Thursday, July 27, 2017

What is the most effective way to mitigate climate change?

Jayson Lusk discusses this article:

The climate mitigation gap: education and government recommendations miss the most effective individual actions
Seth Wynes1,2,3 and Kimberly A Nicholas1
Published 12 July 2017 • © 2017 IOP Publishing Ltd
Environmental Research Letters, Volume 12, Number 7

One of the top things on the list (#2) was living car free. That reminds me of a post I wrote a couple years back over at Economic Sense: Hybrid Corn vs Hybrid Cars. In that post I noted:

"According to research from PG Economics, in 2009 alone, greenhouse gas reductions associated with biotechnology were equivalent to removing 7.8 million cars from the road."

It would be interesting if we could get data to put this in terms of individual consumer choices. To what extent would changing from an organic GMO free diet to a conventional diet containing GMOs impact our carbon foot print? I'm not sure this is really a practical question, most people probably consume a mix of foods (even Whole Foods shoppers) and on an individual level this may not make a big difference. But there definitely could be an aggregate effect. I have not reviewed the methods in this particular study, but as a conversation piece it brings up a very relevant concern - what would happen if consumer sentiments and the regulatory environment continued to disincentivize the production of genetically engineered foods? (we've seen this with finely textured beef for sure, and rBSt) While other studies might provide different estimates of the effect size of CO2 emissions related to biotech adoption, at least directionally our experience suggests that these technologies make it possible to produce the same or additional levels of output while reducing the toxicity of chemical applications, complementing crop rotation and no till practices that reduce fertilizer runoff and pollution, as well as require less energy moving very heavy equipment across fields (which in turn would reduce CO2 at some level).

In terms of practical policy applications, how much coercion/regulation/taxation/incentivization would be required to convince or force 8 million people to give up their cars? It seems a lot easier for me as a consumer to freely choose to consume a mountain dew with high fructose corn syrup derived from GMO corn than to make a huge change in my lifestyle like going car free. And it seems like a very easy choice for farmers to keep planting biotech.

***UPDATED (July 28, 2017): I just realized there has been an update to this study:

Environmental impacts of genetically modified (GM) crop use 1996–2015: Impacts on pesticide use and carbon emissions
Graham Brookes & Peter Barfoot
GM Crops & Food Vol. 8 , Iss. 2,2017

The updated number of car equivalent levels of CO2 reductions due to area planted to biotech crops is closer to 12 million (11.9).


GM crops: global socio-economic and environmental impacts 1996-2009. Brookes and Barfoot.

Wednesday, July 26, 2017

Technical Efficiency, Agricultural Yields, and Livestock Energy Conversion

Jayson Lusk points to the following 2013 Environmental Letters paper:

Redefining agricultural yields: from tonnes to people nourished per hectare
Emily S Cassidy, Paul C West, James S Gerber and Jonathan A Foley
Published 1 August 2013 2013
Environmental Research Letters, Volume 8, Number 3

He has a lot of interesting things to say about this work. He uses this analogy:

"there are two ways to view livestock.  One is that they are inefficient - using up a lot of energy to make food.  Another is that they are good at converting one form of energy that is highly storeable/transportable but untasty (field corn, soy, sorghum) to another form (eggs, meat, dairy) that we like to eat.  Rarely do these sorts of research papers include the the calories (or energy) used in food processing.  It is a mistake to compare the calories in steak to the calories in a wheat kernel.  The wheat kernel requires energy/processing to convert to flour and then more energy to get pasta or bread."

He also links to this report from the Council for Science and Technology that does a deep dive looking at this conversion in livestock production.

I also like the way 'efficiency' is stated in Heyne, Boettke, and Prychitco's The Economic Way of Thinking text.

"efficiency is essentially an evaluative term. It always has to do with the ratio fo the value of output to the value of input" in effect it depends on what people want done and how they value what they want done. "It follows that the efficiency of any process can change with changes in valuations."

What I am getting at is that maybe people prefer to have sustenance from beef vs rice and we have to give weight to that in a policy framework. Physical and technical facts alone can never fully determine efficiency. That's what makes economics so powerful. Its the study of people's choices and how they are made compatible. It is way more than just the study of the technical allocation of resources because it forces us to consider each individual's preferences based on the knowledge of their specific circumstances of time and place.

The NYT and OCA Scream for Organic Ice Cream

There recently was a piece in the NYT discussing the finding of trace amounts of glyphosate in Ben and Jerry's ice cream.

A nod was given to IARC's finding of glyphosate as 'probably carcinogenic'  despite the fact that data critical to the decision was withheld, and admissions that had the data been included, the classification would not have been upheld. 

From the NYT:

"a 75-pound child would have to consume 145,000 eight-ounce servings a day of Ben & Jerry’s Chocolate Fudge Brownie ice cream to hit the limit set by the Environmental Protection Agency, the government body charged with setting a ceiling on the amount of glyphosate allowed in food. An adult would have to eat 290,000 servings to hit the agency’s cutoff." 

So really this is a non-issue and does not merit a story worthy of any major news outlet. The real story seems to be how the Organic Consumer's Association is using this venue to pressure companies to pursue organic certification. It reveals just how powerful this lobby can be. I've speculated in the past that one reason that there was so much lobbying in favor of GMO labeling initiatives was because groups like the OCA view biotechnology (and associated reduced emissions, soil conservation, reduced pollution/runoff, and reductions in use of toxic herbicides and pesticides) as a competitor to organic production. In reality its more likely the case that they are banking on using theatre and fear to drive more sales vs. any real belief that modern technological advances offer real choices in sustainable food to compete with their 'brand.'

Wednesday, July 19, 2017

Food Costs, Satellite Data, and Diversity within Species

Russ Roberts talks with Tomar Haspel about food costs, animal welfare, and modern agriculure on EconTalk.

A couple great discussions regarding the future ag macro environment and satellite based crop data in finance.

More on the myth of monoculture - biodiversity within species in Nature.

"the health of an ecosystem may depend not only on the number of species present, but also on the diversity of their traits. …Equally important to keeping an ecosystem healthy and resilient are the species' different characteristics and the things they can do — measured in terms of specific traits such as body size or branch length."

See also:

Big Data + Genomics  Not Your Grandparent's Monoculture
Crop Diversity

Why AgEcon?

Another reason to study agricultural and applied economics:

"Foster says because we're entering an era of data-driven decision making, "the students who can position themselves to be strong from an analytical and problem-solving perspective are going to have an edge in the market."

See also:

Why Study Agricultural/Applied Economics
Value of Graduate Education

Thursday, July 13, 2017

Market Commentary July 13, 2017

On June 8 we saw a high of 4.09 in the dec17 corn contract with some heavy trading volume and open interest behind it. From there we saw a gradual decline until late June when prices picked up through the July 4th holiday (following USDA acreage reports) with a 12 month and year to date high on July 11th at 4.17. Much of this was reaction to weather vs fundamentals in those reports.

However, interest and volume were not at the elevated levels we saw back during the June high of 4.09. Also, the RSI was near 70 on the 10th and 11th approaching levels giving a potential technical indication of being overbought. This of course may just be the kind of volatility we expect in a weather market while  there is probably somewhat firm fundamental support based on the late plantings, replants, and current crop conditions and lack of uniformity in the crop progress across the corn belt compounding the uncertainty about weather.

***This commentary is provided for descriptive and entertainment purposes only and is not intended to be used for specific trading strategies or interpreted to be investment advice. *****  

Sunday, July 2, 2017

Simulating Impacts of Food Taxes and Subsidies

 Just last week I posted about food subsidies. I asked:

"Could you make the argument that simply shifting money toward programs related to fruits and vegetables would have a large enough impact on price to influence consumption? How much money would that take and what would the effect size be?"

This video discusses a PLOS medicine study that finds positive health benefits related to subsidies for fruits and vegetables and the referenced study (from a 'headline' reading) indicates a 10% subsidy could have a meaningful impact on health:

The video makes no direct reference to a study. However based on this reading I think the following are the studies mentioned in the video, the first being the primary reference:

Reducing US cardiovascular disease burden and disparities through national and targeted dietary policies: A modelling study. PLOS Medicine. June 6, 2017

Taxes and Subsidies for Improving Diet and Population Health in Australia: A Cost-Effectiveness Modelling Study. PLOS Medicine. February 14, 2017

Both papers are simulations based on assumptions related to elasticities and projected health outcomes (vs. empirical findings). One thing advocated is to create a revenue neutral policy that taxes soda and subsidizes fruits and vegetables. I'm skeptical, but if I want to give any credit I could say cynically that in this way maybe a soda tax could be useful even if it fails to have any meaningful impact on consumption or health.

See also: 

Are Soda Taxes Effective?
Four Big Questions about Farm Subsidies

Saturday, July 1, 2017

Democracy in Chains...? Was that not the vision of the founders?

There has been a lot of buzz and controversy surrounding Nancy MacLean's book  "Democracy in Chains" in relation to how James Buchanan (a founder of the public choice school of economics) and others especially connected to George Mason University have been mischaracterized in the book (see these two pieces from the WaPo here and here).

I want to zero in on one aspect of the book, pointed out by economist Russ Roberts, that also confuses me:

Russ Roberts quotes Nancy MacLean:

NM: "American democratic system of majority rule." 

RR: That phrase confuses me. The American system is a constitutional republic with very little majority rule. "


Note, I have not read the book but it makes me the book assuming that in fact the American system is actually a democratic system of majority rule vs. a constitutional republic that greatly restricts majority rule? Is it arguing that the latter is just a fabrication of Koch funded propaganda? And all of those taking Koch money are antidemocratic shills conspiring to covertly establish a libertarian utopian America? Is Nancy (a historian) ignorant of American History, or is she blatantly distorting it....being intellectually dishonest? Or does she (and by she I really should all along say those that think like her)  have some rather complicated and nuanced view of our history and constitution that you've got to read the book to understand because simply reading our founding documents and standard history textbooks leave something out???

I'm not sure....but the notion of an American system as a constitutional republic certainly predates James Buchanan and the Koch brothers. If we are going to be critical of the historical misinterpretations  and mischaracterizations found in "Democracy in Chains" at least we can give some credit. Noone has yet accused the author of claiming that the Federalist Papers or the Constitution were tantamount to Koch funded studies. But I have not yet read the book.

Our founders were well aware (without Koch money by the way) that a democratic system of majority rule was dangerous and they proposed a constitutional solution to check the kinds of abuses and powers that came with majority rule:

As stated in Federalist #10:

"From the protection of different and unequal faculties of acquiring property, the possession of different degrees and kinds of property immediately results; and from the influence of these on the sentiments and views of the respective proprietors, ensues a division of the society into different interests and parties."

In Federalist #10 they also warned us about the populist appeals and uprisings that may result from the above, but proposed a solution:

“A rage for paper money, for an abolition of debts, for an equal division of property, or for any other improper or wicked project…we behold a republican remedy for the diseases most incident to republican government.”

The purpose of the constitution was to ensure that the government did very little without the consent of the governed, but consent was not tantamount to majority rule.  For the most part, this was achieved through legislation held in the strict bounds of enumerated powers, with expanded powers of government coming through the amendment process.  This strict adherence to constitutional principles was the foundation for a workable democratic constitutional republic, as stated by economist Thomas Sowell in  Judicial Activism Reconsidered,

“The federal Constitution is "the supreme law of the land," not because it is more moral than state constitutions or state or federal legislative enactments, but because it represents a larger and more enduring majority. Minorities receive their constitutional rights from that enduring majority to which transient majorities bow, not from whatever abstract moral rights are imagined to exist as a brooding omnipresence in the sky.”

Democracy, limited by strict adherence to constitutional principles meant that government would have few powers and resources to spend on corporate interests or other special interests that can distort our democratic processes through campaign finance, lobbying etc.

Thomas Jefferson (who by the way had no connections to the Koch brothers) had the idea:

“in questions of power then, let no more be heard of confidence in man, but bind him down from mischief by the chains of the constitution” - Kentucky Resolutions, 1798

I think the title "Democracy in Chains" is a good title for a book, and perhaps a better description of the American System than "democractic system of majority rule." But I think reading the book will reveal something quite different in the mind of the author and others that think like her.