Andrew G. Keeler

An Economic Evaluation of Beach Erosion Management Alternatives

This paper examines the relative economic efficiency of three distinct beach erosion management policies — beach nourishment with shoreline armoring, beach nourishment without armoring, and shoreline retreat. The analysis focuses on (i) the recreational benefits of beaches, (ii) the property value effects of beach management, and (iii) the costs associated with the three management scenarios. Assuming the removal of shoreline armoring improves overall beach quality, beach nourishment with shoreline armoring is the least desirable of the three alternatives. The countervailing property losses under a retreat strategy are of the same order of magnitude as the foregone management costs when the beneficial effects of retreat — higher values of housing services for those houses not lost to erosion — are considered. The relative desirability of these alternative strategies depends upon the realized erosion rate and how management costs change over time.

Noncompliant firms in transferable discharge permit markets: Some extensions

Abstract This paper extends the results of previous research on transferable discharge permit (TDP) markets with noncompliant firms to make a specific comparison between standards and TDP systems when regulatory authorities are unable to achieve full compliance. Particular attention is given to the importance of the shape of the penalty function facing noncompliant firms. The analysis indicates that under plausible penalty functions TDP markets may allow more pollution or a higher fraction of regulated firms out of compliance. These results highlight the importance of implementation in the success of pollution control strategies relying on TDP markets.

Penalty Functions for Environmental Violations: Evidence from Water Quality Enforcement

We empirically estimate a penalty function for water quality violations of private firms in Georgia. We find that seriousness of infraction and historical compliance records strongly influence penalty levels, while the intentionality of violations and the method of discovery do not. The size of the polluting company is also an important determinant of financial penalties. Overall the results support the plausibility of modeling assumptions used in much the theoretical enforcement literature but indicate the need for caution in interpreting models that assume penalty amounts are invariant to violation characteristics.

Financing Beach Improvements: Comparing Two Approaches on the Georgia Coast

Fifty-five percent of Georgias developed coastline has been armored with various types of erosion protection devices. This article is about beach improvement projects at Jekyll Island that would operate under (a) a nourishment policy or (b) a retreat policy. Benefits are calculated from an intensive, on-site survey of beach visitors and the costs are calculated from observable sources. Two financing methods are considered: general revenue and user fee financing. The analyses imply recommending beach improvement as an effective policy within the considered time frame.

Regulatory objectives and enforcement behavior

Economic models of enforcing environmental law have incorporated varying assumptions about regulatory objectives. This paper examines the consequences of different attitudes toward the benefits and costs of pollution control on the part of regulators who have limited powers and resources. We find that greater weight given to compliance costs relative to the social damages of the polluting activity will bring outcomes closer to the optimum when the regulator is strong, but may move outcome further from the social optimum when regulatory powers are weak. When negotiated noncompliance is an option, greater consideration of compliance costs will tend to produce better results.

The adoption of best management practices to reduce agricultural water contamination

Abstract Nonpoint source water pollution generated by agricultural production is considered a major environmental issue in the United States and Europe. One strategy in the United States has been to adopt various measures, called best management practices (BMPs), to reduce water pollution. Our research addresses legal institutions and the applied use of BMPs, and discusses compensatory payments to reduce nitrogen fertilization levels. Models employed in Georgia and Baden-Wuerttemberg evaluate institutional constraints of payments to reduce nitrogen usage, penalties for excessive leaching, and financial incentives for meeting minimum mineralized nitrogen levels. By modeling net returns, preferred economic strategies for producers are identified. Results show that while BMPs can reduce agricultural nonpoint contamination, pollution abatement may be costly to producers. Thus, reduced pollution probably will require some type of government intervention.

The value of incorporating bioindicators in economic approaches to water pollution control

Abstract Bioindicators provide better information about environmental quality than chemical and physical measures alone. This paper addresses how this information can improve the efficiency of water pollution control policy. We model bioindicators as a means of resolving uncertainty about the relationship of human activities and environmental effects. Two economic policy models are developed to formalize efficiency gains that result from biological information. We find that resolving uncertainty is valuable in both a benefit-cost framework and in implementing an exogenously-determined safety standard. The results imply that ecological research capable of providing this kind of information can have a direct economic payoff.

Sequestration rental policies and price path of carbon

Abstract Carbon rental has been suggested as a way of providing incentives to sequester carbon in biomass in the context of emissions trading systems for GHG emissions. A rental system works by issuing a credit for sequestered carbon that must be repaid after some fixed term. Rental systems avoid many of the difficulties of ensuring the permanence of sequestered carbon that exist in other institutional arrangements. This article adapts the results of Herzog et al. (2003) to argue that a rental system requires that carbon prices rise more slowly than the value of alternative investments in order to provide adequate incentives, and that there are good reasons to believe that this may not happen. Proponents need to directly address this potential difficulty in advancing arguments that carbon rental should be adopted as policy.

Integrated Assessment Modeling: Modules for Cooperation

An integrated assessment (IA) model combines knowledge from very different disciplines in view of a practical problem. Most models developed so far are rather monolithic in the sense that it is difficult to combine components from different models for purposes of new assessments. We propose to develop a modular approach to IA based on advances in knowledge management as well as in object oriented software engineering. The incentive structure of modular IA is based on turning the knowledge produced neither into public nor into private, but rather into club goods. Competition amongst modelers becomes a process of discovery at the level of module design and module coupling, with strong synergies between competing teams. Together they develop a community pool of IAM-modules, along with software and know-how for running them in varying combinations.

EXPANDING THE NATIONAL FLOOD INSURANCE PROGRAM TO COVER COASTAL EROSION DAMAGE

The National Flood Insurance Program does not currently cover damage strictly attributable to coastal erosion. This paper uses the results of a nationwide survey of coastal property owners to estimate the demand for such insurance. We find that there is significant demand at prices in the range of current flood insurance premiums. Demand is influenced in the hypothesized way by increased measures of erosion risk as well as by insurance price and income.