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Europe is Richer…AND Getting Greener

October 10, 2016 Leave a comment

This very interesting article refers to several concepts we’ve touched on in the first few weeks of class, such as:

Expanding the PPF

As a result, Europe’s forests grew by a third over the last 100 years. At the same time, cropland decreased due to technological innovations such as motorization, better drainage and irrigation systems: Relatively fewer area was needed to produce the same amount of food.

Markets vs. government as the best way to organize economic activities, and how people respond to incentives

In eastern Europe, many forests re-grew after the end of the Soviet Union. Fuchs and his colleagues explain the development with the fact that many privatized agricultural farms were less competitive on the global market. Therefore, farmers abandoned unprofitable cropland. Particularly in Romania and Poland, former cropland was taken back by nature afterward, first turning into grassland and later into forests.

Trade and both absolute and comparative advantage

To the north of formerly communist Estonia, Latvia and Lithuania, Scandinavian countries were able to re-grow most of their forests (and are continuing to do so today) to keep up with timer demand, as they substituted most other suppliers in Europe that had practically used up most of their own wood resources.

Students who think economic growth is usually bad for the environment, requiring lots of government intervention, should at least consider that the real world might be more complex than what they’ve been told.

Read the whole thing.

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Categories: Environment

The Economics of Recycling

October 5, 2015 Leave a comment
The largest aluminum/copper AC core I ever baled!

The largest aluminum/copper AC core I ever baled!

John Tierney has an interesting op-ed piece in the New York Times on recycling:

Despite decades of exhortations and mandates, it’s still typically more expensive for municipalities to recycle household waste than to send it to a landfill.

Much of what Mr. Tierney says is spot on. It makes far more sense–both for the environment and economically–to recycle metals and paper than yard trimmings, plastic bottles and food waste.

Take glass bottles, for example. They are, essentially, sand that is rock-hard and in the shape of a container. To bury a glass bottle in a landfill isn’t much different than burying a rock in the earth. But recycling glass is costly. Just hauling the heavy material to recycling plants burns lots of fuel, as does crushing it to make it easier to transport. So, two cheers to Mr. Tierney for pointing out that recycling isn’t always a matter of “more is better for the environment.”

However, I take issue with two points, one from the perspective of an economics teacher, and one from the perspective of someone who worked in the recycling industry.

First:

The environmental benefits of recycling come chiefly from reducing the need to manufacture new products — less mining, drilling and logging. But that’s not so appealing to the workers in those industries and to the communities that have accepted the environmental trade-offs that come with those jobs. (emphasis mine)

Economically, this shouldn’t matter. Recycling aluminum cans, for example, is economically viable–it will happen in a free market economy without government mandates or subsidies. That being true, it’s better for some jobs of bauxite miners to go away. Those miners can be put to more productive use in other industries. “More mining jobs” is a terrible economic justification for less recycling.*

Second:

As a business, recycling is on the wrong side of two long-term global economic trends….Recyclers have tried to improve the economics by automating the sorting process, but they’ve been frustrated by politicians eager to increase recycling rates by adding new materials of little value.

As a business, recyclers know very well how to substitute capital for labor to maximize profits. They don’t take low value materials because they are foisted on them by politicians. Rather, local governments, knowing some materials are much less valuable than others, give financial incentives to recycling companies to accept these low value materials. Recycling companies that only want to accept metal or paper are free to do so–and in the absence of government subsidy–will usually do just that.

So, blame the politicians, but plenty of recyclers are happy to take government subsidies to accept the less valuable stuff.

Lastly, if you want to know more about this fascinating industry, check out Adam Minter’s always interesting Shanghai Scrap. (I just saw that he also posted in response to Tierney’s article. Haven’t read it yet.)

*That said, it’s true that if government mandates and subsidies are causing people to recycle despite it being economically more efficient to make new products or extract additional raw materials, then job losses in those industries are part of the hidden costs of government interference in recycling markets.

Class Video on Trade and the Steel Industry

November 15, 2014 Leave a comment

Want to Protect Rainforests?

July 25, 2014 Leave a comment

If you understand how public and private ownership explain, in part, why cows are not endangered but elephants are, you’ll appreciate this article:

The best way to protect rainforests is to keep people out, right? Absolutely not. The best way to keep the trees, and prevent the carbon in them from entering the atmosphere, is by letting people into the forests: local people with the legal right to control what happens there.

Categories: Environment

Efficiency and Environmentalism

April 11, 2014 Leave a comment

UPStruck

Improving business efficiency is often good for the environment:

As of 2012, the right turn rule combined with other improvements — for the wow factor, UPS doesn’t separate them out — saved around 10 million gallons of gas and reduced emissions by the equivalent of taking 5,300 cars of the road for a year.

Sometimes governments can improve on the market. Pollution is a huge negative externality and the market often doesn’t produce the socially optimal quantity of it.

But often overlooked are the ways the market does work in favor of the environment.

 

People Face Trade-offs: Pollution and Eagles Edition

September 13, 2013 Leave a comment

goldeneagle-590x472

One of the ten principles of economics in our text’s first chapter is that people face trade-offs.

Here’s a good example:

Wind energy reduces pollution. It’s a cleaner form of energy generation than, say, burning coal.

But it’s not entirely without costs. There are some important trade-offs. For cleaner energy, what do we have to give up as a society?

Besides the visual impact (at first, windmill farms looked futuristic and cool; after 20 or 30 years, they start to look like clutter on the horizon), the noise pollution they generate, and the cost of the materials to build them and transport them to the best locations, they kill birds.

Some of the birds they kill are relatively rare, and therefore prized by conservationists and environmentalists.

Should we build more windmills? Might there be any other trade-offs we haven’t thought of?

Man Bites Dog, Part 4

July 29, 2013 Leave a comment

(For previous installments, see here.)

Wind-Turbines-and-Birds-Could-Mix-USA1

Wind energy is killing rare birds and many bats.

Some of the most damning images of oil industry destruction are of birds soaked in spilled oil. These images help form an image of oil as a dirty, earth-unfriendly energy source.

And in some ways, it is.

But every energy source is in some ways earth-unfriendly.

Why so little reporting on bird deaths cause by wind energy? Does anyone doubt that it’s not because wind energy is considered “environmentally friendly” by most journalists, who then won’t naturally gravitate to any story that runs counter to that narrative?