Why are we drilling for oil 40 miles offshore and thousands of feet underwater? This AP article claims that the answer is simply the world's unquenchable demand for oil:
The world's thirst for crude is leading oil exploration companies into ever deeper waters and ventures fraught with environmental and political peril. The days when the industry could merely drill on land and wait for the oil — and the profits — to flow are coming to an end.
But is it merely the demand for oil that is causing us to drill risky deep-water wells? Hardly. What the AP fails to mention are the various policies in place that encourage oil companies to drill in such dangerous locations.
As Terry Anderson pointed out this summer, part of answer lies in NIMBY— "not in my backyard"—policies. Drilling can be done much safer onshore, but policies forbidding energy development on land drive it to areas where the effects of spills are more deleterious. Nearly 80% of potentially oil-rich offshore lands and 60% of onshore lands are off limits to oil and gas development.
Another missing piece in the AP's story is the 1990 Oil Pollution Act (OPA), which caps the liability of drillers at a paltry $75 million in the event of a spill. This undoubtedly encourages drilling in more risky deep-water locations. And, as Michael Greenstone of the Brookings Institute put it, "The cap effectively subsidizes drilling and substandard safety investments in the very locations where the damages from spills would be greatest." Congress has failed to raise this liability cap (BP, however, has waived its right to this cap and is vowing to pay all legitimate claims).
In short, we are not running out of oil. The unintended consequences of energy policies are causing us to look for it in all the wrong places.
Todd discusses his work with WRI on two pilot projects that are connecting the buyers of ecosystem services with the sellers of the services. Among other things, these projects hope to invest in forests along the Crooked River in Maine, which currently act as a natural filter for the water supply to the city of Portland. For more, see this podcast with Todd or this PERC Policy Series on ecosystem services.
The company takes an approach to water different from engineering or legal consultants, traditionally the ones involved in these types of conversations, Corbin said. Lotic’s role is to look at water as an asset, just as one might look at a piece of land. Water rights are property rights, meaning anyone who owns a right is allowed to sell it to the highest bidder. But the market is informal and most people don’t really know what their water rights are worth, Corbin said.
The article goes on to describe how Lotic helps keep water in stream for fish and wildlife habitat through water markets. For more on Chris and how Lotic is "turning blue into green," see his essay in PERC Reports or this from PERCtv:
We are right in the middle of National Pollinator Week, and if you haven't yet paid homage to the honeybees that pollinate your fruits and vegetables, now is your chance. PERC fellows Walter Thurman and Randal Rucker have an op-ed, "Blessed Are the Beekeepers," in today's Wall Street Journal claiming that despite the hype about colony collapse disorder, there is no shortage of bees.
It turns out that while colony collapse has increased the number of winter bee colony losses from an average of 15% to 30%, the result has not been fewer springtime bees. Beekeepers have adapted by simply splitting and "requeening" their colonies. As a result, total bee numbers were higher in 2010 than in any year since 1999.
Thurman and Rucker also note that honey production and pollination service fees have remained stable. If the effects of colony collapse were significant, they claim, we would expect to see honey production falling and pollination fees rising.
Why haven't we seen the predicted declines?
Commercial beekeepers routinely fight diseases and parasites that threaten their tiny livestock. They apply miticides. They monitor and manipulate their colonies' genetic stock. And they adjust to changing circumstances, such as increased winter mortality, by increasing bee populations in anticipation of winter losses. It is these efforts that explain the relative stability of the nation's bee population and its products in the face of CCD and other diseases and parasites.
Read their op-ed here. And don't worry, there's only one bee joke.
Q: Ecology is about preserving resources while economics is about exploiting them. How does one reconcile these two disciplines?
A: In a way, I think they are both about emergent properties. Ecology is about the spontaneous order that appears in the world through the interaction of different species — the pattern that you see. And economics is about the same thing in society. So they are both bottom-up fields for me. They’re both about how order emerges from the interaction of individuals.
Q: Are you suggesting economics could learn something from Charles Darwin and ecology could learn something from Adam Smith?
A: This is one of my crusades, actually. As someone who was an ecologist and nowadays writes a lot about economics, I am fascinated by the parallels. Charles Darwin read Adam Smith, so there is sort of an ancestral connection between the two fields. And there is a lot going on in evolutionary biology and ecology that is very parallel to what is occurring in economics and vice versa. People like F.A. Hayek knew this and went across to evolution to pinch ideas, so I think there is a very fruitful dialogue between ecology and economics.
A: I don’t think so because I think that the amount of resources we have depends upon our ingenuity. In other words, the more prosperous we get, the more frugal we get in our use of resources. Land is a good example: We use less and less land to produce the same amount of food because we’re getting better at it. We’re applying fertilizer or irrigation or whatever it is. The same is true for the amount of steel in a bridge; it is a lot lower than it was 20 years ago, etc.
So actually we are shrinking the amount of resources we need to run society at the same time that we are growing them, because there are more of us and we’re becoming more prosperous. I actually think the richer we get in this century, the more comfortable the resource position is going to be because we’re going to be better at recycling, better at finding resources, and better at using them frugally.
Q: That is somewhat counterintuitive. The more we use, the more we’re going to have, the more frugal we’re going to be, and the wealthier we are going to be.
A: Until now, the problem has been called the Jevons Paradox, which says that the cheaper you make energy, the more people will use it. And that’s true with a lot of resources. But there is evidence that the Jevons Paradox is reaching its limits with some resources. Land is a good example, again. We are actually reforesting land all over the world, we’re taking land out of farming all over the world, because even though there are more of us every year, and even though more of us want to eat chickens and pigs and all these land intensive forms of food, we still, even with this profligacy, can’t keep up with our increasing efficiency, our productivity. So actually we taking land out of agriculture and turning it back to nature reserves. And as the population growth rate falls in this century, I think that process will accelerate.
From NPR's Planet Money comes this puzzling question: why are U.S. taxpayers subsidizing Brazilian cotton growers? The answer lies in a contentious trade war that pits the U.S. — which pays out between $1.5 and $4 billion a year to U.S. cotton farmers — against the World Trade Organization, who says U.S. cotton subsidies are against global trade rules.
What happened when Brazil recently retaliated with taxes on U.S. imports illuminates the extent to which agricultural subsidies are embedded in American politics.
The American negotiators sat down in Brazil and immediately declared it impossible to get rid of the cotton subsidies right away. But the two sides came to an agreement.
The U.S. would pay Brazilian cotton farmers $147 million a year, and Brazil would drop the threat of retaliation.
To review: The United States was found to be illegally subsidizing U.S. cotton farmers. We are still subsidizing U.S. cotton farmers. Now we're paying Brazilian cotton farmers, too.
"Maybe it's a bribe," Camargo [former Brazilian trade secretary] says. "For Brazilian farmers, it's a lot of money."
For U.S. taxpayers, it's also a lot of money. In effect, they are now subsidizing cotton farmers in both America and Brazil. For more, listen to the full story here.
Reason.tv has this excellent video overview of the debate over hydraulic fracturing from Ronald Bailey, a 2010 Julian Simon Fellow at PERC. Here's some background from Reason:
Fracking has been around for more than 60 years and over 100,000 gas wells are dug per year, most of them in sparsely populated areas in the western U.S. With the discovery of the Marcellus Shale in the eastern part of the country, fracking is increasingly common in populated parts of Pennsylvania, Ohio, and New York, leading to heightened tensions between drillers and environmentalists. Indeed, the attorney general of New York has called for a moratorium on the practice in the Empire State.
Is fracking safe? And what are the potential benefits that will be forfeited if the practice is ended? Reason's Nick Gillespie sat down with science correspondent Ronald Bailey to learn the truth about fracking. Bailey reports that the cases of contaminated water supplies were the result of poorly designed wells that had nothing to do with fracking itself. As important, he notes that the gas generated by fracking would not only massively increase American energy supply, it would do so with a relatively clean and cheap fuel.
• As far as real estate is concerned, 92% of Egyptians hold their property without normal legal title.
• We estimated the value of all these extralegal businesses and property, rural as well as urban, to be $248 billion—30 times greater than the market value of the companies registered on the Cairo Stock Exchange and 55 times greater than the value of foreign direct investment in Egypt since Napoleon invaded—including the financing of the Suez Canal and the Aswan Dam. (Those same extralegal assets would be worth more than $400 billion in today's dollars.)
...Bringing the majority of Egypt's people into an open legal system is what will break Egypt's economic apartheid. Empowering the poor begins with the legal system awarding clear property rights to the $400 billion-plus of assets that we found they had created. This would unlock an amount of capital hundreds of times greater than foreign direct investment and what Egypt receives in foreign aid.
Founded 30 years ago in Bozeman, Montana, PERC—the Property and Environment Research Center—is the nation’s oldest and largest institute dedicated to improving environmental quality through property rights and markets.
The goal of PERC’s programs is to fully realize the vision of establishing “PERC University,” where scholars, students, policy makers, and others convene to expand the applications of free market environmentalism.
PERC's fellowships share a common goal of exposing new scholars, students, journalists, and policy makers to free market environmentalism, as well as enable scholars already familiar with FME to explore new applications.