away from a simple reliance on GDP as a measure of welfare is the Human Development Index (HDI) of the United Nations. Published every year, the HDI is a score that amalgamates three indicators: lifespan, educational attainment, and adjusted real income.
In this paper, Blanchflower and Oswald question the soundness of this measure when the 2004 Human Development Report places Australia at third in the world, ahead of all the other English-speaking countries. The top-ten countries, in order according to that index, are: Norway, Sweden, Australia, Canada, Netherlands, Belgium, Iceland, United States, Japan, and Ireland.
The HDI, the authors note, is a mechanical criterion. "It does not capture the contentment or psychological state of individuals," that is, their mental well being. "Emotion surely ought to play a role in a measure of human well being," they write. Their goal is not to establish that the HDI measure of human well being is incorrect. Rather, their stated goal is to improve upon the traditional narrow economic focus on real income and growth. In that regard, they draw on recent academic literature exploring the "economics of happiness," studies that make use of how people in different countries rate their own happiness or well being. The authors suspect that HDI data and subjective well-being data could play complementary roles.
Using new data on approximately 50,000 randomly sampled individuals from 35 nations in 2002, Blanchflower and Oswald show that Australians have some of the lowest levels of job satisfaction in the world. Only Japan, Taiwan, and six East European nations (including Russia) do worse in this regard. Moreover, in a sub-sample of English-speaking nations where the common language should help such subjective measures to be more reliable, Australia performs poorly on a range of four other happiness indicators. The authors note that comparisons of people's answers regarding happiness in one country to answers to the same questions in another country is "probably hazardous" because of different languages and cultures that may cause biases in such happiness surveys.
In the "world league table" on happiness, Australia performs respectably in these four categories outside of job satisfaction. Ranking the 35 nations by all five categories, Australians place their happiness level at 5.39 on a scale that runs from a low of one to a high of seven, making it the twelfth happiest country in this sample. By comparison, Austria has a value of 5.54, Brazil 5.42, Switzerland 5.51, and the United States 5.52.
Happiness measures, Blanchflower and Oswald add, "can tell politicians and others how citizens value the different effects upon well-being of diverse influences such as unemployment, the divorce rate, real income, friendship, traffic jams, crime, health, and much else. If we can learn to exploit the power of statistical happiness equations, it should be possible to make public policy choices in a more coherent way than before."
Some recent findings from statistical happiness research include the following, the authors note in their paper:
1. For a person, money does buy a reasonable amount of happiness. But it is useful to keep this in perspective. Very loosely, for the typical individual, a doubling of salary makes a lot less difference than life events like marriage.
2. Nations as a whole, at least in the West, do not seem to get happier as they get richer.
3. Happiness is U-shaped in age - that is, it falls off for a while, then stabilizes, and rises later in life. Women report higher well-being than men. Two of the biggest negatives in life are unemployment and divorce. More educated people report higher levels of happiness, even after taking account of income.
4. At least in industrial countries such as France, Britain, and Australia, the structure of a happiness equation looks the same.
5. There is adaptation. Good and bad life events wear off - at least partially - as people get used to them.
6. Comparisons matter a great deal. Reported well being depends on a person's wage relative to an average or "comparison" wage. Wage inequality depresses reported happiness in a region or nation. But the effect is not large
by David R. Francis
National Bureau of Economic Research Website (NBER) www.nber.org
This study reviews different approaches to the political and economic control of global public goods like global warming. It compares quantity-oriented control mechanisms like the Kyoto Protocol with price-type control mechanisms such as internationally harmonized carbon taxes. The pros and cons of the two approaches are compared, focusing on such issues as performance under conditions of uncertainty, volatility of the induced carbon prices, the excess burden of taxation and regulation, potential for corruption and accounting finagling, and ease of implementation. It concludes that, although virtually all discussions about economic global public goods have analyzed quantitative approaches, price-type approaches are likely to be more effective and more efficient.
by William Nordhaus
National Bureau of Economic Research (NBER) www.nber.org
NBER Working Paper No. 11889
Issued in December 2005
In the inter-Andean valleys of Bolivia decisive key-factors influencing farm households' soil and water conservation investments were determined. The household's progressiveness most influences the decision how much to invest; dynamic and responsible families are among the first. Economic stratum is also important; more income from agriculture leads to higher investments in conservation practices. These practices are preferably executed on fields where the required effort is least and where the impact is highest. Based on these results, four concrete recommendations are given for a SWC strategy that aims at motivating farmers for the adoption of soil and water conservation practices.
Keywords: Soil and water conservation; Adoption and investments; Farm households; Factor analysis; Progressiveness; Economic stratum; Strategy development; Bolivia
by C.A. Kessler; Erosion and Soil and Water Conservation Group, Wageningen University, Nieuwe Kanaal 11, NL 6709 PA, Wageningen, The Netherlands; Fax: +31 317 484759.
Applied Geography via Elsevier Science Direct www.sciencedirect.com
Volume 26, Issue 1; January 2006; pages 40-60
Numerous laboratory studies find that minor nuances of presentation and description change behavior in ways that are inconsistent with standard economic models. How much do these context effect matter in natural settings, when consumers make large, real decisions and have the opportunity to learn from experience? We report on a field experiment designed to address this question. A South African lender sent letters offering incumbent clients large, short-term loans at randomly chosen interest rates. The letters also contained independently randomized psychological "features" that were motivated by specific types of frames and cues shown to be powerful in the lab, but which, from a normative perspective, ought to have no impact. Consistent with standard economics, the interest rate significantly affected loan take-up. Inconsistent with standard economics, some of the psychological features also significantly affected take-up. The average effect of a psychological manipulation was equivalent to a one half percentage point change in the monthly interest rate. Interestingly, the psychological features appear to have greater impact in the context of less advantageous offers and persist across different income and education levels. In short, even in a market setting with large stakes and experienced customers, subtle psychological features appear to be powerful drivers of behavior. The findings pose a challenge for the social sciences: they suggest that psychological nuance matters but may be inherently difficult to predict given the impact of context. Successful incorporation of psychological features into field studies is likely to prove a vital, but nontrivial, addition to the formation of more general theories on when, why, and how frames and cues influence important decisions.
by Marianne Bertrand, Dean Karlin, Sendhil Mullainathan, Eldar Shafir, Jonathan Zinman
National Bureau of Economic Research (NBER) www.nber.org
NBER Working Paper No. 11892
Issued in December 2005
Cost Benefit News covers legal, academic, and regulatory developments pertaining to the valuation of environmental amenities and disamenities, such as clean air, trees, parks, congestion, and noise. We apprise the reader about ways in which costs and benefits are measured, and the results of empirical studies. We hope that this information will allow public and private organizations to comprehend the risks and benefits of various actions, help disputants to resolve conflicts equitably and efficiently, and improve the quality of public policies. We will only discuss issues related to the empirical quantification of private and social costs and benefits and damages, and summarize information from daily newspapers, academic journals, legal publications, court decisions, professional newsletters commissioned studies, and on-line services. This newsletter is dedicated to the principal that all policies place values upon life, liberty, and the pursuit of happiness. We believe that more information, explicit specification of assumptions, and rigorous analysis can help our society to better meet these ends.Due to Spammers and the type of software utilized, which we feel is the best available, this site can face frequent downtimes. We apologize and are constantly working to defeat them.