Breaking Barriers to Renewable Energy Production in the North American Arctic

As climate change continues to affect our lives, the communities at the northern extremes of our world have witnessed the changes most profoundly. In the Arctic, where climate change is melting permafrost and causing major shoreline erosion, remote communities in Alaska and northern Canada are particularly vulnerable. Furthermore, these communities have limited access to electrical grids and bear oppressive energy costs relying on diesel generators. While some communities have started to incorporate renewable energy into their hamlets and villages, progress has generally been limited with the notable exception of Canada’s Northwest Territories and some coastal communities in western Alaska. During its latest stint as chair of the Arctic Council, the United States outlined community renewable energy in the Arctic as one of its primary goals. This Note focuses on regulatory and practical policy solutions to make that goal possible. It draws on examples from industrialized countries, such as Canada and the United Kingdom, as well as examples from developing countries, such as India and Peru, to examine solutions for the technical, economic, regulatory, and community engagement problems that Arctic communities in Alaska face when setting up new energy projects. Additionally, this Note describes the current political structure of Alaskan villages under the Alaska Native Claims Settlement Act and argues that Alaska Native Corporations should play a role in developing clean, cheap energy sources for their shareholders. Finally, this Note argues that public-private partnerships, like the non-profit Arctic Energy Alliance in the Northwest Territories, shows that clean, renewable energy projects for rural Arctic villages are possible throughout the Arctic. This Note draws lessons from other communities throughout the world and attempts to apply them to the unique situations that remote northern Alaska communities face regarding access to clean, renewable energy

Do We Value Our Cars More Than Our Kids? The Conundrum of Care for Children

Formal child care workers in the United States earn about $21,110 per year. Parking lot attendants, in contrast, make$21,250. These relative wages are telling: the market values the people who look after our cars more than the people who look after our kids. This article delves below the surface of these numbers to explore the systemic disadvantages of those who care for children—and children themselves. The article first illuminates the precarious economic position of U.S. children, a disproportionate number of whom live in poverty. The article then shows both that substantial care for children is provided on an unpaid basis in households, predominantly by women, and that care for children is undervalued when provided through the market. After presenting three distinct perspectives on market payments for care for children—(1) a public goods analysis, (2) a patriarchy analysis, and (3) a gift analysis— the article proposes a set of income tax breaks for jobs involving care for children

Inertia in infrastructure development : some analytical aspects, and reasons for inefficient infrastructure choices

This paper uses some simple conceptual models to draw out various implications of infrastructure investments with long lifetimes for the ability of societies to reduce their future greenhouse gas emissions. A broad range of such investments, related both to energy supply and demand systems, may commit societies to high and persistent levels of greenhouse gas emissions over time, that are difficult and costly to change once the investments have been sunk. There are, the author argues, several strong reasons to expect the greenhouse gas emissions embedded in such investments to be excessive. One is that infrastructure investment decisions tend to be made on the basis of (current and expected future) emissions prices that do not fully reflect the social costs of greenhouse gas emissions resulting from the investments. A second, related, set of reasons are excessive discounting of future project costs and benefits including future climate damages, and a too-short planning horizon for infrastructure investors. These issues are illustrated for two alternative cases of climate damages, namely with the possibility of a"climate catastrophe,"and with a sustained increase in the marginal global damage cost of greenhouse gas emissions.Climate Change Economics,Energy Production and Transportation,Climate Change Mitigation and Green House Gases,Transport Economics Policy&Planning,Environment and Energy Efficiency

Taxes versus Cap-and-Trade in Climate Policy when only some Fuel Importers Abate

I study climate policy choices for a “policy bloc” of fuel-importers, when a “fringe” of other fuel importers have no climate policy, fuel exporters consume no fossil fuels, and importers produce no such fuels. The policy bloc and exporter blocs act strategically in fossil fuel markets. When the policy bloc sets a carbon tax, the fuel import price set by the exporter is reduced, and more so when the policy bloc is larger. The carbon tax then serves to extract the exporter’s rent. The fringe also gains from reduced fuel import prices, and gains more when the policy bloc is larger. When the policy bloc sets an emissions cap, fuel demand becomes less price elastic. In response, a monopolistic exporter sets the fuel export price higher than under a tax, which hurts both the policy bloc and the fringe. This effect can be stronger when the policy bloc is larger, so that the fringe loses when the policy bloc is larger, opposite to the tax policy case. Overall, a cap is inferior to a tax for fossil fuel importers, both those that implement a climate policy, and those that do not.climate policy, carbon taxes, cap-and-trade schemes, carbon emissions, strategic trade policy

Allocative inefficiencies resulting from subsidies to agricultural electricity use : an illustrative model

This paper provides an analytical discussion of several interconnected resource allocation problems from under-pricing of electricity used by farmers for groundwater extraction. In these situations, groundwater extraction is inefficiently high even without electricity under-pricing. Moreover, part of the electric power supply intended for farmers is often diverted to other unauthorized uses (notably illicit consumption). The paper demonstrates that unless non-price electricity rationing imposes severe constraints on demand, the range of resource allocation problems includes insufficient incentives to provide high-level service by the power utility, insufficient incentives for farmers to install and operate efficient equipment, and losses due to political"rent seeking"activities to influence water allocations. It also shows that diversion of electricity to illicit uses can increase overall economic efficiency when this leads to less electricity use by farmers, thus somewhat ameliorating the problem of excessive groundwater extraction as well as the inefficiencies related to under-pricing of electricity. Systemic reforms for overcoming these problems may face severe political obstacles.Energy Production and Transportation,Water and Industry,Economic Theory&Research,Wastewater Treatment,Electric Power

Implications of a lowered damage trajectory for mitigation in a continuous-time stochastic model

This paper provides counterexamples to the idea that mitigation of greenhouse gases causing climate change, and adaptation to climate change, are always and everywhere substitutes. The author considers optimal policy for mitigating greenhouse gas emissions when climate damages follow a geometric Brownian motion process with positive drift, and the trajectory for damages can be down-shifted by adaptive activities, focusing on two main cases: 1) damages are reduced proportionately by adaptation for any given climate impact ("reactive adaptation"); and 2) the growth path for climate damages is down-shifted ("anticipatory adaptation"). In this model mitigation is a lumpy one-off decision. Policy to reduce damages for given emissions is continuous in case 1, but may be lumpy in case 2, and reduces both expectation and variance of damages. Lower expected damages promote mitigation, and reduced variance discourages it (as the option value of waiting is reduced). In case 1, the last effect may dominate. Mitigation then increases when damages are dampened: mitigation and adaptation are complements. In case 2, mitigation and adaptation are always substitutes.Climate Change Economics,Adaptation to Climate Change,Climate Change Mitigation and Green House Gases,Science of Climate Change,Climate Change Policy and Regulation

Valuing statistical lives from observations of speed limits and driving behavior

The paper discusses how to derive empirical estimates of the value of a statistical life (VSL) from observations of highway driving speeds, and from how such speeds are affected by speed limits and penalties for speeding. When drivers optimize with respect to driving speeds, we discuss three alternative approaches. The first two rely on constructing drivers’ utility functions, and the last on revealed government preferences similar to that used by Ashenfelter and Greenstone (2002) (A-G). The two last approaches are based on observations of changed driving speeds when speed limits and speeding penalties change. When drivers are law obedient and adhere to speed limits only the A-G approach can be used. Their approach is however unrealistic in putting overly great demand on government information about VSL, and in addition provides upwardly biased average VSL estimates.Value of a statistical life; VSL; driving

Public-good valuation and intrafamily allocation

I derive the value of marginal changes in a public good for two-person households, measured alternatively by household member i’s willingness to pay (WTP) for the good on behalf of the household, WTPi(H), or by the sum of individual WTP values across family members, WTP(C). Households are assumed to allocate their resources in efficient Nash bargains over one private good for each member, and one common household good. WTPi(H) is then found by trading off the public good against the household good, and WTP(C) by trading the public good off against the private goods. I show that WTPi(H) is on average a correct representation of WTP(C), but is higher (lower) than this average when member 1 has a higher (lower) marginal public good value than member 2. Pure and paternalistic altruism (the latter attached to consumption of the public good) both move each member’s WTP on behalf of the household closer to the true aggregate WTP, while only the latter raises aggregate WTP. The results have important implications for interpretation of results from contingent valuation surveys of public-goods. In a large sample, individuals tend to represent households correctly on average when asked about household WTP, and counting all members’ WTP answers on behalf of the household will lead to double counting.Public goods; willingness to pay; contingent valuation; intrafamily allocation; Nash bargaining

Low-level versus high-level equilibrium in public utility service

Heterogeneity of public utility services is common in developing countries. In a"high-level"equilibrium, the quality of utility services is high, consumer willingness to pay for services is high, the utility is well funded and staff well paid in order to induce high quality of performance. In a"low-level"equilibrium the opposite is the case. Which alternative occurs depends on both the quality of utility management, and public perceptions about service quality. If a utility administration has the potential to offer high-quality service, and the public is aware of this, high-quality equilibrium also requires the public’s service payments to be high enough to fund the needed pay incentives for the utility staff. When the public lack knowledge about the utility administration’s quality, the public’s initial beliefs about the utility administration’s quality also will influence their willingness to make adequate service payments for a high-quality equilibrium. This paper shows that, with low confidence, only a low-level equilibrium may exist; while with higher initial confidence, a high-level equilibrium become possible."Intermediate"(in between the low- and high-level) outcomes also can occur in early periods, with"high-level"outcomes later on.Economic Theory&Research,Political Economy,Town Water Supply and Sanitation,Urban Water Supply and Sanitation,Public Sector Economics