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Economic Currents

Keep up to date with the latest UHERO news.

New research on urban landlords and the Housing Choice Voucher Program

UHERO's Philip Garboden led research recently released by The Poverty and Inequality Research Lab at Johns Hopkins University on the role landlords play in shaping the residential experience of low- and moderate-income renters, especially those with housing choice vouchers. The research team uses interview data from 127 landlords and property managers in Baltimore, Dallas, and Cleveland combined with ethnographic observations collected between 2013 and 2015 and 1.5 million administrative records on landlords and tenants in the HCV program from HUD’s 50058 database.

The report is available here: https://www.huduser.gov/portal/sites/default/files/pdf/Urban-Landlords-HCV-Program.pdf

 Published version here: Philip M. E. Garboden, Eva Rosen, Stefanie DeLuca & Kathryn Edin (2018): Taking Stock: What Drives Landlord Participation in the Housing Choice Voucher Program, Housing Policy Debate, DOI: 10.1080/10511482.2018.1502202 


Hybrid Forest Restoration Benefits Communities and Increases Resilience

Photo by Ben Nyberg

Researchers from UHERO, the University of Hawai`i at Mānoa, and National Tropical Botanical Garden quantify social, ecological, and economic costs and benefits of alternative forest restoration strategies

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An interdisciplinary research team from the University of Hawai`i at Mānoa (UHM) and the National Tropical Botanical Garden (NTBG) demonstrated how collaboratively-developed forest restoration in Limahuli Garden & Preserve (Limahuli) can increase community benefits and improve resilience at lower cost than standard forest restoration programs. Because conservation managers are increasingly faced with making restoration decisions constrained by multiple goals and limited budgets, the research team collaborated with conservation professionals at Limahuli to co-design research that will directly inform adaptive management.

Specifically, authors of a newly published study in the journal Conservation Letters asked how manager-defined ecological, hydrologic and cultural metrics of success and long-term management costs vary across different restoration strategies. The researchers focused on the ahupua`a of Hā`ena on Kaua`i Island, and evaluated unrestored forest and forests restored to different states—ranging from a pre-human arrival state, to a “hybrid” state that includes mixes of native and non-native species of cultural importance. Their study site was Limahuli Valley, a 400-hectare nature preserve managed by NTBG in the most biodiverse ecoregion of the Hawaiian archipelago, which is home to dozens of endangered plants and birds found nowhere else on earth. They found that restoring forest to a hybrid state provided many of the same services that a restored ‘pre-human’ state can provide, but at a much lower cost. They also found it increased two important services: cultural value and resilience to disturbance such as hurricanes.

The paper “Restoring to the Future: Environmental, Cultural, and Management Tradeoffs in Historical versus Hybrid Restoration of a Highly Modified Ecosystem” has a diverse team of authors from the natural and social sciences as well as natural resource managers: Kimberly M. Burnett, Tamara Ticktin, Leah L. Bremer, Shimona Quazi, Cheryl Geslani, Christopher A. Wada, Natalie Kurashima, Lisa Mandle, Pua`ala Pascua, Taina Depraetere, Dustin Wolkis, Merlin Edmonds, Thomas Giambelluca, Kim A. Falinski, and Kawika B. Winter.

“Restoring forests to a pre-human state on a landscape scale has been idealized, but—given the amount of functional diversity that has gone extinct in Hawai`i—such an approach is almost impossible, ecologically speaking. Beyond that, our research has shown that goal is economically impractical, and it isn’t the best way to engage community in restoration efforts,” said Dr. Kawika Winter, a multidisciplinary ecologist and Research Associate at NTBG who is the anchor author of the new study. “These results can be used by conservation practitioners to guide management actions, and to bring the community back into the forest while improving multiple ecological and social benefits; and do all this at lower costs than programs focused solely on historical restoration goals.”

The methods also have applications far beyond Hawai`i, particularly as conservation managers working in places with a history of cultural engagement with forests, and who are increasingly faced with decisions on how to fund and approach restoration efforts. This new research provides a framework to help managers identify restoration strategies addressing multiple goals in regions where restoration is challenging – areas where invasive species or other issues limit natural regeneration of native species, and/or where local populations depends on natural resources. Lower costs also offer the possibility of scaling-up, a critical consideration since island conservation is underfunded compared to continents.

Dr. Kimberly Burnett, Specialist with the University of Hawai`i Economic Research Organization and lead author of the study, said: “While conservation managers cannot make realistic decisions without considering costs, these type of tradeoff analyses are rare in restoration research. Our study provides a framework to consider these costs and benefits, while providing specific management direction for Limahuli and generalizable lessons for restoration strategies around the world.”

Dr. Tamara Ticktin, co-author on the study, Professor of Botany at UHM, and Principal Investigator on the National Science Foundation grant that funded the research, added: “Like any restoration strategy, hybrid forest restoration also has its limitations. Our study concluded that hybrid forests can be an excellent strategy within a landscape mosaic that also includes more expensive restoration strategies needed to preserve the most endangered species. The value of our multidisciplinary approach is that it provides a powerful tool for resource managers to take into consideration the different metrics that are important to them, and to make more informed decisions about what that landscape mosaic of restored forest could look like.”

This study was supported through funding from a National Science Foundation grant to the University of Hawai`i.


Vog: Using Volcanic Eruptions to Estimate the Health Costs of Particulate

Posted August 20, 2018 | Categories: Hawaii's Environment, Blog

Since its inception, the Environmental Protection Agency (EPA) in the United States has proven itself to be effective at reducing air pollution. For the six ‘criteria’ pollutants that the EPA is mandated to regulate, emissions of all six have declined substantially. Particulates have declined by 38% since 1990. Furthermore, large reductions in particulate pollution in the 1970s have been shown to be a direct effect of EPA regulation. Now that air pollution in many parts of the US has declined significantly, an important policy question becomes how much further reduction is desirable.

Understanding the optimal level of air pollution is critical to setting the National Ambient Air Quality Standards or NAAQS. However, doing so is hampered by two challenges. The first is that, while the costs of pollution abatement are straight-forward to measure using units such as kilowatts of energy or laptops produced, the benefits are harder to quantify. Randomized trials are not an option because it is unethical to deliberately expose people to toxic air pollution. The second challenge is that while the NAAQS correspond to one pollutant (e.g. carbon monoxide or sulfur dioxide), most sources of pollution emit many pollutants at once. As a result, identifying the costs of any one pollutant is very difficult as any given pollutant is confounded by others. Assigning blame to particulates then becomes a challenge. In fact, many academic studies that look at the effect of particulates alongside other pollutants find that particulates have no effect on health outcomes. One way to address these two challenges is to find a ‘natural’ experiment – a situation where the general public has been randomly exposed to pollution and, specifically particulates, in a way that mimics an actual experiment.

The largest stationary source of sulfur dioxide pollution in the US is Kīlauea volcano located on the island of Hawai`i. This sulfur dioxide reacts with sunlight, oxygen, dust and water in the air to produce ‘vog’ (volcanic smog) which is one species of particulate pollution. The Hawaiian Islands typically have some of the best air quality in the world. But whenever Kīlauea volcano starts emitting gases and trade winds die down, the state’s 1.4 million residents experience short-term exposure to elevated levels of particulates. Particulates are far-and-away the main pollutant in the State of Hawai`i and they are very weakly correlated with other pollutants unlike other sources of particulates such as coal-fired power plants.

In a recent paper, we leverage volcanic emissions from Kīlauea over the period 2000-2012 to estimate the causal impact of particulates on emergency room (ER) admissions and charges. We employ measurements of air quality taken from various monitoring stations across the state and administrative data on ER utilisation due to pulmonary-related reasons. An important feature of our study is that our cost data are more accurate than the cost measures used in much of the literature. We isolate variation in particulate pollution on the island of Oahu (which is to the northwest of the island of Hawai`i) that is the consequence of emissions from Kilauea and wind direction to estimate the health costs of particulates.

We find strong evidence that daily exposure to particulate pollution increases pulmonary-related ER admissions. Our instrumental variables estimates indicate that one standard deviation increase in particulates on Oahu increases ER charges for pulmonary-related reasons by 25-35%. These effects are mostly concentrated among the very young. We provide evidence of harm due to particulate pollution below the NAAQS.

- Tim Halliday, John Lynham, and Aureo de Paula

UHERO BLOGS ARE CIRCULATED TO STIMULATE DISCUSSION AND CRITICAL COMMENT. THE VIEWS EXPRESSED ARE THOSE OF THE INDIVIDUAL AUTHORS.


Variable Pricing and the Cost of Renewable Power

How much will it cost to eliminate use of fossil fuels? There is reason for optimism. Technological progress has lowered the cost of wind and solar power to make them competitive with coal and natural gas on a levelized basis. Despite this progress, a recent study by Gowrisankaran, Reynolds and Samano, “Intermittency and the Value of Renewable Energy” (JPE, 2016) indicates that the variability of solar and wind power makes the system-wide costs grow considerably as their share of the power mix rises. While battery costs are falling too, they are still expensive, and cannot easily deal with seasonal or episodic variation in supply.

To economists, the obvious solution to intermittency is real-time retail pricing that reflects the incremental cost and marginal willingness to pay for electricity. Variable pricing would create powerful incentives to efficiently store energy on a distributed basis or otherwise shift consumption from times and places of relatively scarce renewable supply to times and places of plenty. Electricity consumers already have access to many low-cost appliances and devices that store energy in different forms. By carefully timing water heating, electric vehicle charging and water pumping, using ice storage for cooling systems, making micro-adjustments for some kinds of refrigeration, or other means, electricity use can be shifted from seconds to many hours at low cost. Such mechanisms would need to be automated by smart devices acting on customers' behalf. These technologies can make electricity demand highly substitutable over time, at least over horizons up to a day or so. In addition to shifting the timing of electricity consumption within the day, customers facing dynamic prices can also adjust the total amount of power they consume each day, reducing total consumption during extended periods when power is scarce, or increasing it when power is abundant.

In a new study, Imelda, Matthias Fripp and Michael Roberts develop a novel model of power supply and demand to examine the extent to which variable pricing can make renewable energy more cost effective in the state of Hawai‘i. The model is novel in the way it simultaneously optimizes investment in generation capacity, storage capacity, and real-time operation of the system, including an account of reserves, a demand system with different interhour elasticities for different end uses, as well as substitution between electric power and other goods and services. Both supply and demand sides of the model can also provide reserves. The model is an extension of Switch, developed by Matthias Fripp in his PhD dissertation and applied to California. Earlier versions of the model (lacking reserves and demand-side integration) have also been implemented the western United States and other areas. The model is open source and fully adaptable to other settings, but requires a rather substantial amount of data.

Consistent with earlier studies, the authors find that dynamic pricing provides little social benefit in fossil-fuel-dominated power systems, only 2.6 to 4.6 percent of baseline annual expenditure. But dynamic pricing leads to a much greater social benefit of 8.5 to 23.4 percent in a 100 percent renewable power system with otherwise similar assumptions, even if the overall demand for electricity is inelastic (0.1). If overall demand for electricity is elastic (2.0), the social benefits of renewable energy are even greater, and variable pricing can improve welfare by as much as 47 percent of baseline expenditure.

When fully optimized, future high renewable systems, including 100 percent renewable, are remarkably affordable. The welfare maximizing (unconstrained) generation portfolio under the utility's projected 2045 technology and pessimistic interhour demand flexibility uses 79 percent renewable energy, without even accounting for pollution externalities. This optimized share is over 80 percent with more elastic and/or flexible demand, and the cost of growing the share of renewables above this optimum is fairly modest until the last 5 to 10 percent of fossil fuels are eliminated.

Hawai‘i has a natural advantage in adoption of large shares of renewable energy, with plentiful renewable resources and expensive conventional generation. However, the intermittency challenge is especially acute in Hawai‘i, due to the state’s geographic concentration. In continental regions, transmission provides a potentially low-cost alternative to storage and demand response for managing intermittency challenges, as well as transferring renewable power from areas rich in renewable resources to areas that are renewable energy poor. The new modeling framework can assess the substitution possibilities between transmission and demand response, and optimize high-dimensional chronological power systems in a realistic way.

 

The social cost of renewable electricity relative to a fossil future with flat pricing.

Click graph to enlarge.

Notes: Each line shows the social cost—the loss in total economic surplus (PS + CS)—as the share renewable electricity rises above the least-cost share, holding all else the same. Social cost is measured as percent of expenditure in the baseline scenario, which is a predominantly fossil system with flat pricing in the year 2045. Thus, values less than zero imply a welfare improvement compared to using a conventional fossil system in the future (excluding externalities). Graphs on the left assume current (2016) costs, while graphs on the right assume future (2045) costs. Comparison of the top two rows shows the influence of electric vehicles (EV), contrasting the current fleet share of 0.5 percent EV with 100 percent EV. In the top two rows the overall demand elasticity is fixed at the baseline of θ = 0.1. Comparison of the bottom two rows shows the influence of a more elastic demand (θ = 2 versus θ = 0.1), while holding the EV share fixed at 50 percent. In all graphs, black lines show the social cost with flat prices; dark green line show the social cost with variable prices and pessimistic interhour substitutability; and the light green lines show social cost with variable prices and optimistic interhour substitutability.

- Michael Roberts
UHERO Research Fellow and Professor of Economics

UHERO BLOGS ARE CIRCULATED TO STIMULATE DISCUSSION AND CRITICAL COMMENT. THE VIEWS EXPRESSED ARE THOSE OF THE INDIVIDUAL AUTHORS.


Publication: Do electric vehicle incentives matter? Evidence from the 50 U.S. states

Posted June 7, 2018 | Categories: Blog

UHERO congratulates Sherilyn Wee, Makena Coffman, and Sumner La Croix on the publication of, "Do electric vehicle incentives matter? Evidence from the 50 U.S. states," in Research Policy. This research measures the effectiveness of state-level policies on the adoption of electric vehicles in the United States. Read more about this in The Role of Policy and Peers in EV Adoption.


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