Public Interest Economics
Typically, both public and private decision makers lack all the information necessary for determining whether or not a proposed program, policy, or project is in the public interest. Our economists help expose the true costs of these decisions on the public as well as benefits that may be important but are difficult to quantify through standard economic analysis techniques. Our expertise includes non-market valuation, benefit-cost analysis, regional modeling, and other techniques needed to provide a more complete picture of overall economic impact.
Some recent examples of our public interest economics work include:
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Economic Feasibility of Coal to Liquids Development in Alaska's Interior
The Northern Alaska Environmental Center retained CSE to provide an independent critique of two economic studies published by the National Energy Technology Lab and Hatch, Ltd. in support of coal-to-liquids plants in the Fairbanks region. The study considered CTL development from a net public benefits perspective, and concluded that economic feasibility is highly unlikely because the net present value of public investments are likely to be well less than zero and benefit-cost ratios well less than one. CSE's report considered all relevant public and private costs, including natural resource damages, carbon emissions, and public subsidies - costs excluded from both the NETL and Hatch reports. The CSE report also corrected inaccurate assumptions contained in the economic analysis such as 100% plant availability and coal prices significantly less than what is being quoted by the coal supplier. Read:
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Aichi Biodivesity Goals: A Global Cost Assessment
In 2010 parties to the Convention on Biological Diversity (CBD) adopted the Strategic Plan for Biodiversity 2011 – 2020 with the purpose of stimulating a diverse array of activities by governments, NGOs, business leaders, and other stakeholders to halt the loss of biological diversity. In recognition of the critical importance of biological diversity for livelihoods, wellbeing, health and the genetic foundations of modern agriculture the parties agreed to an ambitious set of 20 targets – many of them time bound and quantitative – for slowing, halting, and reversing biological diversity loss associated with degradation of aquatic and terrestrial ecosystems throughout the world.
Collectively, these are known as the Aichi Biodiversity Targets. The costs and benefits of achieving these targets are of keen interest to policy makers as they begin the process of implementing programs of work and on-the-ground activities. Choosing the most cost effective means of implementation is critical given the overall political and economic environment of fiscal austerity facing governments in both developed and developing countries.
In May of 2012, the U.K. Department for Environment and Rural Affairs (Defra) entered into an agreement with Center for Sustainable Economy (CSE) to develop a rough order of magnitude estimate (ROM) of the resource requirements of meeting three of the Aichi Targets: 5 (related to halting the loss of wetlands), 8 (reducing pollution harmful to biodiversity), and 14 (protecting ecosystem services relied upon by traditional communities). We researched the costs and benefits of 17 distinct conservation and restoration programs such as global clean up of marine debris, dramatically reducing nitrogen and phosphorous runoff into marine dead zones, pulling subsidies for new large dams, adopting "no net loss" standards for wetlands, and restoring coral reefs.
While the economic costs of such programs may average $154 to $465 billion per year through 2020, economic benefits - such as increased commercial fish landings and public savings from reduced subsidies - are likely to offset all these costs and in many cases exceed them. As a result, significant global resources allocated to biodiversity preservation represent sound economic investments in the future. Read:
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Chuitna Coal Project - economic damages to Alaska likely to be far greater than benefits
Economic damages to Alaska's fish, wildlife, scenery, recreation and tourism will exceed any benefits by a wide margin, according to a new analysis by CSE of the likely magnitude of net public benefits associated with the Chuitna Coal Project along Cook Inlet. Prepared for Cook Inletkeepers, the CSE report follows federal and state procedures for true cost accounting of the project and weighs the potential net revenues, jobs, and incomes generated by the project against damages to ecosystem services, air quality and climate. The analysis is based on the best publicly available information released to date about the project, and has been submitted into the administrative record and to Governor Parnell to provide a more complete perspective of the project's economic impacts than is now being considered by federal and state decision makers. Read:
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OCS Oil and Gas Leasing Critique
In November 2011, the Department of Interior’s Bureau of Ocean Energy Management (BOEM) issued the proposed Outer Continental Shelf (OCS) Oil and Gas Leasing Program for 2012–2017 and accompanying Draft Programmatic Environmental Impact Statement (DPEIS). Legally, BOEM is required to ensure that the Program is planned and operated in a manner that maximizes net public benefits taking into consideration all relevant benefits and costs to society. In February of 2012, CSE completed a preliminary critique of the economic analysis supporting the Program and the DPEIS for its partner Oceana. We found (a) that BOEM presents a biased characterization and analysis of the no action alternative that significantly understates its economic and social value; (b) that Program benefits are substantially exaggerated, for instance, by including private profits and by failing to account for exports; (c) that Program costs are significantly underestimated by excluding costs of public subsidies, ecosystem service damages and carbon emissions damage; (d) that the DPEIS fails to incorporate the economic analysis in a manner prescribed by NEPA and its implementing regulations, and (f) that BOEM failed to model the effects of a wide range of policy interventions that affect Program economics. Read:
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Fort Huachuca and the San Pedro River: Improving Water Deficit Liability Calculations Through Economic Modeling
Arizona's San Pedro River is one of the nation's hotspots of biological diversity, providing critical habitat for over 350 species of birds, 80 mammals, two native and several introduced species of fish, and more than 40 species of amphibians and reptiles Groundwater pumping jeopardizes the health of the river, and Ft. Huachuca is by far the biggest culprit. CSE completed a study for the Center for Biologcial Diversity that points out serious shortcomings of Ft. Huachuca's population-based method for establishing its groundwater deficit liability and responsibility for mitigation. While Ft. Huachuca claims its liability may be as low as 35%, economic modeling suggests its liability is more likely to be in the range of 80%. Read:
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Benefit-Cost Analysis of the Delong Mountain Terminal Project: Critique and Independent Assessment of Key Parameters
On the far northwestern arctic coast of Alaska, the Army Corp of Engineers and the Alaska Industrial Export Authority are pursuing a plan for major expansion of the Delong Mountain port to accommodate deep draft vessels servicing the Red Dog lead mine and to increase imports of oil from Singapore. The plan jeopardizes subsistence use by nearby residents of the Alaska village of Kivalina and sensitive marine mammal habitat. Working with the Northern Alaska Environmental Center, CSE has completed a critique of the Corps benefit-cost analysis and a reassessment that takes into account carbon emissions damage, loss of subsistence use, loss of marine mammal habitat and other non-market costs as well as more realistic assumptions regarding fuel prices. The assessment has determined that costs may exceed benefits by a factor of five. Read:
