Start Survey Survey

Falling Oil Prices and US Economic Activity

Figure 1. Lower Oil Prices Will Boost Economic Activity in 42 States

Figure 1. Lower Oil Prices Will Boost Economic Activity in 42 States

Weak demand and abundant supply are behind the recent trend in oil prices, which have fallen by more than $50 per barrel since June. This event is not unprecedented—in fact, the conditions associated with the 2014 crude price drop are very similar to those surrounding a similar drop during 1985 and 1986. In both cases, oil conservation caused prices to decrease while dramatic production gains—then in the North Sea, now in US shale fields—pushed supply much higher than originally anticipated. As a result, the world oil market has reached a new equilibrium that follows a much lower crude price trajectory.

These lower prices will have a range of positive and negative effects that are likely to be unevenly distributed across the United States. I’ve detailed these in a new RFF issue brief. Here’s a quick guide to the economic impacts we should expect in the coming months: Read More

Resources Magazine: Developing Policies to Combat Invasive Species

Global trade—and now global warming—are making the problem of invasive species ever more challenging. From surveillance to cooperative management, Rebecca Epanchin-Niell explores options to control these damaging invaders.

The original cherry trees given to DC were infested with roundworms and other harmful insects. (source: casajump / flickr)

In 1909, Tokyo Mayor Yukio Ozaki presented the US government with 2,000 young cherry trees to be planted around Washington, DC’s tidal basin. The gift was part of a beautification effort for the National Mall.

There was one problem. When the trees arrived in Washington in early 1910, inspectors discovered they were infested with damaging roundworms and insects. The trees would have to be destroyed. US Secretary of State Philander Knox informed Japanese Ambassador Yasuya Uchida of the bad news:

The United States has suffered immense damage to its trees and its agriculture generally by various injurious insects not indigenous but introduced from foreign countries, and . . . the introduction of any new kind might result in the future in the enormous detriment to fruit growers and agriculturists of the country. From this point of view, the Department of Agriculture seems to have no choice but the painful duty of ordering the destruction of the trees.

Skillful diplomacy smoothed over any potential hurt feelings, and a new shipment of pest-free cherry trees arrived in 1912, the same year that Congress passed the landmark Plant Quarantine Act, among the first federal legislation dealing with importation of exotic species.

More than 100 years later, exotic pests remain very costly to the American economy, imposing billions of dollars in damages on crops and ecosystems. Invasive species are now a staple of news reports:

  • The Burmese python, likely introduced as a pet and now taking up residence in the Everglades, dines on everything from small mammals to endangered birds and even alligators.
  • The Asian tiger mosquito—thought to have arrived in the Port of Houston in 1985 in a shipment of used tires—is now a backyard menace in 26 contiguous states and Hawaii.
  • The zebra mussel, most likely brought over from Russian freshwater lakes in ballast water, is now driving native mussel species to near extinction and clogging water intake pipes at electric utilities from the Great Lakes to the Mississippi basin.
  • The emerald ash borer, probably introduced to the United States in the 1990s in wood packaging material, is responsible for the loss of more than 100 million ash trees since its first detection in 2002, with devastating economic and ecological impacts.

How Invasives Arrive

Invasive species are yet another manifestation of human impacts on the global environment, as human activity is far and away the main driver of species spreading to new areas. Many invasive species have even been introduced intentionally by individuals unaware of the potential negative consequences. To take a notorious example, the European starling arrived in 1890 as part of Eugene Schieffelin’s effort to bring every bird mentioned in Shakespeare’s plays to America. Many other invasive plants and animals were initially introduced as part of the horticultural or pet trade and subsequently became established in the wild.

Another important way that new invasive species arrive is by hitchhiking on other shipments, as in the case of the pests that accompanied the first gift of cherry trees from Japan. The increase in global trade and travel has exacerbated this phenomenon, with pests arriving on agricultural products, in packing material, in ballast water, and in passenger baggage.

Trade in live plants is a particularly important pathway, as it not only directly introduces plant species that have the potential to become invasive, but more importantly, it also is the most frequent medium for introduction of non-native pests of agricultural and natural resources worldwide. Of invasive forest insects and pathogens taking root in the United States in the last 150 years or so, an estimated 70 percent are thought to have arrived on imported live plants.

But not all alien species qualify as invasive. At a minimum, the species must be able to take hold and flourish in its new surroundings. Most introduced species are not able to do so, but a small percentage can, benefiting from the lack of natural controls like predators, competition, and climate fluctuations that would otherwise keep their populations in check. From a policy perspective, the species must also be harmful to be counted as invasive. The US government’s official definition is an alien species “whose introduction causes or is likely to cause economic or environmental harm or harm to human health.”

And although not all introduced species are harmful—in fact, of the food crops grown in the United States today, only a handful are actually native—enough are damaging to create serious risks for many parts of the economy. For example, the emerald ash borer alone is estimated to cause $850 million in local government control expenditures annually, as communities treat or remove urban ash trees devastated by this pest.

Read the rest of this article.

Fracking in Focus: A Look at Voluntary Environmental Information Disclosure and Firm Size

CoverThe potential environmental risks posed by fracturing fluids—usually some mixture of chemicals and water—make hydraulic fracturing a highly controversial industrial process. These risks have prompted many stakeholders to request chemical disclosure reports on the fluids used by well operators. The oil and gas industry has responded by creating a fracturing chemical registry website——that allows operators to post information online about the location of each well and the chemicals used in its production. (Operators can also disclose their chemical usage to state agencies, but this information can be hard for the public to access because it is not available online.)

In the last few years, a number of high-production states have passed fracturing disclosure regulations that require operators to convey well and fluid information to one, both, or either of FracFocus and a state agency. Before they were passed, disclosure was voluntary in all situations; after their adoption, it became voluntary only in some cases. The voluntary disclosure of such information is considered to be a type of corporate social responsibility (CSR) activity, in which a company goes beyond minimum legal requirements. Read More

RFF on the Issues: Water management projects; Debris brings invasive species

Water Management Projects

Los Angeles—long known for its high water consumption—has recently become a “leader in sustainable water management” thanks to a host of new conservation, collection, and reuse policies. The city now uses “less water than it did in 1970 while its population has grown by more than a third.”

In a new blog post, RFF’s Yusuke Kuwayama comments on a recent US Geological Survey report indicating that water withdrawals nationwide have dropped by 13 percent between 2005 and 2010. He writes: “Instead of taking these latest withdrawal estimates as an indication to ease up on water management activities, we should interpret them as evidence that our policies are starting to work, and that further analysis is needed to ensure that these policies to continue to protect out water sources in a cost-effective manner.”

Debris Brings Invasive Species

More debris from the 2011 Japanese earthquake and tsunami is expected to wash ashore in the Pacific Northwest this winter, bringing a number of potentially invasive species into the area. Researchers are concerned that organisms native to Asia traveling with this debris will “introduce new diseases and compete with, displace, or otherwise affect” species along the coasts of Washington and Oregon.

In a recent Resources article, Rebecca Epanchin-Niell notes that the key to reducing damages from invasive species is to detect them early, when it is “less costly to contain or eradicate” establishing populations. Because “even the best-designed inspection strategy” will not offer a region full protection against bioinvaders, Epanchin-Niell writes that policymakers should focus on using surveillance strategies as cost-effective policy tools.

Assessing the Outcome of the Lima Climate Talks

This post originally appeared on Robert Stavins’s blog, An Economic View of the Environment.

In the early morning hours of Sunday, December 14th, the Twentieth Conference of the Parties (COP-20) of the United Nations Framework Convention on Climate Change (UNFCCC) concluded in Lima, Peru with an agreement among 195 countries, the “Lima Call for Climate Action,” which represents both a classic compromise between the rich and poor countries, and a something of a breakthrough after twenty years of difficult climate negotiations.

Just before two o’clock in the morning, the President of COP-20, Manuel Pulgar Vidal, Peru’s Minister of Environment, gaveled the approval of the text, without dissent. At that moment, the foundation was established for the next major international climate agreement, which – under the auspices of the Durban Platform for Enhanced Action – will be finalized and signed one year from now at COP-21 in Paris, France, for implementation in 2020.

After five days on the ground in Lima, where I participated in a variety of events and met with a diverse set of national negotiating teams, I’ve reviewed the agreed text of the Lima Call for Climate Action (which I abbreviate below as the “Lima decision”), and can now reflect on its gestation, its meaning, and its implications.

The Lima Call for Climate Action

By establishing a new structure in which all countries will state (over the next six months) their contributions to emissions mitigation, this latest climate accord moves the process in a productive direction in which all nations will contribute to the reduction of greenhouse gas emissions.

Working to fulfill the promise made in the 2011 Durban Platform for Enhanced Action to include all parties (countries) under a common legal framework, the Lima decision constitutes a significant departure from the past two decades of international climate policy, which – since the 1995 Berlin Mandate and the 1997 Kyoto Protocol – have featured coverage of only a small subset of countries, namely the so-called Annex I countries (more or less the industrialized nations, as of twenty years ago).

The expanded geographic scope of the Lima Call for Climate Action and thereby the incipient Paris agreement – and the emerging architecture of a pragmatic hybrid combining bottom-up “Individually Nationally Determined Contributions” (INDCs) with top-down elements for reporting and synthesis of contributions by the UNFCCC Secretariat – represents the best promise in many years of a future international climate agreement that is truly meaningful.

Importantly, the Lima decision provides that each country’s INDC shall include a clear statement of emissions mitigation, and may include quantifiable information on reference points (such as base year), time frame of implementation and coverage, assumptions and methodological approaches for estimating and accounting for greenhouse gas emissions, as well as each country’s own assessment of its INDC’s fairness and ambition.  These statements of national contributions are to be submitted by the end of March, 2015, although countries that miss that “deadline” can then make their submissions by June.

Compromises, Compromises

Because of the ongoing sharp divide in climate talks between developed and developing countries, the Lima decision was difficult to accomplish and could only be achieved through compromises that had the effect of watering down various aspects of the accord.  This suggests that the road to Paris may be difficult for the negotiators. Read More

This Week in the RFF Library Blog

Each week, we review the papers, studies, reports, and briefings posted at the “indispensable” RFF Library Blog, curated by RFF Librarian Chris Clotworthy.

Economic and Emissions Impacts of a Clean Air Tax or Fee in Oregon
[From a Climate Wire article by Nathanael Massey, sub. req’d] A carbon tax in Oregon would have minimal effects on jobs and the economy, paving the way for the state’s Legislature to pursue carbon pricing in 2015, according to an analysis by researchers at Portland State University’s Northwest Economic Research Center (NERC). That, in turn, could be a first step in joining or linking to California’s existing cap-and-trade system and perhaps British Columbia’s revenue-neutral carbon tax, as well… – via State of Oregon, Legislative Revenue Office

Revenue-Neutral Carbon Tax: Design Issues — Presentation at the Hoover Institution, Energy Task Force Meeting, Stanford University
[Background] American Clean Energy and Security (ACES) Act passed by the House of Representatives on June 26, 2009; was not voted on in the Senate. In the 113th Congress, seven carbon-pricing proposals have been introduced or released in draft form – Six would establish a tax; one would establish a cap-and-trade program. Since ACES Act, several regulatory measures aimed at reducing GHG emissions have been proposed or finalized… – via Congressional Budget Office / by Terry M. Dinan

Fracking Frenzy: How the Fracking Industry is Threatening the Planet
[DeSmogBlog] …The report, issued by Friends of the Earth Europe, focuses on the prospects for fracking in 11 countries in Africa, Asia, North and South America and Europe, warning of unique hazards in each location along with the climate change risk posed in countries where the rule of law is relatively weak… – via Friends of the Earth Europe

Read More

Peak Water, or Peak Water Withdrawals?

A US Geological Survey (USGS) report released last month, “Estimated Use of Water in the United States in 2010,” surprised many of us in the water research community. According to the report, about 355 billion gallons of water per day were withdrawn for use during 2010, which represented a 13 percent decrease relative to 2005 withdrawals and the lowest level of water withdrawals estimated by the USGS since before 1970. Between 2005 and 2010, thermoelectric power and irrigation, the two largest water users, reduced their withdrawals by 20 percent and 9 percent, respectively. (This is the most recent report in a series that has been published by the USGS since 1950 and represents the longest compilation record of water use data by a US federal agency.)

Based on this finding that water withdrawals have significantly decreased since the last report was released, one might think that our water scarcity woes are over. Some news articles have characterized this report as proof that the US has already reached “peak water” (see, for example, this article). However, it is important to note that the USGS and water researchers in general have a very specific definition for the word “withdrawals.” The report defines withdrawals as “the total amount of water removed from the water source for a particular use, regardless of how much of that total is consumptively used or returned to the hydrologic system for future use.” Consumptive use, in turn, is defined as water removed that is not returned to the hydrologic system, at least for a period of time. As such, consumptive use includes the amount of water transpired by crops during plant growth, water that evaporates from the soil surface of crop land, and water consumed by livestock or humans. With respect to thermoelectric power, consumptive use would include water evaporated or incorporated into byproducts as a result of the production of electricity, but not any water that is returned to rivers and streams after being used for cooling within a power plant.

Quantifying consumption may be as, if not more, important than quantifying withdrawals because consumption actually precludes the subsequent or downstream withdrawal of water for another use. Unfortunately, estimates of consumptive use were discontinued by the USGS after 1995 due to resource and data constraints. So what do we know about recent trends in water consumption in the US? Another recent USGS report, titled “Withdrawal and Consumption of Water by Thermoelectric Power Plants in the United States, 2010,” uses information from the US Department of Energy to show that water consumption by thermoelectric plants decreased by 34 percent between 2005 and 2010. This decrease occurred at the same time that net electrical generation for water-using thermoelectric plants increased by 6.4 percent, so this is good news on the consumption front.

However, much less is known about the other major use of water: irrigation. According to the US Department of Agriculture, irrigation in the United States accounts for approximately 80 percent of the nation’s consumptive water use and over 90 percent in many western states. Furthermore, recent research suggests that water conservation measures in agriculture may actually increase consumption because efficient irrigation technologies reduce return flows and limits aquifer recharge (see, for example, this study and this study). It is quite possible that water consumption has decreased together with withdrawals, but this is not something that can be concluded from the USGS report.

At the same time, research efforts are underway to close this knowledge gap. For example, researchers at the Desert Research Institute in Nevada are developing methods to use remotely sensed data to estimate actual historical agricultural water use. Consumptive use measures from these projects can complement existing USGS estimates on withdrawals so as to provide a more complete characterization of the regions that are at risk of water scarcity and excessive water use.

Finally, it is important to recognize that the reductions in water withdrawals identified in the USGS report are outcomes of a variety of efforts to introduce policies to regulate water withdrawals and encourage water efficiency in all sectors of the economy. Instead of taking these latest withdrawal estimates as an indication to ease up on water management activities, we should interpret them as evidence that our policies are starting to work and that further analysis is needed to ensure that these policies continue to protect our water resources in a cost effective manner.

Resources Magazine: Greening the Global Economy. Roles for Business and Government

An Interview with Linda Fisher12-9 q&a - linda fisher 2

With a career that has taken her to the top levels of the US Environmental Protection Agency (EPA) and the global company DuPont, RFF Board Member Linda Fisher has worked to progress corporate environmental performance from within and without. Resources recently sat down with Fisher, currently the vice president of DuPont Safety, Health, and Environment and the company’s chief sustainability officer, to explore business and government perspectives on some of the major environmental issues of our time.

Resources: How has your time in government influenced how you approach your current job at DuPont?

Linda Fisher: I would say it’s influenced me in three significant ways. Probably the most obvious is that I have a very keen appreciation of why people at EPA make the decisions they do. I understand the flexibility or inflexibility of the laws and regulations they have to administer and make decisions by. I understand the resource challenges, public pressure, and public perceptions that influence how they might approach public policy issues—or a company like DuPont. This helps me think through how DuPont can best engage and interact with the agency.

Second, because EPA is a government agency, by definition I had to listen carefully to the opinions and information people bring from all sides of an issue. That includes other government agencies, Congress, the NGO community, and a whole range of civil society that has a stake in decisionmaking. I have been able to bring a sensitivity to all those perspectives into DuPont, engaging the company to reach out to constituencies it otherwise might not have realized were important.

A third influence from my time in government is that I have a strong sense of how a company like DuPont can innovate to bring market solutions to the environmental challenges that EPA is grappling with.

Resources: What are some of these innovations, and what business opportunities does DuPont see in the future green economy, if you envision one?

FISHER: The green economy offers huge opportunities for science and innovation-based companies. If you are investing as an industry in new, disruptive technologies, then a carbon-constrained world or a green economy creates the opportunity to grow businesses that might not have been envisioned just a few years ago. But greening the economy does not necessarily offer growth opportunities for companies that are not investing in innovation. This difference in approaches helps explain the tension in how corporate America views green energy, carbon pricing, and other environmental innovations and regulations.

At DuPont, where we pride ourselves on our science and innovation, we see green energy as an opportunity. We are investing in advanced biofuels, improved longevity and efficiency of solar technology, and reduced use of petroleum through improved energy efficiency, to name a few areas.

Resources: The push for a greener economy is being driven by not just regulatory strategies in the United States but markets all across the world. How has being a global company affected DuPont’s environmental strategies?

Fisher: We are tracking what I will call “sustainability trends.” For instance, what are the issues and pressures around water in the countries in which we want to operate? What are the pushes for energy efficiency or more regulation around toxic substances in the past several years? What are the changing trends in product regulation? Many trends have not hit in the United States yet or are hitting in fits and starts—for example, the push for zero waste to landfills. DuPont’s sustainability, product regulatory, and product stewardship teams are the eyes and ears for these kinds of practices, and they bring them back and work with our businesses on them.

We also track regulation as it evolves globally. Around the world, many governments are talking about strict regulation of different technologies, but the question is, when will they act? What will the regulations look like?

DuPont is feeling more market pressure around some of the sustainability metrics, such as the greenhouse gas footprint of our manufacturing process and our water use. We are constantly surveyed by hundreds of companies for the absence or presence of certain chemicals in our products. These are pressures—beyond just regulation— that we face as a corporate producer and seller of goods into the global marketplace.

Read the rest of this article.

RFF on the Issues: Oil price drop and an opportunity; Clean Power Plan comments

Event notice: Register now for “Assessing the Air Quality and Climate Benefits of EPA’s Clean Power Plan,” a joint webinar on December 16 from RFF and the Electric Power Research Institute.

Oil Price Drop and an Opportunity

Oil prices have fallen to $65 per barrel, a drop that has been primarily attributed to a decision by OPEC countries to continue producing more than 700,000 barrels a day above existing market demands. Members including Saudi Arabia are reportedly trying to “knock out US shale producers by driving prices lower than they can afford.”

In a recent blog post, RFF’s Alan Krupnick notes that while the US shale industry is “weathering the price drop well so far,” small private companies may not be able to withstand low oil prices for very long. RFF’s Joel Darmstadter notes in the Washington Post that falling gas prices in the United States provide “an opportunity whose cost would encroach only slightly on our good fortune: an increase in the federal gas tax.”

Clean Power Plan Comments

The public comment period for EPA’s proposed emissions regulations for power plants closed last week. The Clean Power Plan garnered more than 1.6 million remarks from “legislators, industry groups, environmental advocates, and private citizens,” while prompting a number of company-led lawsuits and state-filed amicus briefs.

RFF experts submitted comments on the Clean Power Plan, weighing in on a wide range of topics mentioned in the proposal, as well as potential issues and alternatives that lawmakers should consider as they finalize the regulations. For more on this topic, see RFF’s Expert Forum on EPA’s Clean Power Plan.


This Week in the RFF Library Blog

Each week, we review the papers, studies, reports, and briefings posted at the “indispensable” RFF Library Blog, curated by RFF Librarian Chris Clotworthy.

World Energy Trilemma 2014: Time to get Real — the Myths and Realities of Financing Energy Systems
[From Press Release The report finds that as global energy systems are being placed under increasing strain and as governments limit their spending under tough economic conditions, the ability to invest the US$48 trillion required over the next 20 years into energy could be put in jeopardy, threatening countries’ ability to supply sustainable, reliable, and affordable energy for their people… – via World Energy Council

Air Quality in Europe – 2014 report
This report presents an overview and analysis of air quality in Europe from 2003 to 2012. It reviews progress towards meeting the requirements of the air quality directives and gives an overview of policies and measures introduced at European level to improve air quality and minimise impacts. – via European Environment Agency

Turning over a New Leaf: State of the Forest Carbon Markets 2014
[Ecosystem Marketplace] Though demand for forest carbon offsets grew 17% in 2013, market participants recognize the need to scale up faster in order to curb emissions from deforestation and land-use change. Attendees at Ecosystem Marketplace’s launch of the State of the Forest Carbon Markets 2014 at the World Bank last Friday discussed the policy developments that could guide growth – and how the certification of co-benefits could shape demand. – via Baker & MacKenzie | ecoplanet bamboo | JP Morgan Chase | NewForests

Read More