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One of the greatest challenges facing the United States in the 21st century is sustaining our natural resources and safeguarding our environmental assets for future generations while promoting economic growth and maintaining our quality of life. To manage natural resources effectively and efficiently, policymakers need information and methods to analyze the dynamic interplay between the economy and the environment.

Enhancing the information to make sound decisions can be facilitated by developing national environmental accounts. These accounts provide a framework for organizing information on the status, use, and value of natural resources and environmental assets, as well as on expenditures on environmental protection and resource management. While many countries have developed and are using environmental accounts, the United States lags behind.

GAO and the National Academy of Sciences (NAS) convened this forum to discuss developing accounts in the United States. Participants included U.S. federal agency officials and national and international statistical, energy, environment, and natural resource experts. Comments expressed do not necessarily represent the views of any one participant or the organizations that these participants represent, including GAO and NAS.

Forum participants discussed potential criteria to help in developing environmental accounts, lessons learned from the international community, and strategies for overcoming challenges. Participants also made general observations about developing these accounts and discussed next steps.

Suggested Criteria to Help in Developing Environmental Accounts
Participants suggested four broad criteria to use in determining what components of environmental accounting should be developed. These criteria were identifying the objective of the accounts, considering the availability and quality of data, ensuring that accounts provide information on current natural wealth, and considering the timeliness and regularity with which accounts can be produced. Participants generally agreed that pollution and material flow accounts, which provide industry-level information about the generation of pollutants and solid waste and energy and material use, are most critical for the United States to develop first.

Lessons Learned from the International Community
Participants shared the following lessons learned from other countries’ experiences in developing environmental accounts:
• Provide data in a timely manner. To be useful to decision makers, environmental accounting data must be timely.
• Political interest can wax and wane. Shifting political agendas can affect policymakers’ interest in environmental accounting.
• Environmental accounting is a long-term investment. Developing accounts requires a sustained effort over an extended period.

Strategies for Overcoming Key Challenges

Participants broadly agreed that the greatest challenge to developing environmental accounts in the United States is the need for support from policymakers and others. Other key challenges include institutional differences based on agencies’ varying missions; the need for funding; data availability, compatibility, and reliability; and methodological uncertainty. Participants suggested the following strategies, among others, for overcoming these challenges:
• Identify policymakers, experts, and others who support the effort.
• Build an economic business case for environmental accounting.
• Use an incremental approach.
• Take the time necessary to develop high quality accounts.

General Observations and Next Steps
Participants generally agreed that developing environmental accounts is important for both our nation’s environmental and economic sustainability. Several participants offered to be partners in an effort to develop U.S. environmental accounts but noted that they would need congressional support and a designated lead agency to spearhead the effort.

For more information, contact Robert Robinson at (202) 512-3841 or robinsonr@gao.gov.

United States Government Accountability Office (GAO) www.GAO.gov
October 2007
http://www.gao.gov/cgi-bin/getrpt?GAO-08-127SP

International Power announced that it has successfully completed the acquisition of the 27.6 MW Schkortleben operating wind farm, located in the east of Germany, from e.n.o. energy. The equity purchase price is €9.3 million (£6.5 million). The enterprise value is €36.8m (£25.7m), equivalent to €1333 per kW.

This acquisition complements the IPR portfolio of windfarms in Germany principally established through the Levanto and Trinergy (Maestrale) acquisitions. International Power now has 1,081 MW of operational wind turbines and a further 99 MW under construction. This acquisition has been funded through existing liquid resources. An exchange rate of £1:€1.43 has been applied in this announcement.

In August International Power completed the acquisition of the 648 MW Trinergy Wind Portfolio which comprises 581 MW in operation and 67 MW currently under construction. Trinergy was acquired from private investors connected with the Matrix Group and CJS Capital Partners Limited for an enterprise value of €1,839 million (£1,251 million). The acquisition is expected to be earnings accretive and cash flow positive from the first full year of International Power ownership.

The cash consideration of €868 million (£590 million) was funded by non recourse acquisition debt of €300 million (£204 million) and current liquid resources of €568 million (£386 million) from International Power.

The portfolio has assets located in Italy (495 MW in operation and 67 MW under construction) and Germany (86 MW in operation) and will be integrated into the Company under the new name Maestrale. Following this transaction, International Power will have 1,053 MW of operational wind power and a further 99 MW under construction. An exchange rate of £1:€1.47 has been applied in this announcement.

About International Power
International Power plc is a leading independent electricity generating company with 30,807 MW gross (18,935 MW net) in operation and 224 MW gross (149 MW net) under construction. International Power has power plants in operation or under construction in Australia, the United States of America, the United Kingdom, the Czech Republic, France, Germany, Italy, the Netherlands, Portugal, Spain, Turkey, Bahrain, Oman, Qatar, Saudi Arabia, the UAE, Indonesia, Pakistan, Puerto Rico and Thailand. International Power is listed on the London Stock Exchange with ticker symbol IPR.

International Power www.ipplc.com
Press Releases September 27 and August 31, 2008
http://www.ipplc.com/ipr/news/press/pr2007/2007-09-27/
http://www.ipplc.com/ipr/news/press/pr2007/2007-08-31/

Abstract: Childhood lead exposure can lead to psychological traits that are strongly associated with aggressive and criminal behavior. In the late 1970s in the United States, lead was removed from gasoline under the Clean Air Act. I use the state-specific reductions in lead exposure that resulted from this removal to identify the effect of childhood lead exposure on crime rates. The elasticity of violent crime with respect to childhood lead exposure is estimated to be 0.8, and this result is robust to numerous sensitivity tests. Mixed evidence supports an effect of lead exposure on murder rates, and little evidence indicates an effect of lead on property crime. Overall, I find that the reduction in childhood lead exposure in the late 1970s and early 1980s was responsible for significant declines in violent crime in the 1990s and may cause further declines in the future. Moreover, the social value of the reductions in violent crime far exceeds the cost of the removal of lead from gasoline.

by Jessica Wolpaw Reyes; Amherst College and NBER

The B.E. Journal of Economic Analysis & Policy via The Berkeley Electronic Press www.bepress.com/bejeap
Vol. 7, Issue 1, Published October 17, 2007; Article 51.
http://www.bepress.com/bejeap/vol7/iss1/art51

Introduction: Infectious diseases
by SIMON A. LEVIN; Department of Ecology and Evolutionary Biology, Princeton University, Princeton, NJ 08544-1003. Email: slevin@eno.Princeton.EDU

Abstract: In any discussion of the great challenges facing humanity in addressing global environmental problems, a small number of topics automatically rise to the top: climate change, the loss of biodiversity, and the sustainability of the services ecosystems provide us. But no threats to human welfare are more urgent than those posed by infectious diseases; we suffer already the devastating consequences of the emergence of new diseases such as HIV, the reemergence of old ones such as tuberculosis, and simply the increasing toll of endemic diseases such as malaria. Non-human animals play fundamental roles in the spread of many of these diseases – as reservoirs, as vectors, and as cauldrons for the creation of new types. Land-use practices and environmental management both affect the persistence and spread of endemic diseases, such as malaria. Furthermore, as animal populations increase their ranges, due to climate change and human-facilitated alien introductions, the potential for disease spread also increases. These factors, together with the increasing mobility of the human population, conspire to make these environmental problems of great and immediate concern.

Optimal disease eradication
by SCOTT BARRETT 1 and MICHAEL HOEL 2
1. School of Advanced International Studies, Johns Hopkins University, 1619 Massachusetts Avenue NW, Washington, DC 20036-1984 USA. Tel: (202) 663-5761. Fax (202) 663-5769. Email: sbarrett@jhu.edu
2. Department of Economics, University of Oslo, P.O. Box 1095 Blindern, N-0317 Oslo, Norway. Tel: 47 22858387. Fax 47 22855035. Email: michael.hoel@econ.uio.no
Abstract: Using a dynamic model of the control of an infectious disease, we derive the conditions under which eradication will be optimal. When eradication is feasible, the optimal program requires either a low vaccination rate or eradication. A high vaccination rate is never optimal. Under special conditions, the results are especially stark: the optimal policy is either not to vaccinate at all or to eradicate. Our analysis yields a cost–benefit rule for eradication, which we apply to the current initiative to eradicate polio.

A cost analysis of alternative culling strategies for the eradication of classical swine fever in wildlife
by LUCA BOLZONI 3 and GIULIO A. DE LEO 4
3. Dipartimento di Scienze Ambientali, Università degli Studi di Parma, Viale Usberti 11/A, 43100 Parma, Italy. Tel: (+39) 0521-905 619. Fax: (+39) 0521-905 402. Email: luca.bolzoni@nemo.unipr.it
4. Dipartimento di Scienze Ambientali, Università degli Studi di Parma, Viale Usberti 11/A, 43100 Parma, Italy. Email: giulio.deleo@unipr.it
Abstract: In the epidemiological literature, the eradication of a wildlife disease through culling is usually described in terms of a constant hunting rate to simulate the selective removal of animals from the population. By using simple SI (susceptible–infected) models, it is easy to prove that, if the hunting rate is high enough, the population eventually drops below a critical threshold level under which the pathogen is deemed to be extinct. However, hunting costs as well as the monetary benefits of disease control are almost systematically neglected. Moreover, the hunting rate is usually assumed to be constant over time, while in reality health authorities can implement more flexible culling policies. In this work we examine a class of more realistic time-variant culling strategies in a cost–benefit framework. Culling strategies differ in the way decisions are made about when and how much to cull; that is, whether hunting occurs when disease prevalence, host population density, or the number of carcasses exceeds (or is below) a given threshold. For each culling strategy, the optimal value of the control parameters and the hunting rate are those that minimize the sum of the culling costs and the sanitary costs associated with infection over a specific period of time. Classical swine fever (CSF) in wild boar populations has been taken as a reference example because of its potential economic impact on industrialized and developing countries. We show that the optimal time-flexible culling strategy is invariably more efficient than the best traditional strategy in which the hunting rate is held constant through time. We also show that the type of hunting strategy that is selected as optimal depends on the shape of the cost functions.

Optimal harvesting during an invasion of a sublethal plant pathogen
by HOLLY GAFF 5, HEM RAJ JOSHI 6 and SUZANNE LENHART 7
5. Department of Epidemiology and Preventive Medicine, University of Maryland, School of Medicine, 660 West Redwood Street, Baltimore, Maryland 21201. Email: hgaff@epi.umaryland.edu
6. Mathematics and Computer Science Department, Xavier University, Cincinnati, OH 45207-4441.
7. Department of Mathematics, University of Tennessee, Knoxville, TN 37996-1300.
Abstract: Plant pathogens are quite destructive to cash crops throughout the world, resulting in potentially devastating financial losses. This work expands recently developed optimal control theory for an integrodifference model to a mathematical system which includes an integrodifference component. This system models a highly simplified plant pathogen system for which the optimal harvesting scheme is derived. An adjoint system is introduced to characterize the optimal harvesting pattern. This analysis shows that, while it may not be possible to prevent losses upon discovery of the pathogen in an area, it is theoretically possible to significantly cut those losses by culling an area around the initial infection.

Infectious disease, development, and climate change: a scenario analysis
by RICHARD S.J. TOL 8, KRISTIE L. EBI 9 and GARY W. YOHE 10
8. Economic and Social Research Institute, Dublin, Ireland Institute for Environmental Studies, Vrije Universiteit, Amsterdam, The Netherlands Department of Engineering and Public Policy, Carnegie Mellon University, Pittsburgh, PA, USA
9. ESS LLC, Alexandria, VA, USA
10. Wesleyan University, Middletown, CT, USA
Abstract: We study the effects of development and climate change on infectious diseases in Sub-Saharan Africa. Infant mortality and infectious disease are closely related, but there are better data for the former. In an international cross-section, per capita income, literacy, and absolute poverty significantly affect infant mortality. We use scenarios of these three determinants and of climate change to project the future incidence of malaria, assuming it to change proportionally to infant mortality. Malaria deaths will first increase, because of population growth and climate change, but then fall, because of development. This pattern is robust to the choice of scenario, parameters, and starting conditions; and it holds for diarrhoea, schistosomiasis, and dengue fever as well. However, the timing and level of the mortality peak is very sensitive to assumptions. Climate change is important in the medium term, but dominated in the long term by development. As climate can only be changed with a substantial delay, development is the preferred strategy to reduce infectious diseases even if they are exacerbated by climate change. Development can, in particular, support the needed strengthening of disease control programs in the short run and thereby increase the capacity to cope with projected increases in infectious diseases over the medium to long term. This conclusion must, however, be viewed with caution, because development, even of the sort envisioned in the underlying socio-economic scenarios, is by no means certain.

Economic incentives and mathematical models of disease
by EILI KLEIN 11, RAMANAN LAXMINARAYAN 12, DAVID L. SMITH 13 and CHRISTOPHER A. GILLIGAN 14
11. Resources for the Future, Washington DC.
12. Resources for the Future, 1616 P St NW, Washington DC 20036. Email: ramanan@rff.org
13. Fogarty International Center of the National Institutes of Health, Bethesda MD.
14. Modeling and Epidemiology Group, Department of Plant Sciences, University of Cambridge, Downing Street, Cambridge, CB2 3EA.
Abstract: The fields of epidemiological disease modeling and economics have tended to work independently of each other despite their common reliance on the language of mathematics and exploration of similar questions related to human behavior and infectious disease. This paper explores the benefits of incorporating simple economic principles of individual behavior and resource optimization into epidemiological models, reviews related research, and indicates how future cross-discipline collaborations can generate more accurate models of disease and its control to guide policy makers.

Environment and Development Economics via Cambridge University Press www.journals.cambridge.org
Special Issue on Infectious Diseases
Volume 12, Issue 5; October, 2007
doi:10.1017/S1355770X07003890
http://www.journals.cambridge.org/action/displayIssue?jid=EDE&volumeId=12&issueId=05#

Abstract: Proponents of greenhouse gas emissions reductions have long assumed that such reductions are the best approach to global climate change control and sometimes argued that they are the least risky approach. It is now generally understood that to be effective such reductions would have to involve most of the world and be very extensive and rapidly implemented. This paper examines the question of whether it is feasible to use only this approach to control dangerous global climate changes, the most critical of the climate change control objectives. I show that in one of two critical cases analyzed recent papers provide evidence that such an approach is not a feasible single approach to avoiding the dangerous climate changes predicted by a very prominent group of US climate change researchers. In the other case using a widely accepted international standard I show that such an approach appears to be very risky and much more expensive than previously thought. These conclusions further reinforce previous research that emissions reductions alone do not appear to be an effective and efficient single strategy for climate change control. So although emissions reductions can play a useful role in climate change control, other approaches would appear to be needed if dangerous climate changes are to be avoided. This conclusion suggests that the current proposals in a number of Western European countries and the United States to use emissions reductions as the sole means to control global warming may be doomed to failure in terms of avoiding such dangerous changes. An alternative approach is briefly discussed that would be more effective and efficient, and could avoid the perilous risks and high costs inherent in an emissions reduction only approach.

Keywords: global climate change control; Global warming control; implementation

by Alan Carlin
U.S. Environmental Protection Agency (EPA) www.EPA.gov
National Center for Environmental Economics http://yosemite.epa.gov/ee
Working Paper Number 2007-07; June 28, 2007
http://yosemite.epa.gov/ee/epa/eed.nsf/WPNumberNew/2007-07?OpenDocument

Motel 6 has signed on to participate in the Honeywell Cool Control Plus program, which is designed to help drastically reduce Motel 6’s environmental footprint. Working on behalf of Pacific Gas & Electric (PG&E), Honeywell will install energy-saving retrofits in a total of 7,530 rooms in the 66 Motel 6 properties located within PG&E’s service area in northern and central California. Motel 6 has independently installed the Telkonet SmartEnergy (formerly Smart Systems) occupancy sensors and thermostats in 49 properties in California, and teaming with PG&E and Honeywell will bring the total number of rooms with retrofits to 13,440.

Dan Gilligan, vice president of utilities for Accor North America said “Motel 6 will no longer waste electricity in empty rooms and will also cut back on properties’ carbon dioxide emissions – we have calculated that this program will yield a reduction of 10.1 million pounds of carbon dioxide per year for us.”

Honeywell won the $4.7 million contract from PG&E in March 2007 to implement an energy-efficiency program in small hotels and motels. Many hotels waste electricity because they do not have the technology to turn air-conditioning and heating units off when rooms are unoccupied.

To resolve this problem, Honeywell will install the Telkonet SmartEnergy occupancy sensors in the rooms of participating hotels. The sensors turn off air conditioning and heating equipment when the rooms are vacant. Each year, this installation will cut consumption by an estimated average of 1,100 kilowatt-hours per room, saving hotel owners up to $140 per room. Motel 6 has also chosen Honeywell to update interior and exterior lighting fixtures and cold drink vending machines to further reduce energy consumption at its participating California properties.

“Cool Control Plus enables hotels and motels to quickly cut their energy costs,” said Joe Puishys, president of Honeywell Building Solutions. “Conserving energy makes fiscal and environmental sense, and this program makes it automatic, easy to do and free.”

The Honeywell program fits in well with the current efforts of Motel 6’s parent company, Accor, to reduce energy consumption in all its properties. In late 2006, the Environmental Protection Agency honored Accor North America as an Energy Star Leader for significantly increasing energy efficiency in its hotel properties. Accor has also created an Environmental Charter outlining 65 initiatives each property should take to reduce waste and energy consumption.

Honeywell began installation in Motel 6 properties in June. The installation is expected to be complete by the end of the year.

To learn more about Honeywell Cool Control Plus, please visit www.coolcontrolplus.com.

Accor North America www.accor-na.com Press Release
http://accor-na.mediaroom.com/index.php?s=press_releases&item=149

Abstract: This paper investigates the equity implications of marketing ecosystem services in protected areas and rural communities. We use a three-tiered equity framework to analyse four distinct efforts to commercialise watershed recharge and carbon dioxide fixation by forests in Meso-America. We show that project development and participation are strongly mediated by organisational networks, as well as existing rights of access over land and forest resources. We demonstrate that procedural fairness diverges strongly when initiatives are implemented in protected areas or in rural communities. While in the former reserve managers and intermediaries concentrate all decision-making power, initiatives working with rural communities are able to integrate more significantly service providers in management decisions. Marketing ecosystem services in protected areas contributes to reduce expenditure rates for protected area management, but also results in less equitable outcomes, as rural communities and forest resource users become excluded from receiving sustained development benefits. When ecosystem services are commercialised by rural farmers, payments do not cover opportunity costs but act as a significant incentive for participation in most cases. Ecosystem service providers also benefit from complementary project activities, such as forest management training and agricultural extension support. We argue that limited economic impact and existing inequities in decision-making and outcomes can be explained by problems of institutional design, in particular the inability of markets and payments for ecosystem services to account for context-related factors, such as property rights.

Keywords: Equity; Ecosystem services; Development; Poverty; Participation; Property rights; Meso-America

by Esteve Corbera 1 and 2, Nicolas Kosoy 3 and Miguel Martínez Tuna 4
1. Overseas Development Group, University of East Anglia, NR4 7TJ Norwich, UK; NR4 7TJ, Norwich, UK. Telephone: +44 1603 592808; fax: +44 1603 591170
2. Tyndall Centre for Climate Change Research, UK
3. Institut de Ciència i Tecnologia Ambientals, Universitat Autònoma de Barcelona, Spain
4. Freshwater Programme, World Wildlife Fund Central America, Costa Rica

Global Environmental Change via Elsevier Science Direct www.ScienceDirect.com
Volume 17, Issues 3-4; August-October, 2007; Pages 365-380
http://dx.doi.org/10.1016/j.gloenvcha.2006.12.005

Abstract: This study uses the Ricardian approach to analyze the impact of climate change on Ethiopian agriculture and to describe farmer adaptations to varying environmental factors. The study analyzes data from 11 of the country’s 18 agro-ecological zones, representing more than 74 percent of the country, and survey of 1,000 farmers from 50 districts. Regressing of net revenue on climate, household, and soil variables show that these variables have a significant impact on the farmers’ net revenue per hectare.

The study carries out a marginal impact analysis of increasing temperature and changing precipitation across the four seasons. In addition, it examines the impact of uniform climate scenarios on farmers’ net revenue per hectare. Additionally, it analyzes the net revenue impact of predicted climate scenarios from three models for the years 2050 and 2100. In general, the results indicate that increasing temperature and decreasing precipitation
are both damaging to Ethiopian agriculture. Although the analysis did not incorporate the carbon fertilization effect, the role of technology, or the change in prices for the future, significant information for policy-making can be extracted.

by Temesgen Tadesse Deressa; 2 Ethiopian Development Research Institute (EDRI), e-mail: ttderessa@yahoo.com.

The World Bank www.worldbank.org
Development Research Group, Sustainable Rural and Urban Development Team
Policy Research Working Paper WPS 4342; September, 2007
http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2007/09/04/000158349_20070904101248/Rendered/PDF/wps4342.pdf

Abstract: The curse of natural resources detected in numerous cross-country growth regressions is questioned. Although natural resource dependence is associated with slow economic growth, there is no evidence that natural resource abundance per se is negatively related to growth. Thus, the supposed link between resource dependence and growth arises not from the numerator of the dependence measures (i.e. resources themselves) but rather, because of the inherent relationship between slow growth and a small non-resource sector caused by other undetermined characteristics of the economy.

Keywords: Natural resources; Economic growth; Institutions

by Alexandr Černý and Randall K. Filer
1. CERGE-EI, Politických věznů 7, 111 21 Praha 1, Czech Republic. E-mail: alexandr.cerny@cerge-ei.cz.
2. Hunter College, City University of New York and CERGE-EI. E-mail: rfiler@hunter.cuny.edu.

Charles University; Center for Economic Research and Graduate Education CERGE-EI www.cerge-ei.cz
Academy of Sciences of the Czech Republic; Economics Institute
Working Paper Series Number 321; March, 2007
http://www.cerge-ei.cz/pdf/wp/Wp321.pdf

Abstract: This paper examines the role of local housing market conditions for social capital
accumulation and neighborhood club good provision. A model of individual investment
decisions predicts that in a setting with high property transaction costs (i) homeowners are
more likely to invest in social capital than renters and (ii) the positive link between
homeownership and social capital is stronger in more built-up neighborhoods with inelastic
supply of new housing. In these neighborhoods homeowners are largely protected from
inflows of newcomers that would dilute the net benefit from social capital in the longer run.

Empirical evidence from the Social Capital Community Benchmark Survey confirms the
model predictions. Instrumental variable estimates suggest that the effects are causal.

1 Introduction and Background
The monitoring of one’s property by friendly neighbors or watch groups, a neighbor
holding one’s spare key, BBQ-parties among closely connected neighbors, or a pool of
trusting parents that look after each other’s children are all examples of club goods that are essentially the result of accumulated social capital among a group of contributing neighbors.

In this context, DiPasquale and Glaeser (1999) have argued that homeowners are ‘better
citizens’ because homeownership (i) creates barriers to mobility and (ii) gives individuals an incentive to invest in local amenities and social capital since community quality is capitalized into property values.

Simple stylized facts from the Social Capital Community Benchmark Survey (2000),
suggest, however, that homeowners may not always be ‘better citizens’. For example, while
homeowners, compared to renters, on average socially interact 30 percent more often with
immediate neighbors in essentially built-up neighborhoods (more than 85 percent developed),
the difference between the two groups is only about 9 percent in an ‘average’ neighborhood
(45 to 55 percent developed) and there is virtually no difference between the two groups in
little developed neighborhoods (less than 15 percent developed). These numbers change little
when other factors – including population density in the developed area – are controlled for.

How can this be explained? In this paper Christian A. L. Hilber arguesthat property transaction costs (interpreted broadly) create incentives for homeowners to invest in social capital because it discourages free riding. Homeowners can in principle free ride on other neighbors’ social capital investments by selling their property and pocketing the proceeds from the improved neighborhood quality. However, such free riding is not an attractive option if transaction costs exceed the benefits derived from the improved neighborhood quality. In a world with high transaction costs the question then becomes whether the homeowner’s long-term benefits derived from social capital exceed the costs and Hilber will argue that the answer to this question crucially depends on the elasticity of new local housing supply – proxied by the share of developable land in the neighborhood.
...
The empirical evidence presented in this paper provides strong support for the view that
in a world with high transaction costs the elasticity of new housing supply – as proxied by the share of developable land in the neighborhood – is an important determinant of a household’s social capital investment decision. This is true even when controlling for the population density within the developed area of the neighborhood and many other characteristics that are expected to affect social capital accumulation and even when using instrumental variable (IV) estimates that treat the share developed land, the population density and the respondent’s homeownership status as endogenous. The empirical analysis also tests and confirms other elements of the theory and discounts alternative explanations of the empirical findings.

Keywords: House price capitalization, social capital, homeownership, land and housing supply, neighborhood club goods.

by Christian A. L. Hilber; London School of Economics, Department of Geography and Environment, Houghton Street, London WC2A 2AE, United Kingdom. Telephone: +44-20-7107-5016. Fax: +44-20-7955-7412. E-mail: c.hilber@lse.ac.uk.

Munich Personal RePEc Archive MPRA http://mpra.ub.uni-muenchen.de
Research Papers in Environmental and Spatial Analysis No. 123
August 2, 2007
http://mpra.ub.uni-muenchen.de/5134/01/MPRA_paper_5134.pdf

Summary: Fell and Sanchirico discuss to what extent fish processors might be justified in claiming compensation when a quota system is imposed on the catch of individual fishermen; assessing the appropriate amount, if any, of compensation is a critical component in the political dealmaking required to move forward with more effective, and badly needed, regulation.
...
Overfishing is a classic example of the tragedy of the commons. Since no one owns the fish in the ocean, it's in everyone's interest to catch them as fast as possible, regardless of present or future damage to fisheries. Overexploitation and inefficient use of marine resources are the direct result of open-access conditions. For years, regulators have attempted to solve this problem by utilizing season-length restrictions, total allowable catch limits (TAC), and gear and vessel power restrictions. This has led to a cat-and-mouse game where fishermen adopt technologies and methods to work around these controls. The result is the infamous and wasteful, "race to fish," where fishermen catch the allowable limits for a season in hours rather than months.

An alternative approach to dealing with this issue--by addressing causes rather than symptoms--is to allocate shares of the TAC to individual fisherman and fishing vessels. With secured access to a portion of the TAC in a season, fishermen no longer need to race and they also have greater stewardship incentives. Individual fishing quotas (IFQs), or dedicated access privileges (the U.S. term), are an increasingly prevalent form of fishery management around the world, regulating more than 175 species in Iceland, New Zealand, Canada, and Australia. The United States, however, lags far behind in adopting IFQ systems.
...
If policymakers decide to capitalize on the changes in fishery management that go with the transition to IFQs in order to address the impacts of years of inefficient regulation, there are policy mechanisms other than an initial allocation of quota to processors. The list includes quota allocation to vulnerable communities, mandatory sunset contracts between harvesters and processors that guarantee fixed supplies of the product over a set length of time, and levies on quota owners for processor and community compensation funds.

Further Readings:
Fell, H.G. 2007. "Estimating Time-varying Bargaining Power with Nonlinear Kalman Filters: An Application to the Alaskan Sablefish Fishery." in PhD dissertation Essays in Empirical Industrial Organization Using Time Series Techniques: Applications to Natural Resource Markets. University of Washington, Department of Economics.
Fell, H.G. 2007. "Rights-based Management and Processors' Supply" in PhD dissertation Essays in Empirical Industrial Organization Using Time Series Techniques: Applications to Natural Resource Markets. University of Washington, Department of Economics.
Newell, R., Papps, K., and J. N. Sanchirico. Asset Pricing in Created Markets for Fishing Quota. American Journal of Agricultural Economics. 89(2) (May 2007): 259-272.
Sanchirico, J. N. and R. Newell. Catching Market Efficiencies: Quota-based Fishery Management, Resources, No. 150, Spring 2003.
Sanchirico, J.N., D. Holland, K. Quigley, and M. Fina. Catch-quota balancing in Multispecies Individual Fishing Quotas. Marine Policy, 30(6): 767-785, 2006.

by Harrison Fell 1 and Jim Sanchirico 2
1. RFF Fellow
2. associate professor of environmental science and policy at the University of California-Davis and RFF university fellow.

FOR FULL COMMENTARY GO TO:
http://www.rff.org/rff/News/Weekly_Policy_Commentary/This-Weeks-Commentary.cfm
Series Editor: Ian Parry; Assistant editors: John Anderson, Felicia Day
Resources For the Future (RFF) www.RFF.org RFF Weekly Policy Commentary
Series Editor: Ian Parry; Assistant editors: John Anderson, Felicia Day
October 22, 2007

Executive Summary
Wind power capacity in the United States has grown substantially in recent years. From 1998 through 2006, almost 9,900 megawatts (“MW”) of new wind capacity was added, accounting for 85% of the 11,575 MW cumulative total capacity as of the end of 2006. In 2006 alone, 2,454 MW of new wind capacity was installed, representing a 27% increase in cumulative capacity.
This rapid expansion has required the mobilization of a tremendous amount of capital to finance wind project costs. Roughly $18 billion (in real 2006 dollars) has been invested in wind project installation in the U.S. since the 1980s, with more than $3.7 billion invested in 2006 alone. Looking ahead, wind project developers will need to raise close to $6 billion in 2007 in order to finance the expansion projected by the American Wind Energy Association (“AWEA”), and the required amount of capital will likely continue to increase in future years if market growth continues.

The financing of new wind projects varies from that of fossil-fueled power projects due to the different cost characteristics of each. Specifically, wind projects are capital-intensive to build but have no ongoing fuel costs, while fossil-fueled power projects are less capital-intensive (per unit of production) but have higher operating (e.g., fuel) costs. Furthermore, whereas Federal tax incentives for fossil-fueled power plants can be (and generally are) distributed throughout the entire fuel cycle (e.g., from exploration and extraction to transportation, power production, and emissions controls), tax incentives for wind projects are instead targeted almost exclusively at the power production stage. The two principal Federal tax incentives available to wind projects are the production tax credit (“PTC”) and accelerated depreciation deductions (together with the PTC, the “Tax Benefits”). These Tax Benefits provide a significant value to wind projects, but also complicate wind project finance, since most wind project developers lack sufficient Federal income tax liability to use the Tax Benefits efficiently.

In response, the wind sector has developed multiple financing structures to attract various investors to projects, manage project risk, and allocate Tax Benefits to entities that can use the Tax Benefits most efficiently. Some of these structures are intended to attract actively involved large equity investors with a strategic interest in the wind sector, labeled here as “Strategic Investors.” Others are designed to tap into more-passive equity capital from “Institutional Investors,” which are primarily interested in the Tax Benefits. Still others enable developers and equity investors to layer on debt financing to leverage their equity exposure and returns.

This report surveys the seven principal financing structures through which most new utility-scale wind projects in the United States have been financed from 1999 to the present, excluding projects owned by investor-owned and publicly-owned utilities where the project becomes part of the utilities’ internal generating portfolio and rate base. The report defines utility-scale wind projects as those designed to sell electricity directly to utilities or into power markets on a wholesale basis. The report does not cover financing structures used for smaller community-based wind power projects, though it may have some indirect utility for parties considering such projects, as several financing options used for smaller projects are derived from structures first conceived for larger projects.
...
The report has three primary objectives: (1) to survey recent trends in the financing of utility-scale wind projects in the United States, (2) to describe the seven principal financing structures through which most utility-scale wind projects have been financed from 1999 to the present, and (3) to explain each structure’s relative impact on the levelized cost of wind energy. The year 1999 is used as a starting point because it marks the recent upsurge in wind power growth in the United States.

The seven structures feature varying combinations of equity capital from project developers, third-party tax-oriented investors (both Strategic and Institutional Investors, jointly known as “Tax Investors”), and commercial debt. Their origins stem from variations in the financial capacity and strength, as well as the business objectives, of wind project developers. The structures have received various names in the industry. The names given in this report are intended to reflect a defining characteristic. For the first three structures it is the nature of the Tax Investor. The Pay-As-You-Go (“PAYGO”) structure name reflects the delayed timing of the Tax Investor contribution. For the three structures involving leverage, the name refers to the type of debt financing provided. Other names are feasible and in use; care should therefore be taken to specify structures other than solely by name.

The list of financing structures covered in this report is not intended to be exhaustive. Various permutations of these structures, as well as other structures altogether, are possible. That said, the initial construction costs of most new utility-scale wind projects in the United States from 1999 to the present have been financed using one or another of these structures.

To compare the levelized cost of wind energy under each structure, a simplified Excel-based pro forma financial model of an indicative or template wind power project was constructed. The template project is based on a set of assumptions intended to reflect market conditions for projects coming on-line in 2007 and 2008 for items such as non-financing capital costs, operating costs, energy production, taxes, and revenue flows. The template project is then customized to reflect each financing structure. For the six financing structure involving third-party equity or debt capital, the analysis includes assumptions for: (1) the cost and terms of debt (if any); (2) the cost and terms of equity from Tax Investors; and (3) any financing-related transaction, or “soft” costs. The model then estimates the power prices needed to comply with those terms. For these six structures (i.e., all but the Corporate structure), the model calculates the minimum 20-year levelized cost of energy (“LCOE”) that yields the 10-year internal rate of return (“IRR”) requirement for the Tax Investors in each structure, while not violating any lender constraints.i For these structures, the 10-year Tax Investor IRR is used as a key metric, as it is a key negotiating point between developers and investors.ii For the Corporate structure, the model calculates the minimum LCOE that yields the developer’s 20-year IRR target. Using a 20-year target for the Corporate structure is consistent with the assumption that the developer, as sole project participant, evaluates the project on a longer-term basis than do pure Tax Investors. The use of a standardized template project enables the observed variations in LCOE to reflect the impact of the different financing structures.

The analysis finds significant variation – ranging from $48 per megawatt hour (“MWh”) to $63/MWh – in the 20-year LCOE required under the various financing structures. This variation is principally a function of:
(1) financing-related transaction costs (shown in Table ES-2 as “soft costs”);
(2) assumed 10-year Tax Investor IRR target rates, and Corporate 20-year IRR target; and
(3) the relative terms of each structure), including the level of equity contributions and pre- and post-flip allocations of both cash and Tax Benefits.

by John P. Harper 1, Matthew D. Karcher 2, and Mark Bolinger 3
1. Birch Tree Capital, LLC
2. Deacon Harbor Financial, L.P.
3. Lawrence Berkeley National Laboratory

Ernest Orlando Lawrence Berkeley National Laboratory www.lbl.gov
Environmental Energy Technologies Division http://eetd.lbl.gov
Paper LBNL-63434; September, 2007
http://eetd.lbl.gov/ea/ems/reports/63434.pdf

Executive Summary: Private ownership of land in the United States comes with a bundle of rights and responsibilities. The bundle of rights usually includes the right to subdivide and develop the land. However, this right can sometimes be inconsistent with other social objectives, such as provision of wildlife habitat, preservation of farmland or certain ecological resources, protection of historically significant areas and scenic views, and prevention of development on highly erodible slopes or in difficult soils.

Regulating private land uses to achieve these social objectives generally falls to local governments. Local governments in the United States regulate in a variety of ways, but the primary instrument is zoning laws, which establish the allowable uses on particular parcels of land and the intensity of those uses. One planning tool that can be used in combination with zoning is a system of transferable development rights. tdrs allow ownership of the development rights on a privately owned parcel of land to be separated from ownership of the parcel itself. These rights can then be transferred from that property to another in a different location. Having transferred the development rights, the landowner is restricted from developing his land, usually by means of a conservation easement or restrictive covenant. The person to whom the rights are transferred—in most cases a real estate developer—uses them to develop another piece of property more intensively than allowed by its baseline zoning.

TDRs sound relatively simple in concept—development is transferred from one location to another—but they have often been difficult to implement effectively in practice. Among the approximately 140 tdr programs in existence in the United States, program designs differ greatly, and the results have varied from virtually no transfers at all (and thus no land protected from development) to preservation of 49,000 acres.

In this report, Margaret Walls and Virginia McConnell carry out detailed case studies of 10 programs. The programs include five in Maryland (Calvert, Montgomery, Queen Anne’s, St. Mary’s, and Charles counties), two in Florida (Collier and Sarasota counties), and programs in Malibu, California; King County, Washington; and Chesterfield Township, New Jersey. They focus on a range of land use goals, including farmland preservation, prevention of development on environmentally sensitive lands, and curtailing of sprawl. Some have been effective and have preserved or protected land as intended, but others have not lived up to expectations. Their experience to date and the evolution of programs and innovative ideas provide useful lessons for other jurisdictions considering the use of tdrs. For each program, the authors describe its genesis, features, and outcomes, and we evaluate the program design and assess reasons for success or failure.

Contents
Acknowledgments 6
Executive Summary 8
Chapter 1: Introduction: Land Preservation, Zoning, and TDRs 17
Chapter 2: How TDRs Work 21
Chapter 3: Calvert County, Maryland: Maintaining Flexibility in Land Uses 28
Chapter 4: Montgomery County, Maryland: Linking TDRs to Bold Downzoning 38
Chapter 5: St. Mary’s County, Maryland: The Problem of “Free” Density and TDRs 49
Chapter 6: Charles County, Maryland: Problems withTDR Supply 60
Chapter 7: Queen Anne’s County, Maryland: Dual Programs with Divergent Outcomes 71
Chapter 8: Malibu, California: State versus Local Control 79
Chapter 9: Collier County, Florida: Downzoning and Bonus Densities 86
Chapter 10: Sarasota County, Florida: Planning for “Build-out” 99
Chapter 11: Chesterfield Township, New Jersey: Using TDRs in a Master Planned Development Chapter 12: King County, WA: Providing Incentives for Municipalities to Accept Density 115
Chapter 13: Conclusions 123

by Margaret Walls 1 and Virginia McConnell 2
1. University of Maryland–Baltimore County, and 2. Resources for the Future

Resources for the Future (RFF) www.RFF.org
http://www.rff.org/rff/Documents/Walls_McConnell_Sep_07_TDR_Report.pdf

September, 2007

Innovest Strategic Value Advisors, rated the #1 global provider of "extra-financial" research by Thomson Extel and research provider for the Carbon Disclosure Project, has released a new study titled "Carbon Beta© and Equity Performance: Moving From Disclosure to Performance."

The study evaluates the relationship among climate change, companies’ ability to manage the associated risks and opportunities, and their financial performance. The analysis is the first of its kind in the world, and lays the foundation for further research and investment products.

Among the study’s key findings:

* Companies’ risk exposures to climate change varies widely, both between and even within different industry sectors and geographic regions
* Companies with the most robust risk management architecture and ability to seize competitive opportunities on the upside have tended to out-perform their same-sector peers financially over the past three years
* The “Carbon Beta© premium” for leading companies appears to be growing larger over time, as regulatory regimes tighten around the world
* Non-verified, company-provided information provides an extremely poor and limited basis for actual investment decisions. More in-depth company research is clearly required

Innovest founder and Chief Executive Matthew Kiernan commented:

“As the authors of each of the Carbon Disclosure Project global reports in the five years since its inception, we at Innovest are only too aware of the power and importance of company disclosure. However, we have also believed for many years that self-reported, non-verified data supplied by the companies themselves is, by itself, a woefully inadequate basis for actual decisionmaking by sophisticated investors. The results of this study would seem to bear that out.

With over $40 trillion in institutional investor assets now concerned about climate change (Carbon Disclosure Project, 2007), it is increasingly critical that performance-driven investors move beyond simply pressing for greater company disclosure. We are now seeing them begin to demand the sorts of investment tools, research, and products they need to turn mere information into superior investment decisions and performance. In addition, such tools will allow them to meet their growing responsibilities as 21st century fiduciaries. We hope that this study will be helpful in that regard.”

The report is downloadable at http://i-ratings.innovestgroup.com/newsletters/Carbon%20Beta%20Webinar%20Recording.html

Innovestgroup www.Innovestgroup.com
http://i-ratings.innovestgroup.com/newsletters/Carbon%20Beta%20Webinar%20Recording.html

According to Morgan Stanley worldwide sales from clean energy sources like wind, solar and geothermal power and biofuels could grow to as much as $1 trillion a year by 2030. Revenues could reach $505 billion in 2020, a nearly nine-fold increase from 2005.

Population growth and soaring prices for fossil fuels are driving the market, along with dropping costs in clean energy and concern about energy security and climate change.

...
The bank also began covering the clean energy industry. It rated thin film solar company First Solar Inc, solar company SunPower Corp, biofuel company VeraSun Energy Corp., and emissions reducers Fuel Tech Inc. as overweight-volatile:
...
The bank was particularly bullish on solar power. Market penetration of solar in electricity generation could rise from insignificant levels in 2005 to 11.2 percent in 2030, and wind power from 0.9 percent to 9.6 percent by then.

Solar would take more market share as costs decline. Morgan Stanley projects the cost of solar power to fall from $8 per Gigawatt installed in 2005 to $1.60 per GW by 2030. The cost of wind power, which is now about $2 per GW. is forecast to remain about the same.

Penetration of biofuels like ethanol and biodiesel in transportation could increase from approximately 1 percent in 2005 to 21 percent in 2030, it said, assuming cars boost fuel efficiency.
...
Late in 2006 the bank said it planned to invest $3 billion in carbon markets over the next five years.

by Timothy Gardner
Reuters www.Reuters.com
http://www.reuters.com/article/environmentNews/idUSN1844905920071018?pageNumber=2&sp=true

October 18, 2007

How will a cap-and-trade policy affect low income families? What will it mean for the federal budget? For the October 18, 2007 Energy & Environment TV (E&ETV) Event Coverage, the Center on Budget and Policy Priorities presents a report on the importance of fiscal responsibility when creating a climate policy and the effect it could have on the poor. Panelists include, Robert Greenstein, founder and executive director of the Center on Budget and Policy Priorities; David Doniger, policy director of the Natural Resources Defense Council Climate Center; Chad Stone, chief economist at the Center on Budget and Policy Priorities; and Martha Coven, senior legislative associate at the Center on Budget and Policy Priorities.

Also see the Center on Budget and Policy Priorities www.cbpp.org website discussion at: http://www.cbpp.org/pubs/climate.htm

Energy & Environment TV (E&ETV)
http://www.eenews.net/tv/2007/10/18/
October 18, 2007

Abstract: Voluntary approaches have become a popular in the U.S. to enhance the efficacy and scope of existing regulations and to reduce emissions in sectors or for pollutants where formal environmental regulation is lacking. In this paper, we examine the effectiveness of a particular EPA voluntary program for the metal finishing industry, the Strategic Goals Program (SGP). The Strategic Goals Program is a good candidate for evaluation because it had a credible regulatory threat at the time the program was implemented, we can measure both baseline emissions and progress towards explicit environmental goals, and we have data for participants and non-participants. We look at the decision to participate in the SGP and also try to determine what effect, if any, this program has had on the pollution profile of facilities. In addition, we examine whether the voluntary program had any discernible impact on toxicity-weighted emissions. Finally, we explore the possibility that we have a bimodal distribution in the sample caused by the different motivations of facilities to join a voluntary program. A number of factors influence a firm’s decision to participate in SGP, including trade group membership. However, we do not find robust evidence that SGP participation has had a significant impact on emission reductions. This result continues to hold when we adjust emissions to account for toxicity. Our measure of the threat of regulation is correlated with emission reductions for both participants and non-participants.

Keywords: voluntary programs; air emissions; Program effectiveness

by Keith Brouhle, Charles Griffiths and Ann Wolverton

U.S. Environmental Protection Agency, National Center for Environmental Economics www.epa.gov http://yosemite.epa.gov/ee
Working Paper Number 2007-06
Document Date May 30, 2007
http://yosemite.epa.gov/ee/epa/eed.nsf/WPNumberNew/2007-06?OpenDocument

The political and economic landscape in the countries of Eastern Europe, Caucasus and Central Asia is evolving. Are environmental policies keeping pace? What major environmental policy measures have been taken by each country? What are the main barriers to further progress? What are the emerging policy issues and priority areas for action?

In 2003, the Ministers of Environment of the 12 countries of Eastern Europe, Caucasus and Central Asia (EECCA), together with their partners in the “Environment for Europe” process, adopted the EECCA Environment Strategy. The Strategy aims to promote sustainable development through environmental policy reform and environmental partnerships.

This book provides a review of progress in achieving the Strategy's objectives, and provides a solid analytical base for discussions on future environmental co-operation between EECCA countries and their partners. Preparation of this report has involved a unique process of collaboration among all the major international institutions active on environmental issues in this region - UNDP, UNECE, UNEP, WHO Europe, the World Bank, Project Preparation Committee, Regional Environmental Centre (REC) for Central and Eastern Europe, REC Central Asia, REC Caucasus, REC Moldova, REC Russia and European Eco-Forum. By focusing on the policy actions taken by EECCA countries, it complements "Europe's Environment: The Fourth Assessment” – prepared by the European Environment Agency – which assesses environmental conditions in the pan-European region. This report is the “flagship” document from the EAP Task Force to the Belgrade "Environment for Europe" Ministerial Conference.

This report was officially launched together with a report, prepared by the European Environment Agency on environmental quality in the pan-European region, and the report on environmental policy in South East Europe prepared by the United Nations Development Programme on the first day of a Europe-wide Ministerial Conference in Belgrade (Serbia) on 10 October 2007.

Table of contents
Executive Summary
Introduction
PART I. PROGRESS ACROSS STRATEGIC OBJECTIVES
1. Environmental Legislation, Policies, and Institutions
2. Pollution Prevention and Control
- Air Quality
- Water Supply and Sanitation
- Waste and Chemicals Management
3. Sustainable Management of Natural Resources
- Water Resources Management
- Biodiversity Conservation
4. Environmental Policy Integration
- Overall Issues
- Energy and Environment
- Transport and Environment
- Agriculture, Forestry, and Environment
5. Finance for Development
6. Environmental Information and Awareness
- Environmental Monitoring and Information Management
- Public Participation in Environmental Decision Making
- Environmental Education
7. Transboundary Issues and Multilateral Environmental Agreements
8. Conclusions
PART II. COUNTRY PROFILES
Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyz Republic, Moldova, Russian Federation, Tajikistan, Turkmenistan, Ukraine, Uzbekistan

ISBN: 9789264027343
Release: 10 October 2007
Organization for Economic Cooperation and Development www.oecd.org
http://www.oecd.org/document/17/0,3343,en_2649_37465_39305233_1_1_1_37465,00.html

Abstract: Policy making at the level of international environmental problems appears to lack a transparent, multi criteria based, decision support ‘tool’. This is due mainly to the highly political, volatile, and contextual nature of issues at this level. The environmental problem of how to regulate emissions from international civil aviation due to their transboundary nature, and the participation of international and domestic players, makes it a ‘wicked’ international environmental problem where policy making has proved problematic. This problem has been used as the basis for developing and pilot testing a tool for contributing to international policy