Archive for the ‘Environmental policy’ Category

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EPA backs off “imminent and substantial endangerment” claim in Texas hydraulic fracturing case

April 2, 2012

Michael Giberson

On December 7, 2010, the Environmental Protection Agency dropped a bomb on Range Resources Corporation. From the EPA news release:

(DALLAS – December 7, 2010) Today, the U.S. Environmental Protection Agency (EPA) has ordered a natural gas company in Forth Worth, Texas, to take immediate action to protect homeowners living near one of its drilling operations who have complained about flammable and bubbling drinking water coming out of their tap. EPA testing has confirmed that extremely high levels of methane in their water pose an imminent and substantial risk of explosion or fire. EPA has also found other contaminants including benzene, which can cause cancer, in their drinking water.

EPA has determined that natural gas drilling near the homes by Range Resources in Parker County, Texas, has caused or contributed to the contamination of at least two residential drinking water wells. Therefore, today, EPA has ordered the company to step in immediately to stop the contamination, provide drinking water and provide methane gas monitors to the homeowners. EPA has issued an imminent and substantial endangerment order under Section 1431 of the Safe Drinking Water Act.

The endangerment order threatened Range Resources with thousands of dollars a day in fines if they did not take immediate action in response to EPA’s administrative order. Range Resources denied responsibility for methane in complainants groundwater and objected to being subjected to either fines or expensive remediation efforts without a hearing on the evidence. Range Resources went to court to bar enforcement of the order.

Fast forward to last Thursday, some 15 months after EPA’s order to take immediate action, and EPA has decided to withdraw its endangerment order  in order to “shift the agency’s focus in this particular case away from litigation and toward a joint effort on the science and safety of energy extraction.” Range Resources agreed to collect quarterly groundwater samples from 20 wells for one year, have the samples analyzed, and share the analysis with the EPA. (See also the Bloomberg story and WSJ coverage.)

The industry-side spin is that this is vindication for Range Resources and another black eye for the EPA. From Energy in Depth, “a troubling trend for EPA: Every time EPA intervenes in a high-profile case – generating scads of maligning headlines about shale and hydraulic fracturing in the process – the agency ends up getting it wrong.”  Texas Railroad Commissioner David Porter takes the same position.

At least one fracking critic says “not so fast” with the pro-Range Resource conclusions, apparently inferring from Range’s willingness to conduct groundwater sampling some sort of tacit concession on the company’s part.

My guess is that Range was tacitly admitting they’d rather collect groundwater samples than continue to pay lawyers and operate under the cloud of uncertainty created by the EPA endangerment order. After all, the scientific analysis is probably cheaper than the lawyers, and if the samples turn out the way Range expects, then the data becomes more evidence for the industry and against the EPA in the battle for public opinion.

I’m on board with the industry-side spin: this is vindication for Range Resources and another black eye for the EPA.

RELATED: We first posted on Knowledge Problem about the Range Resources case soon after the initial endangerment order.

Legal action continues. The initial complainants, Steve and Shyla Lipsky have sued Range Resources in civil courts, seeking $6.5 million in damages. Range Resources have counter-sued the Lipskys and their environmental consultant Alisa Rich for $4.2 million plus additional damages. In February of this year a judge refused a motion by the Lipskys and Rich to dismiss the countersuit, with the judge ruling that Lipskys had worked with Rich to create a deceptive video intended to give the impression they could light their groundwater on fire. (Here is the video as annotated by blogger “Texas Sharon.”)

 

Posted in Environmental policy, Regulation | Tagged , , , , | Comments Off

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Left, right, and climate change

March 27, 2012

Michael Giberson

In principle, there is nothing in the science of climate change that imposes a partisan political commitment. It isn’t as if, for example, you have to believe in steeply progressive tax rates in order to understand climate science. Yet there seems to be a partisan divide on the science. Three recent posts at Grist have ventured into this ground.

David Roberts wrote, “What ‘left’ and ‘right’ really mean on climate change (hint: nothing)“:

The left-right alignment on climate is completely scrambled, in part because the real battle, as we shall see, is not ideological. …

I’m not sure I would call carbon-pricing solutions right-wing, but I do think it’s fair to characterize them as conservative. Conservative economic thinking prefers a minimum of government intervention in the economy. Sending a carbon-pricing signal via a tax or cap is a minimalist intervention, as technology and industry agnostic as policy can be….

The odd thing that’s happened in climate circles in the last few decades is not just that the (generally liberal) environmental community has fervently championed “market-based” solutions like carbon pricing, but that the activist left in particular has adopted a carbon tax as its cri de coeur. … That doesn’t make any sense at all … both are basically conservative in their approach.

Nonetheless, that’s the odd situation we are in today: an intra-left battle between two conservative policy solutions. … It’s a mess. There really is no coherent left vs. right on climate, at least not in terms of economic ideology.

Roberts concludes:

In actual fact, there is no struggle between philosophies happening in U.S. climate politics, only a struggle among economic interests.

A few weeks after the Roberts piece, Grist ran an interview with author/activist Naomi Klein, and she had a directly opposing view:

(Klein:) [B]elief in climate change in the United States has plummeted. If you really drill into the polling data, what you see is that the drop in belief in climate change is really concentrated on the right of the political spectrum. It’s been an extraordinary and unusual shift in belief in a short time. … So I started researching the denial movement and going to conferences and reading the books, and what’s clear is that, on the right, climate change is seen as a threat to the right’s worldview, and to the neoliberal economic worldview. It’s seen as a Marxist plot. They accuse climate scientists of being watermelons — green on the outside and red on the inside.

Q. It seems exaggerated, but your piece was about how the right is in fact correct.

A. I don’t think climate change necessitates a social revolution. This idea is coming from the right-wing think tanks and not scientific organizations. They’re ideological organizations. Their core reason for being is to defend what they call free-market ideology….

You can set up carbon markets, consumer markets, and just pretend, but if you want to get serious about climate change, really serious, in line with the science, and you want to meet targets like 80 percent emissions cuts by midcentury in the developed world, then you need to be intervening strongly in the economy, and you can’t do it all with carbon markets and offsetting… The market is not going to step up to this challenge. We must do more… These climate deniers aren’t crazy — their worldview is under threat. If you take climate change seriously, you do have to throw out the free-market playbook.

Q. What is the political philosophy that underscores those who accept climate change versus those who deny it?

A. The Yale Cultural Cognition Project has looked at cultural worldview and climate change, and what’s clear is that ideology is the main factor in whether we believe in climate change. If you have an egalitarian and communitarian worldview, and you tend toward a belief system of pooling resources and helping the less advantaged, then you believe in climate change. And the stronger your belief system tends toward a hierarchical or individual worldview, the greater the chances are that you deny climate change and the stronger your denial will be.

Environmental economist Gernot Wagner responded with a piece saying Klein was only half right:

Naomi Klein’s interview in Grist this week is smart, insightful, and half right. Her assessment of the obstacles to solving climate change — from ideology to misplaced faith in green consumerism — are exactly right.  And she’s right that fixing this problem means changing how the world does business.

But Klein is wrong in her more serious assertion, first articulated in her “Capitalism vs. the Climate” article in The Nation, that we can save the planet only if we abandon capitalism:

Responding to climate change requires that we break every rule in the free-market playbook and that we do so with great urgency.

The deeper problem is not that our markets are too free; it’s that they are woefully rigged in favor of pollution. Which is also the main reason the Earth finds itself in peril.

The “rigging” in favor of pollution Wagner refers to is the economists’ familiar negative externalities, and the too-common absence of rules that require polluters to pay.

Wagner concludes, “My real argument with Klein is that in trying to escape capitalism, she is trying to evade human nature. [The debate is] not about a full-scale assault on human desires, capitalism, and free markets. … It’s about freeing markets, and in the process freeing all of us to do the right thing.”

I think Klein has a good point concerning the ideological divide over climate change. Crudely speaking, leftists are all to willing to accept scientific claims implying a bigger role for government in the economy, while rightists are all too willing to reject scientific claims implying a bigger role for government in the economy. (And note that the Yale study she cited isn’t about bashing conservatives – they find that leftists are too willing to dismiss scientific findings challenging their views on nuclear waste disposal.)

But I’d like to insert my plea here: climate change science ought not to be a political issue. And, as a complement to that position, climate scientists ought also to recognize the limits of their expertise. The science can and should inform the public policy making process, obviously, but nothing in temperature data, computer modeling and the study of climate/cloud-cover interactions, etc., implies any particular policy conclusion.

It might be true, as Klein says, that we must “throw out the free market playbook” in order to achieve an emission cut “in line with the science.” And if it is true, it may also be quite reasonable for an analyst to weigh the costs and benefits of such a shift, and choose markets. Fortunately, I think Wagner is more right. In my view, we don’t need a government-led assault on markets to address environmental issues, we need rules that support markets.

Posted in Economics, Energy markets, Environmental policy, Liberty, Politics | 8 Comments »

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The WSJ’s awful editorial against the wind power industry

March 8, 2012

Michael Giberson

Like the editorial board of the Wall Street Journal, I’d like to see the Production Tax Credit for wind and other renewable energy technologies expire at the end of this year as scheduled. So policy-wise, I’m with them. Still, their editorial against the wind power policy yesterday was awful and it deserves public criticism.

So here are quotes from the WSJ in italics, followed by my comments.

“The renewable energy tax credit—mostly for wind and solar power—started in 1992 as a ‘temporary’ benefit for an infant industry.”

Stick with “mostly for wind.” Other technologies qualify, too, including a variety of hydroelectric technologies and geothermal power, but not currently solar power.

Solar was briefly included in the PTC through the American Jobs Creation Act of 2004, but then was back out at the end of 2005. Solar power benefits from the Investment Tax Credit, and until December 2011 benefited from “Section 1603″ cash grants in lieu of the ITC.

If you’re tempted to argue they said “renewable energy tax credits”, not specifically the PTC, note that they clearly say the renewable energy tax credits that began back in 1992 (in that year’s Energy Policy Act) – they’re talking about the PTC and they get the solar reference wrong.

Details on the PTC, via DSIRE.

“The ’1603 grant program’ pays up to 30% of the construction costs for renewable energy plants …. Wind producers then get the 2.2% tax credit for every kilowatt of electricity generated.”

No. To get the 1603 cash grant a developer has to forgo the Production Tax Credit. One or the other, but not both.

And for crying out loud, it is a 2.2 cents/kwh tax credit, not a “2.2% tax credit.” The Heritage Foundation can get this right, you’d think the WSJ could do as well.

(Or, more precisely, that was last year’s subsidy but the PTC is adjusted annually for the effects of inflation so in 2012 it will be slightly higher.)

… and Senator Jeff Bingaman of New Mexico has introduced a national renewable-energy mandate so consumers will be required to buy wind and solar power no matter how high the cost.

I didn’t notice this problem myself, not having dug through the details of the bill Sen. Bingaman introduced last week, but Richard Caperton and Stephen Lacey at Climate Progress point out that the bill caps the cost increase at 3 cents/kwh.

These sloppy errors don’t mean the WSJ is wrong, only that they’re willing to publish poorly researched opinion pieces.

The Caperton and Lacey post at the Climate Progress blog mentioned the above errors and raised some additional complaints. Most of their additional complaints concern the relative virtues of oil and gas production when compared to wind power, and who gets how much subsidy. On these points I mostly lean toward the WSJ‘s view. Suffice to say that wind power subsidies are orders of magnitude higher per unit of energy provided to consumers.

But this brings us to one key point they raise: “one justification for the tax credit is to makeup for the fact that taxpayers are bearing the harm from fossil fuels.”

There is, embedded in this idea somewhere, the foundation of an analytically sound justification for policy intervention. My problem with the Production Tax Credit for wind power is that it flows to wind investors for every qualifying kwh of power generated irrespective of any such benefit. The wind power investor gets the same subsidy whether the wind power produced displaces coal-fired electric power or efficient natural gas-fired power or hydropower. Wind would still qualify for a PTC even if its output was displacing solar power while wind turbines chopped up migrating birds.

While there may be an intellectually defensible case for a policy supporting renewable energy because it reduces a harm, the Production Tax Credit bears little resemblance to that policy.

So let’s let the Production Tax Credit die, and get on with the business of developing sound public policy on emissions. (And please, WSJ, stop embarrassing yourself with silly mistakes.)

 

Posted in Electricity, Energy markets, Environmental policy, Politics, Regulation | Tagged , , , | 8 Comments »

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Well, in that case I favor higher automobile fuel economy standards

March 8, 2012

Michael Giberson

Gasoline prices are relatively high and we’re well into the 2012 political campaign, so that means we have presidential wannabees and a wannabee-reelected promising to pass out candy to voters faster than a newly split piñata.

In North Carolina yesterday President Obama announced a $1 billion initiative for a “National Community Deployment Challenge to help selected communities invest in necessary infrastructure.” That effort promises to subsidize the building of electric vehicle recharging stations, or natural gas vehicle recharging stations, or “other alternative fuels [whichever] would be the best fit.”

About the only thing encouraging about that line was the President was embarrassed to say “ethanol” out loud.

But I found this discussion of automobile fuel economy standards notable, from the Detroit Free Press:

Obama was in North Carolina to discuss what the White House called “Daimler’s commitment to increasing fuel economy standards.” The White House and automakers agreed to new fuel standards for model years 2011 to 2025 that will push average fuel efficiency to 54.5 miles per gallon in the next 13 years. The administration says that could save consumers $1.7-trillion in fuel costs, or roughly $8,200 per gallon.

The higher standards will save consumers roughly $8,200 per gallon???!!?

Well, in that case I favor the higher fuel economy standards.

Posted in Energy markets, Environmental policy, Politics | Tagged , | 2 Comments »

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The Matt Ridley Prize for Environmental Heresy

March 5, 2012

Michael Giberson

The Spectator magazine in the U.K. announces the Matt Ridley Prize for Environmental Heresy:

Matt Ridley has long deplored the wind farm delusion, and was appalled when a family trust was paid by a wind farm company in compensation for mineral rights on land on which it wanted to build a turbine. The trust would be paid £8,500 a year for it, and Matt couldn’t abide the idea of profiting — even in part — from this. So he is donating £8,500 in an annual prize to be given to the best essay exposing environmental fallacies. Entries open today.

The rules are simple. We invite pieces from 1,000 to 2,000 words in length, to gore one of the sacred cows of the environmentalist movement. Matt says more in his cover essay for the new Spectator (which you can also read on Facebook) : ‘There are many to choose from: the idea that wind power is good for the climate, or that biofuels are good for the rain forest or that organic farming is good for the planet or that climate change is a bigger extinction threat than invasive species.’ A shortlist of six will be put to a panel of judges and the winning entry will be published in the magazine in July.

Entries … close on 30 June 2012.

More details at the first link above. £8,500? That is more than US$13,000. Hmmm, which sacred cow do I want to gore?

Matt Ridley is the author of several books on science and society, including The Rational Optimist, The Red Queen, The Origins of Virtue, and Genome.

Posted in Electricity, Environmental policy, Miscellany | Tagged | 2 Comments »

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The green costs of Kelo

March 2, 2012

Lynne Kiesling

At PERC, Jonathan Adler has a trenchant post highlighting the environmental consequences of the eminent domain precedent established in the Supreme Court’s Kelo decision. In opposition to the Keystone pipeline, environmentalists are criticizing the use of eminent domain that could override their objections.  Jonathan observes that “… the use of eminent domain for economic development results in more environmental harm than if the market were left alone”, and refers to a paper that he and Ilya Somin have on the subject. Politicized use of government monopoly eminent domain force to redistribute land to politically-powerful developers has detrimental environmental consequences, in addition to being a flagrant violation of individual rights.

Posted in Electricity, Environmental policy | 2 Comments »

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Ethanol industry struggles through regulatory change

February 29, 2012

Michael Giberson

Usually I wouldn’t take pleasure in reports an industry is losing money. But when the industry is is a net drag on society sustained almost entirely by governmental action rather than economic contribution — when we’re talking about ethanol — then I will take a bit of pleasure.

Reported by Minnesota Public Radio: “Ethanol industry lurches in wake of lost subsidy, oversupply“:

WORTHINGTON, MInn. — After predicting they would survive the end of a major federal subsidy without problems, it looks like officials at the nation’s ethanol producers may have been too optimistic.

Since the subsidy ended Dec. 31, ethanol profit margins have declined sharply, even slipping into negative territory. Experts see no quick turnaround in sight.

Now that the subsidy has disappeared, the ethanol downturn is being felt nationwide, including in Minnesota. The state’s $2 billion-plus industry ranks fourth in the nation in capacity and production.

At the Al-Corn Clean Fuel ethanol plant in southeast Minnesota, CEO Randall Doyal sees how the loss of the subsidy has hurt this business. He said his profit margin — the difference between the cost of making the corn-based fuel and what he can sell it for — has disappeared.

Unfortunately, it is mostly transitory pain, and the industry will survive this little economic storm under the sheltering arms of the Renewable Fuels Standard.

One part of the problem is that the petroleum refining industry stocked up on ethanol at the end of last year, when the blenders tax credit was still in place. Not surprisingly, demand for ethanol dropped in January (and yet some in the ethanol business seem surprised). In addition, the high price of gasoline is leading consumers to drive less, also reducing demand for the ethanol blended into gasoline.

[Doug Punke, CEO of Renewable Products Marketing Group] said another plus for the ethanol industry is the overseas market. Brazil, a country that produces its own ethanol, but where demand is high, has been a major customer.

“We’re seeing some export demand pick back up, which is necessary for this industry right now to balance out that supply and demand,” he said.

Last year U.S. ethanol companies sold about 8 percent of their production abroad.

What? We’re exporting home-grown American energy? Quick, somebody call Congressman Markey’s office, I’m sure he’ll want to put a stop to it right away!

RELATED: The Des Moines Register , “Ethanol 11 cents per gallon in red in January.”

Posted in Energy markets, Environmental policy, Politics | Tagged , | 4 Comments »

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Green energy paradox: Hotelling’s exhaustible resource and consequences of improving the alternatives

February 24, 2012

Michael Giberson

The “green power paradox” grabs Hotelling by the ankles, turns him upside down, and shakes the change out of his pockets.

Harold Hotelling’s classic article, “The Economics of Exhaustible Resources,” observes that the owner of an exhaustible resource stock always is making choices in the shadow of the future. If the owner produces and sells a bit today, that necessarily involves sacrificing the opportunity to produce and sell that bit in the future. Given that the resource is exhaustible, we expect the price to increase as the stock of resources nears exhaustion. The resource owner’s choice, then, is whether to sell at a low price today or a higher price tomorrow.

Hotelling’s mathematics says the resource price will tend to increase at the rate of interest, at least under certain conditions (The intuition: if the rate of price increase is below the rate of interest then it will pay to produce more quickly now; if the  price increases are any faster then it will pay to produce more slowly. The adjustments will tend to keep the rate of resource price increases in line with interest rates.)

The green paradox emerges when, in a world of exhaustible energy resources, a new renewable energy supply is introduced. Suddenly, the heavy hand of the future is lifted a little. Therefore, even as the exhaustible energy resource dwindles, no longer can the owner expect ever rising prices. In fact, as the technology of the renewable energy resource improves, the price of all energy resources should drop.

In a world of constantly improving renewable energy technology, the owner of an exhaustible resource may be choosing between a low price today and an even lower price tomorrow. The implication: produce and sell now, before the price drops again!

Paradoxically, government promotion of alternative energy technology as a means to fight global warming may be encouraging the rapid exploitation of fossil fuels!

(This is my optimistic, Julian Simon-esque version of the Green Paradox, with resources becoming cheaper over time. A similar pessimistic version can obtain if owners of an exhaustible energy resource expect that regulatory controls on production will become increasingly onerous over time. Produce now while the controls are light instead of keeping your resource in the ground where future regulations may insist it stay.

And finally, if you are a combination resource optimist and a regulatory pessimist, then you ought to stop reading this post right now and go drill, baby, drill!)

SEE: Hans-Werner Sinn, The Green Paradox, MIT Press (2012). Related Sinn: “Greenhouse gases: Demand control policies, supply and the time path of carbon prices.“

HT: Marginal Revolution.

Posted in Economics, Energy markets, Environmental policy | Tagged , , | 9 Comments »

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The federal government’s natural gas R&D breakthrough

February 23, 2012

Michael Giberson

In the recent edition of The American magazine, the on-line journal of the American Enterprise Institute, Michael Shellenberger and Ted Nordhaus write in defense of the President’s State of the Union address claim of federal government credit for the shale gas revolution. (For those of you not keeping score at home, (1) I commented on a related Shellenberger and Nordhaus op-ed in two posts back in December 2011, here and here, and then (2) followed with a comment in response to the State of the Union remark in late January 2012, here.)

Shellenberger and Nordhaus begin this recent article:

In his State of the Union address, President Obama invoked the 30-year history of federal support for new shale gas drilling technologies to defend his present day investments in green energy. Obama stressed the value of shale gas—which will create thousands of jobs and billions in profits—as part of his “all of the above” approach to energy, and defended the critical role government investment has always played in developing new energy technologies, from nuclear to solar panels to wind turbines.

The president’s remarks unsurprisingly sparked a strong response from some conservatives (here, here, here, and here), who have downplayed and even attempted to deny the important role that federal investments in hydrofracking, geologic mapping, and horizontal drilling played in the shale gas revolution.

This is an over-reaction. In acknowledging the critical role government funding played in shale gas, conservatives need not write a blank check for all government energy subsidies. Indeed, a closer look at the shale gas story challenges liberal policy preferences as much as it challenges those of conservatives, and points to much-needed reforms for today’s mash of state and federal clean energy subsidies and mandates.

Note that the first of their “here” links is to the first of my two December 2011 blog posts in response to their op-ed, as it appeared at The Energy Collective site (where some of our KP energy-related posts get a second life). As it happens, after the President’s address, the Master Resource blog republished the post as a commentary in response to the President’s natural gas research claim, appending to my title “(December 20 post becomes part of a national debate).”

I want to object to a couple of pretty minor points below, but before I object let me emphasize my agreement with part of what they say about much-needed reforms to today’s state and federal clean energy policies. As they point out late in their article, they’d like to see a reduction or even an end to most current renewable energy production subsidies and direct some of that funding to energy research and innovation. I would completely support such a move, even though I wouldn’t defend the change on the same grounds that they do.

And now two petty objections, both in response to the sentence “The president’s remarks unsurprisingly sparked a strong response from some conservatives (here, ….”

  • First, I am not a conservative. I am pro-dynamism, pro-market, pro-experimentation in many matters both economic and social, and pro-freedom. I don’t want to belabor the point, they probably didn’t mean to offend me, but I am libertarian not conservative.
  • Second, my December 20, 2011 response was not directed at President Obama’s State of the Union address in January 2012, but rather at the mid-December 2011 op-ed by Shellenberger and Nordhaus. (For what it’s worth, I find their arguments more thoughtful and more worthy of a thoughtful response than the President’s  remarks on the topic. So even though my first response to their piece started in somewhat flippant tone, I did try to engage with what they were saying.)

My less minor objections to this new article by Shellenberger and Nordhaus will require a bit more explanation, so I’ll defer them for now. In brief, I still object to how they characterize the significance of the federal role in drilling technology and especially to some of the policy inferences they want to make. In addition, I will want to explain how and why I would support the kind of renewable energy policy reforms they propose even though I disagree with the reasons they give for the reforms.

I should add that their article goes far beyond the first three paragraphs quoted above. You should read the whole thing.

Posted in Energy markets, Environmental policy, Technology | Tagged , , , , | 1 Comment »

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A.C. Pigou, public choice economist, on the use of government

February 20, 2012

Michael Giberson

At the end of a comment on Windfall, a new documentary on the effects of wind power development on a community in upstate New York, Michael Munger pulls out the key Pigou quote.

Pigou is relevant because the best possible case to be made for subsidizing wind power production involves correcting for the externalities associated with conventional electric power production. Maybe we imagine a Pigovian tax on conventional generators as a sort of first-best solution, and direct subsidy to alternative generators as a second- or third-best solution.

Well, here Munger whips out the Pigou:

It is not sufficient to contrast the imperfect adjustments of unfettered enterprise with the best adjustment that economists in their studies can imagine. For we cannot expect that any State authority will attain, or even wholeheartedly seek, that ideal. Such authorities are liable alike to ignorance, to sectional pressure, and to personal corruption by private interest. A loud-voiced part of their constituents, if organized for votes, may easily outweigh the whole.

From A. C. Pigou, Economics of Welfare, chapter 20, paragraph 4, available online free via the Library of Economics and Liberty.

Yes, well before James Buchanan, Gordon Tullock, Mancur Olson, Robert Tollison or even Michael Munger were objecting that government intervention may go awry, Professor Pigou was already there.

[ASIDE: I was led to wonder why this insight was seemingly lost from economics for several decades after Pigou published his work. Maybe someone has researched the question carefully. In the absence of someone setting me straight, I'll blame Paul Samuelson.

Samuelson's influential Foundations of Economic Analysis refers to Pigou several times, according to the book's index, but so far as I noticed just once it mentions that the presence of Pigou's external costs means "there is of course need to interfere with the 'invisible hand'." (p. 196)  Samuelson neglects Pigou's qualification: "The case, however, cannot become more than a prima facie one, until we have considered the qualifications, which governmental agencies may be expected to possess for intervening advantageously." (And then Pigou continues with the public choice-like lines Munger quoted.)]

Posted in Economics, Electricity, Energy markets, Environmental policy | Tagged , , | 8 Comments »

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