“The real problem is that the price of water in California, as in most of America, has virtually nothing to do with supply and demand…If water was priced to reflect scarcity, a decrease in supply would lead to an increase in price, and people would demand less… My system is designed to reduce demand rather than cover costs.” – David Zetland, The Water Shortage Myth (Forbes, 2008)
In Part I of this series we discussed how a proposed Drought Environmental Water Market does not meet the criteria of a market nor would the prices produced from such a system reflect Fair Market Value. The proposal for an environmental water market by a group of experts from the University of California, Davis, the Public Policy Institute of California and law schools at the University of California and Stanford (the “U.C. Davis-PPIC Proposal”) would end up double charging farmers for water they already paid for, including $180 million in river restoration fees.
In this second part of the series we discuss the implications of wholesale water auctions currently in vogue in California, ostensibly as a drought relief mechanism.
We previously discussed the eminent domain property appraisal rule called the “Project Influence Rule.” This rule means that any increase or decrease to property values due to a public project must be excluded from any appraisal for Fair Market Value. This rule is typically applied in redevelopment project areas where the upzoning, road improvements and utilities brought about by redevelopment have to be excluded from any property valuation. Appraisers usually control for project influence by searching for sales data outside the defined project area.
Below we will compare agricultural water sales prices from outside the Central Valley to cross check if there is any premium in water prices caused by government withdrawing over half of the supply of farm water to restore “fish flows.” In general, government does not have to pay for an enhancement of private property value it created. This rule should work in reverse when government wants to sell back to farmers water at environmentally-inflated prices. [Read more →]
February 21, 2014 No Comments
“The U.C. Davis proposal to establish an environmental water market partly induced by environmental regulatory drought does not hold water. And we find pricing environmental water sales by auctions to reflect inflated non-market prices derived from the “project influence” of inducing a water shortage as a result of the San Joaquin River Restoration Settlement Project of 2009 …. Nonetheless, we welcome the opportunity to open up a discussion of how markets might alleviate drought hardship on farmers and, wherever possible, on the environment.”
Road sign on rural highway in Kern County, California, erected in 2010:
KERN & KINGS COUNTY FARMS PAID 100%
35% in 2008
50% in 2010
WaterForAll.com – Families Protecting the (Central) Valley.com
With implications for the huge hydropower and natural gas powered market in California, on Feb. 11, 2014, a team of water experts associated with University of California at Davis, the Public Policy Institute of California (PPIC), and the University of California and Stanford law schools, called for the creation of a “special water market.” [Read more →]
February 20, 2014 No Comments
“An important biological species – humankind – is at risk of disappearing due to the rapid and progressive elimination of its natural habitat…. It must be said that consumer societies are chiefly responsible for this appalling environmental destruction.”
– Fidel Castro, Rio Earth Summit, 1992.
“If you look at the time since 1992, we sort of started out with a bang with Rio and Kyoto. [Since then] things have slowed down.”
- Tim Wirth (U.N. Foundation Vice Chairman; former State Department Undersecretary for Global Affairs). Quoted in Lisa Friedman, “The Diplomatic Road to a New Climate Agreement May Not End in Paris Next Year,” ClimateWire (sub. req.),
Fidel Castro (1926–), one the great wealth destroyers and wealth averters of the last fifty years (he came to power in 1961), has come back in public after an eight-month absence. Alive but not much else, Castro ceded power to his brother Raúl Castro in 2008 because of deteriorating health.
Fidel Castro combined Marxism-Leninism with environmentalism. His Communist rule of Cuba has been filled with innumerable human-rights abuses under his dictatorship. He is both the smartest and the meanest guy in the room in the name of socialist humanitarianism. And he continues to rail against industrialization on environmental grounds, more recently criticizing Canadian oil-sands development.
Big Government loves Big Environmentalism and vice-versa. It is not coincidental that Marxists are environmentalists, and that environmentalists believe in central planning. (Earth Day is on Lenin’s birthday, coincidental or not).
February 19, 2014 1 Comment
On February 12, the United States National Academies of Sciences (NAS) issued a news release inviting the public to a joint meeting with the UK Royal Society:
On Thursday, February 27th, the U.S. National Academy of Sciences and The UK’s Royal Society cordially invite the public to the release of Climate Change: Evidence & Causes, a new publication produced jointly by the two institutions. Host Miles O’Brien from the PBS Newshour will guide a discussion about the publication with authors Dr. Eric Wolff of the University of Cambridge (UK lead), Dr. Inez Fung of the University of California, Berkeley (US lead), Sir Brian Hoskins* of the Grantham Institute for Climate Change, and Dr. Benjamin Santer* of Lawrence Livermore National Laboratory. Dr. Ralph J. Cicerone, President of the National Academy of Sciences, and Professor Sir Paul Nurse,* President of the Royal Society, will kick off the event.
The publication, which is written by a UK-US team of leading climate scientists and reviewed by climate scientists and others, is intended as a brief, readable reference document for decision makers, policy makers, educators, and other individuals seeking authoritative information on some of the questions that continue to be asked. The publication makes clear what is well-established and where understanding is still developing. It echoes and builds upon the long history of climate-related work from both national academies, as well as on the newest climate-change assessment from the United Nations’ Intergovernmental Panel on Climate Change.
As Captain Renault said in the classic 1942 movie Casablanca, “Round up the usual suspects.” Yes, the report “Climate Change: Evidence & Causes” has as authors a familiar crew of fuel alarmists. [Read more →]
February 17, 2014 No Comments
“The level of emissions savings provided by wind plants has never been conclusively determined, taking into account all the factors.”
Part I yesterday questioned the analysis and robustness of Joseph Cullen’s study, “Measuring the Environmental Benefits of Wind-Generated Electricity”.  Part II completes the commentary on this paper, covering:
- Questionable data, which seriously inhibits any analysis of wind performance
- Interstate trade in electricity, an often overlooked, but important, consideration in understanding impacts on emissions
- A summary of the acknowledged shortcomings of this paper
- Questionable opinions/claims made
The level of emissions savings provided by wind plants has never been conclusively determined, taking into account all the factors. Further, there is no published accurate, minute-by-minute, actual fuel consumption or emissions by individual plant, especially for systems with notable levels of wind present. Note the limitations in the Katzenstein and Apt paper looked to by Cullen for corroboration as discussed in Part I.
In general, government reported emissions are estimates based on calculations using assumptions and relatively simple algorithms. In some cases, actual measurements are taken but are no better than those calculated as reported by the International Energy Agency (see page 35).
“Commercial instrumentation is available for monitoring CO2 concentration and flue gas volume flows. Given the limitations of such instrumentation, the accuracy of directly measured CO2 release is probably no better than that derived by indirect calculation.” (emphasis added)
A report by The Sustainable Energy Authority in Ireland, “Renewable Energy in Ireland”, in Appendix 1 also refreshingly recognizes the limitations to existing reporting methods.
“The assumption underpinning this approach is that the renewable plant is displacing the last plants to be dispatched to meet electricity demand, i.e. the marginal oil and gas plants. There are clear limitations in this analysis but it does provide useful indicative results.” (emphasis added for “indicative”, which is taken to mean “suggestive”)
“The limitations and caveats associated with this methodology include that it ignores any plant used to meet the associated reserve requirements of renewables. These open cycle plants will typically have lower efficiency and generate increased CO2 and NOx emissions compared with CCGT and these emissions should be incorporated into the analysis. The purpose of presenting a simplified analysis here is to provide initial insights into the amount of fossil fuels that are displaced by renewables and the amount of emissions thereby avoided.” (emphasis added)
The issue raised in the last quote speaks to the comments made in the Robustness section in Part I. [Read more →]
February 14, 2014 7 Comments
“The nature of the short-term operation of an electricity system is more like that of a machine than a market.”
A paper published by Joseph Cullen in the American Economic Journal: Economic Policy (November 2013), “Measuring the Environmental Benefits of Wind-Generated Electricity”  is important in two regards. First, using Texas data, it shows that even with notable emissions savings attributed to wind, the highly subsidized cost of wind is exceeded only by high estimates of the social costs of pollution.
Secondly and perhaps more importantly, his paper provides an opportunity to illustrate where wind-performance analyses fall short. This is the subject of this two-part post today and tomorrow, and is independent of the issue of carbon dioxide social benefits versus social costs.
Professor Cullen first determines how much electricity production of other generator types is offset by the presence of wind plants in the grid using a reduced form econometric model based on “…observed behavior and current market conditions.” The time frames for production are 15 minute intervals and two hour ahead forecasting by market participants. The market-oriented approach is exemplified by the following quote:
“When low marginal cost wind-generated electricity enters the grid, higher marginal cost fossil fuel generators will reduce their output.” (emphasis added) [Read more →]
February 13, 2014 5 Comments
[Ed. note: Julian Simon, born February 12, 1932, died four days before his 66th birthday. He would have been 82 years old today. MasterResource takes its name from Simon’s term for energy, and we publish on his oeuvre from time to time.]
Thirty-three years after its publication by Princeton University Press, The Ultimate Resource remains insightful and timely—if not timeless. Simon’s Ultimate Resource 2, published in 1996, greatly expanded upon the original, but the major themes were not changed due to the solid worldview that Simon had developed in the 1970s.]
Energy: The Master Resource
“Energy is the master resource, because energy enables us to convert one material into another. As natural scientists continue to learn more about the transformation of materials from one form to another with the aid of energy, energy will be even more important.”
- Julian Simon, The Ultimate Resource (Princeton: Princeton University Press, 1981), p. 91.
“Technological forecasts of resource exhaustion are often unsound and misleading [in part because] … the physical quantity of a resource in the earth, not matter how closely defined, is not known at any time, because resources are only sought and found as they are needed.” (p. 40) [Read more →]
February 12, 2014 1 Comment
Cap-and-trade, carbon taxation, net social cost for carbon: all assume that increasing emissions of carbon dioxide (CO2) and other greenhouse gases by mankind have injurious effects that are not accounted for in private activity. But the politically incorrect is intellectually correct: CO2 emissions make life better – even possible – for people, the economy, and the ecosphere.
Weighing risks, costs and benefits is fundamental to life. We do it every day – when walking, driving, showering, heating our homes, and using stairs, ladders and tools; and when balancing the cost of new payments versus the benefits of a better home or car. The alternative is hunkering down in a bedroom or cave – until a lightning bolt, tornado, hurricane or armed burglar disturbs our false sense of security.
That is why government agencies are required to assess the benefits and costs of proposed regulations. Otherwise, officials could simply tout and exaggerate the supposed benefits of a rule, minimize its heavy costs, or ignore the values of the activity or product they want to regulate.
They could focus on the alleged risks of using a chemical, while disregarding the many ways it enhances and safeguards lives. They could abuse their power, to drive agendas that actually reduce our health and welfare.
Fed’s ‘Social Cost of Carbon’
That is now happening with the federal government’s efforts to “prevent dangerous climate change.” [Read more →]
February 11, 2014 1 Comment
The Alliance for Wise Energy Decisions (AWED) is an informal coalition of individuals and organizations interested in improving national, state, and local energy & environmental policies. Our basic position is that technical matters like these should be addressed by using Real Science. It’s all spelled out at WiseEnergy.org, which is a wealth of energy and environmental resources.
A key element of AWED’s efforts is public education. Towards that end, every 3 weeks we put together a newsletter to balance what is found in the mainstream media about energy and environmental matters. We appreciate MasterResource for their assistance in publishing this information.
Greed Energy Economics:
London School of Economics: Property Values do Decline
February 10, 2014 No Comments
“The Triumph of Capitalism” (Socialism is Intellectually Dead, but Central Planning in the Mixed Economy Lives On)
“Less than 75 years after it officially began, the contest between capitalism and socialism is over: capitalism has won… Capitalism organizes the material affairs of humankind more satisfactorily than socialism.”
- Robert Heilbroner, “The Triumph of Capitalism,” The New Yorker, January 23, 1989, p. 98.
A major event in the history of political economy thought occurred in 1989 when socialist economics writer Robert Heilbroner (1919–2005) renounced his belief in central planning in the pages of the New Yorker. For anti-market liberals, this made it official: socialism was out of the mainstream. Socialism could not plan a modern economy and was an open sesame for totalitarianism. Hayek said as much in his 1944 classic, The Road to Serfdom. A trusted voice on the Left confirmed it 45 years later.
David Boaz, the Cato Institute’s longtime scholar of liberty, wrote a tribute upon Heilbroner’s death nine years ago in Reason magazine. MasterResource, with permission, reprints Boaz’s essay for its lucidity and its relevance in today’s political economy debates where mainstream views about perilous man-made climate change and the sustainability of “green” energy are in intellectual trouble.
“The Man Who Told the Truth: Robert Heilbroner fessed up to the failure of socialism” Reason, January 21, 2005. [Read more →]
February 7, 2014 3 Comments