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The government’s bad idea to stop using single-use plastics

Kenneth P. Green — Mon, 24 Oct 2022 18:00:00 +0000

The Government Services Administration is considering phasing out single-use plastics from its supply chain and procurement processes, which would have major ramifications for America’s economy and the functioning of its production and service sectors. Due to the size and market power of the GSA, the proposed rule’s impacts would likely ripple through the national plastics economy and the personal plastics economy of individual Americans, who would find their choices to use single-use plastics impacted, perhaps considerably.

On July 7, 2022, the Government Services Administration (GSA) put out an advance notice of proposed rulemaking asking its contractors who make or use single-use plastics to tell the GSA what they think about the Center for Biological Diversity’s proposal that they stop contracting for goods or services that use such materials.

In the notice, GSA poses a long list of questions about the scale and scope of single-use plastics used in goods and services they source through their providers and what it would cost those providers to go along with the plan to ditch the single-use plastics. The class of single-use plastics includes plastic drinking straws, plastic water bottles, plastic packaging materials, plastic grocery bags, plastic cutlery, and many other plastic items often treated as environmental villains of the moment. But it also includes things less commonly considered nuisances, even when found out of place as litter, such as single-use medical containers, products, and devices of many sorts, such as surgical masks.

The GSA appears to be acting on this issue due to the petitioning of the Center for Biological Diversity (CBD). This aggressive group describes itself as a conservation organization “dedicated to the protection of endangered species and wild places.” But in this case, what CBD requests the Government Services Administration to do would not improve global, national, local, or individual environmental health and safety. These proposed actions would, in all probability, most likely compromise those very things.

The Center for Biological Diversity argues that banning single-use plastics aligns with President Joe Biden’s Executive Order 14008, “Tackling the Climate Crisis at Home and Abroad,” which calls for federal agencies to align their activities with the president’s climate change agenda. The crux of CBD’s petition is on page 9:

In furtherance of its stated policy to purchase sustainable products, and in line with its directive to procure environmentally preferable and nonhazardous products, the GSA must issue a rule committing the federal government to reduce and eventually eliminate its procurement and acquisition of single-use disposable plastic products….
Petitioners request that the GSA revise its regulations to reduce and eventually eliminate the acquisition of single-use plastic bags, single-use plastic utensils and straws, beverage bottles, packaging, and other single-use food service items and personal care products.
These revisions should apply to the procurement of single-use plastics for federal government meetings, conferences, and events; food service facilities in leased and custodial buildings; and supplies for federal government operations. In addition, the new regulations should apply to all manners by which civilian executive agencies acquire goods and services, directly or indirectly, including through lease, procurement, contracting, and purchase orders.
We further request that the rulemaking contains exemptions for disability accommodations, disaster recovery, medical use, and personal protective equipment. GSA regulations must clarify that “single-use product” does not include medical products necessary for the protection of public health, or personal protective equipment, including masks, gloves, or face shields.

To give the CBD some credit where it is due, this last paragraph is refreshingly grounded in the reality of real-world tradeoffs—some of them, anyway. More such thinking would improve environmental policy considerably. But there does not appear to be much emphasis on the trade-offs of many problematic elements of CBD’s or GSA’s proposed approach to plastics.

Policy Problem One: First, do no harm (proximal)

Perhaps the first test of sound public policy is the same test used to determine sound medical policy, which is, as the Aesculapians like to say, primum non nocere, or first, do no harm.

It doesn’t take much reviewing of the research literature on the topic of plastic material substitutions to reveal that, in fact, plastic substitutes are usually worse for the environment than plastics, as well as worse for human health and safety. I have written about the downsides of plastics substitutions at some length. My recent piece here examines the Canadian context, where they’re even farther ahead of the United States in pursuing “zero plastic waste.”

So why are alternatives to single-use plastics worse for the environment? One of the biggest reasons for this is that the “reusables,” as I’ll call them, consume more energy over their life cycles than their single-use plastic alternatives. More energy in manufacturing, distribution, utilization, and disposal means greater environmental impacts coming out of the soil (oil production); going into the air (conventional pollutants and greenhouse gases); running off into the water, and going back into the land (landfilling).

The downsides with regard to human health involve something that should be top-of-mind for everyone in the post-Covid-19 pandemic landscape—biological contamination. Single-use products are more likely to be sterile when first used, and they are rarely used again in a context where sterility is essential.

The same is not true for durable plastic alternatives that see regular use involving the same activities where biological contamination is an issue: eating and contact with body fluids.

The research literature on the use of renewable bags is fairly solid on this issue and would extend to renewable alternatives to plastic packaging (for food and medicines, for example). Reusable materials are more likely to be contaminated on secondary and sequential use and are simply less safe.

It should be obvious, but this is one reason why single-use plastics were adopted over reusable materials in the first place, particularly in medical settings, but also with regard to food contamination and preservation.

Policy Problem Two: Also, First, do no harm (proximal-distal)

The second policy problem is the same as the first: The policy is likely to violate the idea of doing no harm—in this case, distally, through its impacts on the economy in which we all live and from whose productive powers we receive all the wonderful goods and services that give us our historically absurdly nurturing quality of life.

From the more proximal economic standpoint of impacts to the American economy specifically, the proposal to get GSA out of the business of participating in the market of single-use plastics can only be a net harm. America’s economy is a high-tech transformation and service economy. America specializes in a certain kind of material and energy transformation, which is the creation and use of advanced technologies, materials, and heaps and gobs of powered gizmos and gewgaws of every sort. That’s our thing. We’re not a nation of farmers anymore. We’re not “hewers of wood and haulers of water,” as some of our Canadian friends have been styled. We’re not a raw natural-resource economy where we just dig up materials found in our environment and trade in them.

We are increasingly a consumer goods and services economy that engages in a vast spectrum of activities requiring a vast spectrum of materials with which to provide those goods and services. And though manufacturing has shrunk as a share of US Gross Domestic Product, America still invents, makes, uses, invents new uses of, and, importantly, sells high-tech goods and services rendered with such goods, in high quantities, at high speed, to as big a market as we can reach.

And plastics have become a significant part of that over a short span of time–only about 60 years since early adoption in the US materials economy.

More distally still (but, to this biologist, no less compelling) is that this entire idea of rationing and restricting access to a useful material such as plastic is unwise from the higher-order perspective of humanity’s evolutionary niche. Unlike other animals, human beings evolved to use technology and energy to transform raw materials into things that let us survive in the places that we otherwise might not, which is most of the surface of the Earth, and compete against animals that would otherwise view us as a light snack, or perhaps a decent lunch. Our transformative capabilities also let us defend ourselves against other humans, some of whom might not have gotten the memo about “cooperation is a better strategy for mutual co-existence.”

This is obligatory stuff woven into human evolution. Humans need to make use of virtually all materials available to them (and need a lot more that are not yet created, like that catalyst that will split water with little energy input) in order to meet their evolutionary imperatives to survive. Banning plastics, arguably one of the singularly most useful materials ever available to homo sapiens (as easily shown through the eagerness with which it has been incorporated into the human materials ecosystem freely, without government compulsion), will needlessly—and obviously—set back humanity’s ability to prosper in a hostile universe.

Summary

The Government Services Administration’s proposal to remove single-use plastics from their supply and acquisition chains at the behest of the Center for Biological Diversity would be detrimental to environmental health and safety from the standpoint of humanity’s evolutionary imperatives, America’s social and economic imperatives, people’s individual imperatives and rights, and the protection of the environment itself, either locally or globally.

The GSA might feel obligated to act on the petition of the Center for Biological Diversity’s anti-plastic demands. However, sound public policy principles would suggest that, at the end of the day, the agency should not give the CBD what it wants. The Government Services Administration should not ban single-use plastics from its supply and acquisition chains. That could only do America more harm than good.

The post The government’s bad idea to stop using single-use plastics appeared first on Reason Foundation.

Finding consensus on environmental and permitting reforms to build needed infrastructure

Robert Poole — Wed, 05 Oct 2022 14:46:02 +0000

I was guardedly optimistic when Sen. Joe Manchin (D-WV) introduced what was portrayed as a measure to streamline the environmental review process of major infrastructure projects. This summer, Sen. Manchin had previously voted with 49 Senate Republicans to overturn a Biden administration action that scrapped modest 2020 Trump administration environmental streamlining, but that measure died in the House. The Associated Press reported:

Manchin countered that, “for years, I’ve worked to fix our broken permitting system, and I know the (Biden) administration’s approach to permitting is dead wrong.″
Manchin called Thursday’s vote “a step in the right direction” but said the measure likely “is dead on arrival in the House. That’s why I fought so hard to secure a commitment (from Democratic leaders) on bipartisan permitting reform, which is the only way we’re going to actually fix this problem.″

Manchin thought he had bipartisan support for the permitting reform bill he refers to, but Senate Minority Leader Mitch McConnell (R-KY) whipped Republican votes against the bill, causing Manchin to pull it.

While Manchin’s bill would’ve delivered some incremental progress on permitting, it was far from the thorough reforms needed. Over the past two years, we’ve seen a growing number of studies comparing the very high costs of major U.S. infrastructure projects with comparable projects in Europe and Japan. Like the United States, these countries also all have environmental laws that infrastructure projects must comply with, but studies show Italy and France can build new subways faster and for about half the costs per mile as U.S. subway projects. This suggests something is seriously wrong with America’s environmental review process.

A significant factor identified by researchers as driving the higher costs is the massive role of the “citizen voice” in the review process for U.S. projects. Frequently cited on this topic is a 2019 study by George Washington University’s Leah Brooks and Yale University’s Zachary Liscow, which sought to explain why the cost per mile of building U.S. Interstate highways tripled between the 1960s and 1980s.

Citizen litigation to prevent or redesign highways came about not via the National Environmental Policy Act (NEPA) of 1970. The key factor was a 1971 Supreme Court ruling—Citizens to Protect Overland Park v. Volpe—that citizens could sue administrative agencies over environmental impacts. Brooks and Liscow estimate that citizen voice litigation is a significant factor in forcing expensive design and location changes that helped cause the tripling of per-mile costs in the United States.

A growing number of liberal and centrist critics have recently published articles lamenting the obstacles to needed infrastructure imposed by the “citizen voice” in this country. They include Ezra Klein in The New York Times, Jerusalem Demsas in The Atlantic, Matthew Yglesias in his Substack newsletter, and many others.

Construction unions have also picked up on this problem, such as this comment by James T. Callahan, president of the International Union of Operating Engineers:

“Since its modest beginnings, NEPA has evolved into a massive edifice, capable of destroying project after project, job after job, in virtually every sector of the economy. Dilatory strategies employed by project opponents frequently exploit provisions in NEPA, weighing down projects, frustrating communities, and raising costs to the point that many applicants, whether public or private, simply walk away.”

Sen. Manchin’s well-meaning bill pretty much ignored this major problem. It included a statute of limitations for court challenges, maximum timelines of two years for NEPA reviews, and an “improved process” for categorical exclusions under NEPA. But there was nothing that would overturn numerous court decisions that have empowered citizen litigation.

Another problem is that Manchin’s measure was limited to energy projects. Highway and mass transit projects are also generally subjected to endless citizen litigation. A more consequential bipartisan reform aimed at getting needed infrastructure projects approved more efficiently would have to include all infrastructure categories.

Another major problem was the bill’s reliance on “administrative earmarking.” Had the bill passed, it would have directed the president to “designate and periodically update a list of at least 25 high-priority energy infrastructure projects and prioritize permitting for these projects.” This would be a recipe for high-powered lobbying for projects that might fail a benefit/cost analysis but could offer lucrative contracts for companies and unions. Earmarking is earmarking, whether done by the legislative or executive branches of government, and it plays a harmful role in politicizing the infrastructure project selection process.

The U.S. needs meaningful permitting reform. The country seems primed for a broad, centrist coalition that recognizes the need to build and modernize infrastructure and supports streamlining environmental reviews of energy and transportation projects. This potential coalition could include supporters of highway expansion in fast-growing states, mass transit projects in dense urban areas, wind and solar projects in blue states, and natural gas and nuclear projects in red states.

Basic statutes such as the National Environmental Policy Act and the Clean Air Act would likely not be subject to change. Instead, the focus of the reform effort would be on curtailing the extent of citizen litigation, drawing on the lessons being learned by research done by entities like the New York University Marron Institute’s Transit Cost Project and similar work from the Eno Center for Transportation.

I am not aware of specific reform measures that would adequately address this problem, so considerable work must be done. Part of the answer might be challenging key court decisions that have empowered citizen litigation. An important element would be specific federal policy changes for Congress to enact.

A diverse group of research organizations, such as the American Enterprise Institute, Bipartisan Policy Center, Breakthrough Institute, Brookings Institution, Hoover Institution, and Reason Foundation, along with the above-noted Eno Center and Marron Institute, could play valuable roles in these types of issues.

If reform proposals are developed, energy and transportation organizations should also mobilize to support legislation to implement the recommendations. In the transportation sector, I’m thinking of groups like the American Association of State Highway and Transportation Officials, the American Road and Transportation Builders Association, the Associated General Contractors, and others, along with construction trade organizations and other unions.

With infrastructure construction costs escalating at a much faster rate than the Consumer Price Index, there’s a real danger that the increased federal funding in the Infrastructure Investment and Jobs Act, also known as the bipartisan infrastructure bill of 2021, could fail to lead to much actual expansion of infrastructure—unless there is meaningful streamlining of the environmental, permitting and litigation process.

While Sen. Manchin’s bill didn’t address many of the critical problems and ultimately failed, it is notable that there’s a growing coalition that recognizes that policy reforms are needed to address the excessive obstacles blocking key infrastructure projects. Centrists in both major political parties acknowledge that needless delays, bureaucracy, and litigation are increasing taxpayers’ costs and preventing the U.S. from modernizing and building 21^st-century energy projects, highways, mass transit, and more housing. Now, researchers and Congress need to develop substantive policy and legislative solutions to start removing obstacles and addressing them so the country can build the infrastructure it needs.

A version of this column originally appeared in Public Works Financing.

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Jackson’s boil advisory lifted, now must address long-term water problems

Austill Stuart — Fri, 16 Sep 2022 17:36:14 +0000

After 40 days without clean drinking water, the boil-water advisory in Jackson, Mississippi, was lifted yesterday. Around 150,000 residents in the city had been under a boil water advisory since July, and severe flooding in August only worsened the water system’s problems.

Conditions are so bad that Rep. Bennie Thompson (D-MS) and Mississippi Gov. Tate Reeves (R), who agree on little else, agree that Jackson needs a new water operator. Gov. Reeves raised the possibility of water privatization at a recent press conference:

“I’m open to all options. Privatization is on the table,” Reeves said.
“Having a commission that oversees failed water systems as they have in many states is on the table… There have been even a number of city council members that I have seen over the last several weeks that have talked a lot about the need to hire outside contractors to come in and run different pieces of or the system as a whole.”
“I think you’re seeing more and more individuals recognize that the operations of city government in general, but particularly the operations of the water system… it ain’t Republican or Democrat or ideological, it’s about delivering a basic service to the people you represent,” he said.

Reeves and the state government will play a role in helping Jackson overcome its water problems. Still, the financial and productive capital required for such a large undertaking will likely need to come from the private sector. Long-term, Jackson’s water, sewer, and stormwater system need an estimated $2 billion to get them working again and back in compliance with the Environmental Protection Agency.

Jackson’s shaky finances and the dire shape of its water and sewer operations mean merely outsourcing maintenance, as Jackson Mayor Chokwe Antar Lumumba suggested as an alternative to privatization, would not solve the long-term water system replacement concerns, attract the needed capital investments to repair and rebuild, or truly address the city’s more extensive environmental compliance and staffing concerns.

While outsourcing would certainly help some of the day-to-day operations issues, Jackson would still be mostly on its own for getting itself back into compliance and finding the $2 billion needed for system repairs and upgrades.

Jackson’s previous bad contracting experience with its water system should not prevent the city from seeking a long-term deal now. A few years into a 2013 water contract with Siemens to repair sewer infrastructure and upgrade billing and meter systems, Jackson filed a complaint in court against the company, claiming it was misled into the 15-year $90 million contract with promises of increased revenues that never materialized and work that was never done. Before going to trial, the parties agreed to a settlement equal to the original contract’s total amount, $90 million, paid to the city.

In the future, a well-written, long-term privatization contract can set clear benchmarks for the private company to meet and instill financial penalties for failing to do so. Any privatization contract should protect Jackson’s taxpayers, make it easy to hold the private water company accountable for meeting its commitments and avoid some of the problems from the Siemens deal.

Six weeks without drinking water has drawn public attention to the government’s failures in Jackson and decades of failing to comply with EPA standards. For example, drinking water quality is partly ensured by monitoring the turbidity—cloudiness from impurities—of water samples taken from the system. A 2020 EPA inspection found that the turbidity monitoring equipment at one of Jackson’s two water treatment plants didn’t work because it hadn’t been calibrated in around three years, resulting in continuously inaccurate readings. And, in an example of how hard it will be for the city to fix all of its water problems itself: The technician position needed to perform water turbidity maintenance and monitoring is not filled right now. In fact, the job no longer exists in the city government at all.

Additionally, the EPA found that when Jackson’s lead levels rose above acceptable limits, the city didn’t notify residents. The EPA report also noted that Jackson did not have a plan to remove lead service lines from its water system—something the city has been required to do but has been failing since 1992.

Among other problems, the EPA report also discovered that filter membranes in water treatment facilities were not functioning and were damaged beyond repair, automated treatment systems were failing, and low staffing levels were a constant problem.

Jackson’s water problems are severe, and solving them won’t be inexpensive. Still, the right long-term partnership could help the city overcome its obstacles as cost-effectively as possible. Hiring capable partners legally bound to perform well would put Jackson on a path to bring its system into compliance and start reducing its backlog of maintenance and repairs.

Without a privatization deal, Jackson’s water system will likely worsen. Procuring a multi-decade lease will undoubtedly be challenging, but without one, there is no path to address Jackson’s many water and sewer management problems fully.

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Western states facing water cuts should look at Arizona’s recent water legislation

Austill Stuart — Fri, 19 Aug 2022 20:25:00 +0000

The U.S. Bureau of Reclamation recently announced cuts to the water allotment Nevada and Arizona get from the Colorado River. The cuts—21% for Arizona and 8% for Nevada—demonstrate the water challenges facing Western states. They also highlight the timeliness of the groundbreaking bipartisan water legislation passed in Arizona and signed by Gov. Doug Ducey in June.

Arizona is dedicating $1 billion over the next three years to fund water rights acquisition, conveyance, and conservation efforts while allowing the water projects to be established through a wide variety of contracting and procurement methods. This substantial investment better equips Arizona to respond and adapt to the challenging demands of both its growing population and the dwindling availability of freshwater supplies, a move other Western states should watch with keen interest.

The Associated Press reports seven Western states relying on the Colorado River should expect more water cuts:

But those reductions represent just a fraction of the potential pain to come for the 40 million Americans in seven states that rely on the river. Because the states failed to meet a federal deadline to figure out how to cut their water use by at least 15%, they could see even deeper cuts that the government has said are needed to prevent reservoirs from falling so low they cannot be pumped.
“The states collectively have not identified and adopted specific actions of sufficient magnitude that would stabilize the system,” Bureau of Reclamation Commissioner Camille Touton said. Together, the missed deadline and the latest cuts put officials responsible for providing water to cities and farms under renewed pressure to plan for a hotter, drier future and a growing population. Touton has said a 15% to 30% reduction is necessary to ensure that water deliveries and hydroelectric power production are not disrupted.

Seven states and Mexico rely on water from the Colorado River for both consumption and recreational needs. And the water needs in those Western states are increasing. The populations in Arizona, Colorado, Idaho, Nevada, and Utah all grew by more than 10% over the past decade, according to Census Burea data.

Back in 2016, the Bureau of Reclamation (BOR) forewarned: “Growing demands in the Colorado River system, coupled with the potential for reduced supplies due to climate change, may put water users and resources relying on the Colorado River at risk of prolonged water shortages in the future.”

While both this and next year’s announced cuts by the BOR will not affect residential use, the current cuts have already forced Arizona farmers to cut back around 65% of their Colorado River allotment. The drier Colorado River is not all due to a drying climate, either—agricultural interests draw heavily from groundwater supplies that also source about half of the Colorado River’s water. Continued dry conditions and groundwater extraction could lead to a 30% decline in the river’s flows over the next 30 years, which would necessarily include even more drastic water allotment cuts.

While many conversations and assessments will need to be made before Arizona’s water projects come to fruition, the recently-passed legislation and its dedicated funding show there are possibilities to start solving Arizona’s water use demands.

The state may end up conveying water from the Mississippi River or transferring desalinated water from offshore Mexico, both ideas that Arizona is examining, or it may discover those ideas are not financially viable. For now, the fact that those ideas and others are even being considered demonstrates state lawmakers recognize the need to find creative ways to overcome water problems that will likely only intensify as populations in many parts of the West continue to grow.

In an era where bipartisan agreement is increasingly rare, Arizona lawmakers from both major political parties wisely agreed that securing water for the coming decades required swift action that was bold enough to embrace an “all of the above” type approach, which means local governments and potential public and private partners will not be limited in looking for ways of potentially delivering innovative solutions to secure and save water.

Modern technology has provided the means to make sure there can be enough water to sustain populations all over the world, including in dry, fast-growing environments like the Western United States. While some methods are still quite expensive and not always practical at scale, potable water can now be generated from almost any potential source, including seawater and even raw sewage.

For Western states to meet their growing populations’ water needs, they will need funding, the flexibility to seek a wide variety of projects, and a determination by lawmakers and local leaders to pursue the right arrangements to structure those critical projects and operate and maintain them for decades.

Managing and operating water projects comes with inherent risks. For example, cities in the Eastern United States have dealt with deferred maintenance issues with their aging municipal water systems. Needed repairs and upgrades that have been put off for years become increasingly expensive and difficult for governments and taxpayers to fund.

Long-term leases and public-private partnerships with clear contracts and accountability can be effective in shielding taxpayers from the financial risks of building and maintaining many expensive water infrastructure projects. Governments can transfer the risks to private companies better capable of managing those risks.

While Western states and the federal government have made efforts to plan for higher water demand and reduced supplies from traditional sources, much work remains to be done. Arizona made a critical step in passing legislation earlier this year that gives the state’s local water systems varied and valuable tools to help manage water acquisition, conservation, and conveyance. Arizona’s legislation saw nearly unanimous support in both legislative chambers and other states might find it useful to adopt a similar approach as they seek to secure water for the future.

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How to maximize Arizona’s water investment

Austill Stuart — Fri, 15 Jul 2022 04:01:00 +0000

Arizona has long enjoyed extensive economic and population growth, but this year’s federal designation of a Tier 1 shortage restricting the state’s share of Colorado River water and restricting water supply to Central Arizona agricultural users presents a stark reminder of the need for major ongoing investments in public water infrastructure to sustain a strong economic future.

With the state’s elected leaders prudently setting aside more than $500 million for water augmentation and conservation projects and overhauling the state agency responsible for financing water infrastructure in the closing days of the legislative session, Arizona’s robust tradition of using public-private partnerships (P3s) to deliver critical water investments appears set to enter a transformative new phase.

The state’s economy today would not exist without the legacy of major waterworks like the Central Arizona Project or Salt River Project’s network of dams, reservoirs, and canals—projects built with extensive collaboration between federal, state, and private entities. Cities like Phoenix have also used public-private partnerships to deliver major new water and wastewater infrastructure.

Financing water infrastructure is complex, but the fundamental issue for Arizona is simple: There aren’t enough traditional tax or ratepayer dollars today to deliver the future water infrastructure Arizona needs.

Offshore desalination plants, new reservoirs, and multistate pipeline agreements are among the types of promising—but costly—new-build water supply projects that have captured the minds of policymakers.

These projects could easily cost billions of dollars on their own and, back in 2013, the U.S. Environmental Protection Agency estimated the state would need $7.4 billion by the mid-2030s just to improve, repair, and upgrade existing water infrastructure, a figure that excludes costly expansions needed to accommodate population growth.

Public-private partnerships provide opportunities to overcome many of the water infrastructure challenges that Arizona faces, including sourcing, conveyance, and treatment. They have been used extensively around the world to ensure water systems and treatment facilities are financed, built, operated, and upgraded in ways that minimize taxpayer exposure.

When government water agencies enter partnerships designed to manage major financial and operational risks, they shield taxpayers and users from unexpected repairs and other costly problems.

While water P3s typically involve large projects with high upfront costs, they also include decades-long commitments to operations and maintenance that government agencies typically lack the resources to do alone, resulting in lower operating costs over the long term.

Private partners are on the hook for decades for managing the systems under performance-based contracts, as well as handing managed assets back to government owners in good shape. Contracts designed to protect the public interest while outlining clear terms for project delivery give partner firms the incentive to find value through the right capital investments that balance cost and quality.

Some major P3 investments are being used to secure and deliver water from new sources to accommodate population growth. In 2016, fast-growing San Antonio, Texas, entered a 30-year, $923 million P3 to deliver up to 50,000 acre-feet of water per year via a new 140-mile pipeline to provide about half of the water needed to meet future population demand.

The partnership puts the risks of securing the water on the private partner responsible for negotiating with local landowners to secure drinking water supplies, as well as the risk of building and operating a 140-mile pipeline to deliver the water to the city from its watershed source. The project was financed with loans taken out by the private partner, which will be repaid by the city over several decades from collected user fees.

Santa Clara, California, after an unsuccessful attempt a few years back, is close to finalizing a similar 30-year, $600 million public-private partnership that would secure water from multiple sources.

Just as Arizona’s water challenges aren’t confined to sourcing clean water, P3s can be and have been used to overcome numerous ecological and environmental challenges. Chicago, Atlanta, Baltimore, and many large cities have partnered with private firms to deliver and operate wastewater treatment and processing facilities to help prevent massive pollution problems, often to comply with EPA and state consent decrees.

Opportunities also exist to encourage land ownership practices through P3s that reduce the strain put on water and sewer infrastructure: Prince George’s County in Maryland has worked with landowners and developers to integrate more porous ground surfaces capable of diverting stormwater from the area’s overburdened sewer systems. And San Mateo, California, is in the process of exploring an advanced water treatment P3 that can keep clean water in reserve for droughts and other hazardous conditions.

Innovations in leak detection, a problem that results in 1.7 trillion gallons worth of lost revenue for water systems each year, are also becoming a source of water agency contracting, as technology allows detection using acoustics without digging.

With the Arizona state legislature setting aside a major down payment for critical water projects and simultaneously expanding the state finance agency’s toolkit to deliver them the key to success will be giving governments the greatest flexibility to enter long-term public-private partnerships designed to increase water supplies through acquisition, treatment, conservation and more.

Arizona’s continued economic success will require effective partnerships between public, private, and stakeholder interests to secure the state’s clean water future in a fiscally responsible way going forward.

A version of this commentary first appeared in The Arizona Republic.

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Florida Gov. DeSantis continues to pursue Everglades restoration

Vittorio Nastasi — Wed, 13 Jul 2022 12:55:00 +0000

Florida Gov. Ron DeSantis recently vetoed legislation that would have hampered environmental restoration efforts in the Everglades region. This move is consistent with the governor’s recent record of advancing restoration projects for the Everglades. The legislation, Senate Bill 2508, was a priority of outgoing State Senate President Wilton Simpson who is currently running to be Florida’s agricultural commissioner.

Among other provisions, Senate Bill 2508 would have created new requirements for the South Florida Water Management District (SFWMD) to certify “that its recommendations to the United States Army Corps of Engineers are consistent with all district programs and plans” before the release of state funds. A previous version of the bill required SFWMD to ensure that its plans did not “diminish the quantity of water available to existing legal users.”

This language was interpreted by environmental groups to favor the interests of agricultural producers in the region to the detriment of environmental restoration efforts. Flexibility regarding the management of water within Lake Okeechobee is key to several restoration goals in the region. While DeSantis noted that the final version passed by the legislature was “an improvement over what was originally filed,” he maintained that it would create “unnecessary and redundant regulatory hurdles that may compromise the timely execution and implementation of Everglades restoration projects, water control plans, and regulation schedules.”

As the Tampa Bay Times reported:

After opponents swarmed legislators with nearly 40,000 petitions and more than 1,200 phone calls, senators reversed course, removing provisions in the bill that advocates said would have led to toxic discharges, more Red Tide blooms and dead fish on beaches.
Still, advocates said the final version of the bill would have knelt to agriculture interests and been detrimental for Florida’s conservation and environment.
DeSantis on Wednesday announced the veto to loud applause during a news conference in Fort Myers Beach. “I’ve heard you; we’ve vetoed that today,” he said.

Gov. DeSantis has made the restoration of the Florida Everglades one of his policy priorities. The Florida Legislature has largely acted in lockstep with the governor’s agenda, passing substantial reforms in recent years. State lawmakers have allocated additional money to fund ongoing infrastructure projects, imposed harsher penalties on water polluters, and provided state and federal agencies greater flexibility in the management of water flows through the series of canals, storage reservoirs, and treatment areas.

Decades of water mismanagement have resulted in the deterioration of the Everglades ecosystem and a series of toxic blue-green algae blooms in waterbodies throughout central and south Florida. In July of 2020, Reason Foundation released a comprehensive report providing the historical context of Florida’s water management issues, an overview of current challenges and ongoing projects in the state, and several recommendations for future restoration efforts. The state’s actions have largely been in line with the 2020 report’s recommendations.

A significant problem restoration efforts seek to solve is that of algal blooms, which occur when large amounts of nutrients enter a body of water. The algae feed on the nutrients and grow until a slimy, green layer is formed on the water’s surface. The recent blooms in Florida originated predominately in Lake Okeechobee before spreading to St. Lucie and Caloosahatchee estuaries.

The spread of blooms to the coasts is the result of state and federal infrastructure projects which block the natural flow of water south to the Everglades and Florida Bay. Beginning in the 1850s, wetlands in the historic Everglades region were drained and cleared for human settlement. A series of devastating hurricanes and floods in the early 1900s prompted the construction of the Herbert Hoover Dike surrounding Lake Okeechobee and a series of canals to the east and west to divert water through the St. Lucie and Caloosahatchee rivers when water levels in the lake climb too high.

Severe algal blooms have become more frequent over recent years, prompting state of emergency declarations in 2016 and 2018. These episodes were largely triggered by major storm events and higher-than-average rainfall in those years.

Mitigating toxic algal blooms will require a reduction in discharges to the coast and, to some extent, allowing additional water to flow south. Such changes to the current management and flow of water will require flexibility on the part of the SFWMD and the Army Corps of Engineers. As Gov. DeSantis recognized, the requirements included in SB 2508 may have imposed unnecessary obstacles to that flexibility.

Florida lawmakers have taken significant steps to advance restoration goals and speed up various projects that have been in progress for nearly two decades. Gov. DeSantis’ veto of Senate Bill 2508 will help ensure that progress continues.

The post Florida Gov. DeSantis continues to pursue Everglades restoration appeared first on Reason Foundation.

California should embrace large-scale water desalination projects

Marc Joffe — Wed, 15 Jun 2022 21:41:01 +0000

As the state continues to grapple with drought conditions, water restrictions are being placed on six million residents in Southern California. The latest restrictions are another reminder that the California Coastal Commission’s recent rejection of the Orange County desalination plant, after 24 years of delay, reinforces the state’s position as a laggard in adopting technology that could provide water security. While arid coastal countries worldwide are implementing desalination, the most obvious solution to water scarcity, the Coastal Commission unanimously voted against the Huntington Beach project.

California Gov. Gavin Newsom, noting years of drought in the state, harshly criticized the rejection, saying, “We need more tools in the damn tool kit.”

The commission claimed it was worried about higher water bills for the area’s lower-income residents, impact on marine life near the facility, and reduced public access to the shoreline, especially during the construction period. It remains to be seen whether those objections will also defeat the proposed Doheny Beach desalination facility in southern Orange County despite its seemingly initially favorable reception from regulators. But even if the Doheny plant is approved, it would provide only 10% of the water that the Huntington Beach facility would’ve provided.

The Coastal Commission’s objections to larger facilities are out of touch with numerous other countries pursuing desalination at scale. Australia has five major desalination plants with more under development. Spain has hundreds of smaller desalination plants providing water for industry, agriculture, and drinking. On El Hierro, in the Canary Islands, desalination plants are powered by wind energy and hydroelectric power, demonstrating how Spain is addressing climate change and water security.

Last year, Singapore opened its fifth desalination facility and now meets about 30% of its water requirements from purified seawater. Its government is also experimenting with new technologies that reduce desalination’s energy consumption sharply.

Israel’s success with desalination is well known. It has five operating plants and two more under construction. Once all seven plants are online, they will collectively provide enough fresh water to meet 85%-to-90% of Israel’s municipal and industrial water requirements.

The world’s largest desalination plants are in Saudi Arabia and the United Arab Emirates. The Ras Al Khair plant in Saudi Arabia can produce 228 million gallons of water daily—more than four times the volume processed by the facility in Carlsbad, which remains California’s only major desalination plant.

These numerous examples suggest an overall pattern: countries with high per capita income, insufficient rainfall, and a seacoast are increasingly investing in desalination. But California, despite years of drought and its long-term water needs, is not following this global trend. And even within the United States, California is becoming an outlier.

This year, Arizona Gov. Doug Ducey proposed an ambitious plan to increase his state’s water supply. Under Gov. Ducey’s plan, Arizona would fund two desalination plants on the Sea of Cortez in northern Mexico. The desalinated water would be used in Mexico in exchange for Arizona being allowed to increase its use of Colorado River water, which is now limited by a binational agreement that reserves a portion of the water for Mexico.

If California officials cannot get comfortable with building more desalination plants in the state, they might consider participating in the Arizona project. Or, perhaps they could work on a similar deal with the Mexican state of Baja California, which had to cancel its own desalination project in 2020 due to the declining value of the Mexican peso. If California agreed to buy a portion of the water purified by the proposed facility in Rosarito, about 15 miles south of the border, perhaps the economics would work for everyone.

While it is true that desalinated water is much more expensive than groundwater or snowmelt piped in from the Sierra, this cost needs to be put in perspective. The estimated cost of water from the Huntington Beach desalination plant would have been $2,900 per acre-foot, which works out to just under one cent per gallon. This is a tiny fraction of the cost of bottled water, recently estimated to average $9.60 per gallon.

With many of the state’s politicians warning of worsening climate change and severe droughts, California shouldn’t be rejecting a sustainable opportunity to buy water for a penny per gallon.

A version of this commentary originally appeared in The Orange County Register.

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Municipal water systems show wide variations in quality and financial results

Marc Joffe — Tue, 14 Jun 2022 04:01:00 +0000

Municipal water systems face many challenges, but when they must confront regulatory compliance and financial issues simultaneously, agencies are put in a tight spot where every corrective action will be costly and, ultimately, borne by ratepayers. To better identify the level of financial and regulatory challenges facing municipal water systems, Reason Foundation reviewed municipal water funds listed in the fiscal year 2020 annual comprehensive financial reports issued by U.S. counties and cities. We then cross-referenced this data with violation information provided by the U.S. Environmental Protection Agency.

EPA assigns water providers violation points based on a complex formula outlined in a 2009 memo on enforcement targeting to ensure water “systems comply with the requirements of the Safe Drinking Water Act.” It describes its violation point system as follows:

The enforcement targeting formula is the basis for the enforcement targeting tool that identifies public water systems having the highest total non-compliance across all rules, within a designated period of time. A higher weight is placed on health-based violations (including treatment technique and maximum contaminant level violations). The formula calculates a score for each water system based on open-ended violations and violations that have occurred over the past five years but does not include violations that have returned to compliance or are on the ” path to compliance” through a specified enforceable action.

The accompanying map shows data for over 900 city- and county-owned water providers across the United States. Dedicated water districts are not included in this analysis. Dot colors on the map reflect the net income or loss per resident and the number of water quality violation points the water providers have accumulated. The red dots on the map reflect providers with some combination of substantial financial losses or many violation points while green reflects positive net income and/or relatively few violations.

Three municipal water providers serve as good case studies for relatively poor performance across these two metrics.

Lindsay, CA

Lindsay is a small city located in California’s Central Valley. About a third of its residents live in poverty and per capita income is less than half of the state’s average. Lindsay has suffered long-term fiscal distress as documented in a 2021 report by the State Auditor’s Office and this fiscal distress has impacted the city’s ability to provide safe drinking water to residents.

As the California State Auditor Elaine Howle observed in her summary:

Lindsay has improved the condition of its general fund over the past several fiscal years…because the city forgave more than $6 million in loans from restricted funds to its general fund, a violation of Proposition 218, which restricts the use of certain local government funds. This unlawful action has exposed the city to possible litigation from taxpayers and utility ratepayers, and it obscures what we estimate to be a general fund deficit of more than $3 million as of June 30, 2020, instead of its apparent surplus.

Because of both Lindsay’s loan forgiveness and the fact that it has not regularly updated the fees and rates it charges for city services and utilities, it lacks resources in some of its utility funds. The city’s water fund recently incurred a nearly $1 million deficit and is unable to pay for necessary infrastructure projects…

In fiscal year 2020, Lindsay's municipal water fund reported a loss of $195,000, or $14 per user, and had no cash reserves. Without available financial resources or positive cash flow, the city’s water system does not have the resources to tackle water contamination issues. The city’s water system has been repeatedly cited for providing water with excessive levels of two categories of disinfection byproducts: Total Trihalomethanes (TTHM) and Haloacetic Acids (HAA5). According to the city’s 2020 Annual Drinking Water Quality Report:

The TTHMs and HAA5s were found to be out of compliance during 2020 and studies have been completed and identified the options available to correct the violations. The City is pursuing funding to construct improvements. Quarterly sampling and public notification are in place until the violation is corrected.

The report goes on to note that some people who drink water with high TTHM levels over many years “may experience liver, kidney or central nervous system problems, and may have an increased risk of getting cancer,” while excess HAA5 intake over many years may also be a cancer risk.

Lindsay has not imposed a water rate increase since 2015 and does not expect to do so until it completes multiple studies. Meanwhile, residents are obliged to choose between bottled water or taking the risk of bladder cancer due to long-term consumption of disinfection byproducts.

Lemoore, CA

Fifty miles west of Lindsay, the city of Lemoore is also struggling with disinfection byproducts in its municipal water supply even though it is in a stronger financial position to address the problem. The city is fully reliant on groundwater, which has naturally-occurring compounds that react with chlorine to produce TTHMs. Lemoore's city water exceeded TTHM health guidelines in 87 of the 88 samples analyzed between 2014 and 2019.

In fiscal year 2020, Lemoore’s water fund reported a net income of $3.75 million, or $114 per resident. The city also reported substantial general fund reserves and a positive unrestricted net position—two indications of strong overall fiscal health.

In March 2019, the city issued $27.8 million in water revenue bonds to finance the construction of new water treatment plants, an additional well, and a storage tank. It then approved a design-build contract with J.R. Filanc Construction to create the new facilities while also contracting with AdEdge Water Technologies to remove TTHM’s from its chlorinated groundwater using a combination of ozone, activated carbon, and ion exchange.

Unfortunately, the city’s initiative suffered a severe setback in June 2021 when a gas explosion destroyed the city’s new water tank, killing a J.R. Filanc employee and injuring a city worker.

Aiken, SC

Unlike Lindsay and Lemoore, the municipal water in Aiken, SC, did not contain contaminants above legal limits, although its TTHM levels usually exceed 0.15 parts per billion, which is the health guideline published by the Environmental Working Group. Aiken has instead been cited for various procedural violations including failure to maintain a sanitary control area of at least 100 feet around one of the city’s wellheads, employing a system operator lacking the required license grade, and not conducting tests to ensure that fire hydrants have adequate water pressure.

Aiken has a combined water and sewer fund that reported a net loss of $2 million in fiscal year 2020, amounting to about $48 per resident. But the fund had over $10.5 million of cash on hand, suggesting that resources are available to address the procedural issues found by state inspectors.

Conclusion

Every town, city, or county that operates water, sewer, or stormwater systems will continue to face challenges in the coming decades. Larger, older cities with declining populations will be especially challenged, as their infrastructure will require significant investments while their ratepayer bases and (likely) bond ratings fall. But even fast-growing cities will face sourcing and compliance challenges as treatment facilities must be expanded or created to maintain compliance standards with larger demands of water and sewer infrastructure for ratepayers. Finding the right people to operate those systems and facilities is becoming a greater challenge, too.

While hardly a definitive means to identify all potential problems, our modest effort to cross-tabulate financial and compliance data to yield a combined analysis presents a fuller picture of municipal water system challenges and potentially helps identify problems mentioned earlier. While those challenges will affect municipalities differently and unevenly, more forward-thinking and openness to contracting and public-private partnerships in municipal water systems will be required by agencies to ensure systems operate safely and effectively.

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Laserweeding could eventually eliminate the need for many chemical herbicides

Grayce Burns — Tue, 15 Feb 2022 05:00:00 +0000

In the last few decades, new farming technologies like surveillance drones, autonomous tractors and high-tech greenhouses have greatly reduced the costs of growing food and helped increase the food supply. Looking ahead, new advancements in weed control techniques could be the next big agricultural tech breakthrough to help transform farming and improve the environment.

The advent of automated, laser-guided methods of weed control for agriculture could mean that farmers will no longer have to use potentially dangerous herbicides or less effective natural weed control options. In light of public concern with the use of herbicides, some regions of the U.S. have banned certain chemicals used to prevent weed growth. While some farmers gladly accept mandates on herbicides and pesticides because they believe traditional chemicals to be harmful to people and/or the environment, most natural weed control methods come at a high price. Natural herbicides cannot kill the roots of weeds as effectively as more chemically-modified compounds, thus many natural pesticides require farmers to spray their crops multiple times a season—raising the costs to farmers, whereas traditional chemical methods only need one application.

Given decreased efficiency of natural herbicides, it is unsurprising that many farmers are hesitant to embrace the shift away from the traditional chemicals used to protect their crops. Many farmers are looking for cost-effective alternatives that offer environmental protection alongside cost-reduction benefits and some entrepreneurs are stepping up to fill this market need.

Carbon Robotics is one of several players in the automated driving farm technology industry and focuses on building purpose-driven products to automate a specific part of the farming process. The company’s new product, the Autonomous LaserWeeder, utilizes automated driving technology alongside laser beams to zap a field’s weeds—no chemicals required.

Requiring no physical human oversight, the device can fully weed anywhere from 15-to-20 acres a day. Today’s average farm team, on the other hand, would need at least a week to treat the same acreage. The Automated Laserweeder can also work at any time of day, in any weather, and ultimately decreases the cost of running a farm.

Beyond efficiency, the Autonomous LaserWeeder is much friendlier to the overall health of a farm’s soil and plants. Some of the longest-used chemical herbicides are those which selectively kill weeds, allowing farmers to save time and labor by indiscriminately spraying all crops. Unfortunately, these herbicides that selectively kill weeds harm the farm’s soil over time, with some even sterilizing the soil.

Although some farmers continue to use chemical-based methods and support the soil through other means, many farmers choose more natural herbicides for the sake of their soil. Since these methods are not selective towards agricultural plants and cannot kill all weeds, farms that use natural herbicides often face lower crop yields and higher labor costs overall as they willingly sacrifice some of their profits for the sake of the soil’s health.

Laserweeding technology would allow farmers to benefit from the time-saving advantages of selective herbicides by using high-resolution cameras to differentiate weeds from crops. This technology could also help farmers maintain profits while avoiding harm to the health of the soil.

Heavily reducing chemical herbicide use would likely directly translate into reduced operating costs for most farmers since these types of chemical herbicides account for nearly 30% of total farming expenses on average according to surveys.

Laserweeding may also have direct benefits for human health. Current estimates suggest that the use of pesticides in the last half-century has caused major soil depletion, leading researchers to estimate that some vegetables have lost up to 40% of their nutritional value compared to older versions of those crops. Since laserweeding would allow farmers to avoid any chemicals, over the long-term, it is likely more beneficial for the soil than even the safest herbicides. Further, by leaving the soil untouched and unmodified, laserweeding negates the need for herbicidal additives that compromise the land’s chemical integrity, benefiting both the farmer and the environment.

As more farmers learn of and gain access to this technology, it is likely many will opt to take advantage of its many benefits, and herbicides will become less and less popular on a commercial level. However, as with any new technology comes an adoption curve since many smaller farmers will likely be unable to embrace this new technology immediately or until prices decline and the products become more widely available.

In the interim, for many farmers, traditional pesticides are going to continue to be the most cost-effective way to keep their farms running. For this reason, regulators should not force farmers to immediately cease utilizing traditional chemicals. Rather than ban herbicides with harmful chemicals, policymakers should ensure that regulations don’t block or slow the development of farming technology like laserweeding.

As the American agricultural industry embraces laserweeding and other technological advancements are developed and hit the market, it could largely negate the future need for chemical herbicides.

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Can virtual reality technology encourage remote work and slow climate change?

Marc Joffe — Wed, 24 Nov 2021 07:02:00 +0000

Virtual reality, a technology normally associated with gaming, promises to enhance remote collaboration, further reducing the necessity for physical meetings and the need for workers to commute. If virtual reality (VR) successfully builds upon technological advantages that have enabled remote work, it could help put a dent in greenhouse gas emissions attributable to in-person commerce.

Although the term telecommuting was coined all the way back in 1973, the practice required technological progress, and, sadly, a global pandemic to come into its own. Businesses, non-profits, and government agencies in the early 1970s lacked personal computers, had rudimentary telecommunications capabilities, and relied heavily on physical files for information storage. Workers needed to be physically present just to obtain and share information.

The rise of personal computers (PCs), the internet, digital video cameras, smartphones, and cloud technologies have enabled most knowledge workers to exchange information and complete tasks from almost anywhere. Meanwhile, categories of work not traditionally thought of as knowledge or office work have come online.

Over the last two decades, online collaboration software has proliferated and improved. But online meeting tools don’t fully capture the interpersonal dynamics of physical meetings. And for many users, they can be tiring. Stanford Communications Professor Jeremy N. Bailenson has researched the phenomenon of “Zoom fatigue.” He considered four possible aspects of online meetings that could cause participants to become fatigued:

Excessive amounts of close-up eye gaze,
Cognitive load arising from difficulty in sending non-verbal signals,
Increased self-evaluation from staring at video of oneself, and
Constraints on physical mobility.

New technology promises to reduce some of these drawbacks by making online meetings less stressful and tiring. Meta (formerly known as Facebook) is beta testing Horizon Workrooms, which leverages the company’s Oculus Quest 2 VR headsets to create a virtual workspace. Currently, Meta’s workroom service is free, but to get the full benefit, participants need to have the headsets which cost $299 each.

Instead of staring at colleagues’ video headshots on Zoom, participants in a Horizon Workrooms meeting view their coworkers’ avatars around a virtual conference table, a configuration that demands less one-on-one eye contact. Avatars can move around and share virtual whiteboards, mimicking a common tool used for planning, ideation, and product design in physical meetings.

Reviews suggest that Meta’s VR workroom will face barriers to adoption. The headsets are heavy and extended use can cause discomfort. But these issues should be ameliorated through technological innovation. For example, the Quest 2 headsets weigh 12% less than their predecessor, following the trajectory of laptops and other electronic devices that have become lighter over time.

In the wake of Facebook’s name change to Meta, the company’s emphasis on virtual reality and the metaverse has been subject to derision not unlike that directed to older platforms such as Minecraft and Second Life. But those who dismiss VR may not have a full historical appreciation of the process from obscure technology to household name. Technologies that seemed solely fit for recreation have become mainstream. Consider, for example, how Robinhood attracts younger investors by “gamifying” the task of portfolio management. iPads and other tablets originally targeted at home users are now commonly used for point of sale applications. With heavy investment from Meta, Microsoft, and others, there is reason to think that VR will enter the mainstream later in the 2020s.

Policy Implications

The idea that telecommuting has environmental benefits goes back to at least 1979 when economist Frank Schiff wrote in The Washington Post about the possibility of remote work reducing gasoline consumption, congestion, and air pollution.

Now, with VR joining a stable of older enabling technologies, remote work appears to be on its way to becoming commonplace with or without policy change.

The San Francisco Bay Area’s Metropolitan Transportation Commission (MTC) considered mandating large employers keep at least 60% of their employees at home by 2035. The mandate would have applied to all businesses with 25 or more employees in jobs eligible for remote work. But the idea was criticized by transit advocates concerned about ridership impacts. Ultimately, MTC watered down the mandate, instead recommending that employers implement trip reduction programs “to shift auto commuters to any combination of telecommuting, transit, walking, and/or bicycling.”

But, from a climate perspective, mass transit travel is not a full substitute for telecommuting. Even trips completed on fully electrified transit modes are not fully green. The Bay Area’s utility, Pacific Gas and Electric, generates one-third of its electricity from renewable sources and hopes to reach 60% from renewables by 2030. But this means a sizable proportion of electricity is, and will continue to be, derived from burning fossil fuels.

In any event, the Bay Area could reach the now discarded remote work target without a mandate. In July, the Bay Area Council found that 68% of the employers it surveyed expected a typical employee to go into the office three days or less post-pandemic. A Bay Area News Group poll found “that 70% of those able to work from home now want to stay out of the office most, if not all, of the time once the pandemic is over.”

So, at least in one large metropolitan area, a transition to remote work appears to be inevitable without government funding or encouragement. That said, government policies that could potentially slow this climate-friendly development deserve more careful scrutiny. These government policies include explicit and implicit subsidies for physical travel. For example, fares covered less than 10% of the cost of operating public transit in Santa Clara County before the pandemic. If this 90% travel subsidy was reduced or focused just on students and low-income passengers, more white-collar employees and their employers might opt for remote work.

On the other hand, policies that reduce the cost of accessing broadband networks can make it less expensive to work from home while taking advantage of advanced technology like VR. That said, direct broadband subsidies in recent federal legislation could result in waste. Encouraging greater competition among private providers is a more fiscally sustainable approach.

But, as long as governments do not get in the way, we can expect the megatrend of remote work to continue—yielding unexpected climate change-related dividends with minimal costs to taxpayers. The further development of VR and other advanced technologies promise to accelerate this welcome trend.

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Municipal bonds reveal the weaknesses of ESG investing

Marc Joffe — Mon, 08 Nov 2021 05:30:00 +0000

The rise of Environmental, Social, and Governance (ESG) investing in corporate securities has reached the municipal-bond markets. But recent experience shows that incorporating ESG factors into municipal investing can be a convoluted, quixotic effort.

While ESG encompasses a wide range of factors, it is the “E” that gets the most attention in the municipal bond market, with climate change being a major concern. When thinking about the role of climate change in municipal finance, we can imagine two issues: (1) Does climate change increase the risk of a municipal-bond default for specific issuers?; and (2) can investors choose bonds that finance projects that provide the largest reductions in greenhouse-gas emissions? Let’s consider these two questions in turn.

Climate Change and Default Risk

Unlike corporate equities, municipal bonds offer little financial upside related to global warming. While an equity investor may achieve enormous returns by purchasing shares in a company that invents new green technologies, the best-case scenario for a municipal-bond buyer is the return of principal at par along with interest payments that rarely exceed 5 percent annually.

But investors may be able to avoid the loss of interest and principal if they can predict whether a given municipal issuer is going to be affected by a climate-related disaster such as flooding, fires, or drought. Unfortunately, this isn’t so easy.

Many municipal-bond issuers have authority over large geographic areas only portions of which are subject to climate impacts. Consider, for example, the State of California. Its forests are burning, and may well continue to do so, but most of the vulnerable areas are far away from the coastal cities that generate most of the state’s tax revenue. So a large increase in California forest fires is unlikely to be a significant credit event for the state’s municipal bondholders.

Scientists expect coastal areas to be affected by sea-level rise, but the initial effects in California will likely be confined to areas very close to the Pacific Ocean. Property one mile or more away from the coastline should suffer limited impacts, at least during the life of any given municipal bond, which is generally 30 years or less.

Smaller jurisdictions could be at greater risk from climate change, but even in these cases, the default-risk implications may not be intuitive. In November 2018, a wildfire wiped out the small California city of Paradise, which had issued pension-obligation bonds in conjunction with two other California cities back in 2007. Two months later, Moody’s downgraded the bonds by three notches to Caa3, noting that “the heavy physical, social, and economic damage to the town, will inexorably devastate its financial position, realistically eliminating any short term ability to pay debt service on its share of the bonds, thus rendering a near-term default almost certain.”

But that default did not occur thanks to proceeds from an insurance settlement and the state legislature’s decision to backfill Paradise’s lost property tax receipts, prompting Moody’s to upgrade the bonds by one notch in August 2019. Earlier this year, Moody’s further upgraded the bonds to Ba2 after the town received $270 million from Pacific Gas & Electric, whose power lines were blamed for the conflagration.

The bonds now carry a higher rating than they did prior to the fire, reflecting an informed view that Paradise is now better positioned to perform on its pension obligation bonds than before it burned down.

Of course, these circumstances may not occur after all adverse climate events, but the federal government has shown an increasing propensity to provide aid in the aftermath of major disasters. The takeaway for analysts trying to assess the default-risk implications of environmental factors is that they may have to also perform analysis of intergovernmental aid offsets as well as insurance and litigation payouts to get the full story.

Finally, there is a question of how climate-model results can translate into better-informed opinions about the prospects for asset destruction. For example, the latest report from the Intergovernmental Panel on Climate Change states:

Increasing evaporative demand will expand agricultural and ecological drought and fire weather (particularly in summertime) in Central North America, Western North America and North Central America (from medium to high confidence). Severe wind storms, tropical cyclones, and dust storms in North America are shifting toward more extreme characteristics (medium confidence), and both observations and projections point to strong changes in the seasonal and geographic range of snow and ice conditions in the coming decades (very high confidence).

Converting these generalized predictions into risk assessments for specific geographic areas requires a lot of assumptions, especially for those predictions made with less-than-very-high confidence.

Given uncertainties around the specific impacts of climate change on individual municipal-bond issuers, as well the availability of third-party assistance, it is hard to see how climate-risk analysis can benefit bondholders. Over the past 80 years, general-obligation municipal-bond defaults have been quite rare. Further, the most recent major defaults — notably, those in Detroit and Puerto Rico — have coincided with high levels of debt (including pension debt) and population loss. So, for now, it appears that traditional economic and fiscal analysis is sufficient to protect municipal-bond investors from most defaults.

Encouraging Municipal Climate Investments

Some municipal-bond investors would like to use their assets to fund a robust state and local government response to climate change, while many municipal issuers would like to demonstrate their leadership on climate issues. But with so much demand for municipal securities and near record-low bond yields, it is hard for issuers to reduce interest costs by issuing green bonds.

Whether or not green bonds provide measurable financial benefits, interest in green bond certification is high. Since 2014, local governments in North America have issued over $50 billion in bonds carrying green certifications from the Climate Bonds Initiative, an NGO that publishes sector-specific standards for providing such certifications. CBI does not certify the bonds itself but authorizes third-party verifiers to apply its criteria and provide certifications.

But if an institutional investor buys a portfolio of certified climate bonds, would that institution make a meaningful contribution to combatting climate change? The answer depends on how well the standards are crafted and implemented.

One city with an especially aggressive green-bond program is San Francisco. The controller touts a report from C40 Cities noting that San Francisco has already reduced its greenhouse gas emissions by 36 percent since 1990 (although most of that reduction cannot be attributed to green bonds, which the city only began issuing in 2015).

Certifications notwithstanding, it is far from clear that investing in San Francisco bonds is a great way to combat climate change. One San Francisco certified green bond helped finance the Salesforce Transit Center, a new transportation terminal that recently opened in the city’s downtown. The Series 2019 green bonds helped fund a rooftop park for the center as well as its “train box.”

Although the rooftop park’s trees provide some climate benefits, this is not the case with the train box, which was built to accommodate commuter-rail service from San Jose, as well as California High-Speed Rail. But trains cannot reach the station until a subway tunnel is constructed between the Salesforce Transit Center and the current terminus at the Caltrain station.

Only 1.4 miles separate the two locations, but the subway project has yet to be funded. Transit officials will have to pull together $6 billion to build the line and make associated improvements. Even if the bipartisan infrastructure bill is signed into law, San Francisco will have to compete with other communities for the federal share of this funding package. And, even once funding is identified, it could take a decade or more to start service. Even the transit advocates at Streetsblog project a start date of “sometime after 2032.”

So bond funding of the train box will not result in any transit service for at least thirteen years from the date of issuance, if it ever does. Even then, it is not clear that many train passengers will use the new station, given the transition to work-from-home now occurring in the Bay Area and nationally. Further, train ridership overstates the climate benefit to the extent that riders switch to the train from walking or other transit alternatives. Right now, passengers alighting at the Caltrain terminus often board a light rail train that connects to downtown.

Building a train station in San Francisco without connecting track in hopes that it will attract a subway line and passengers ditching their cars to use it does not seem like the most efficient way of using bond proceeds to reduce greenhouse gas emissions. But investors relying on climate bond certifications would not know that.

In addition to the certifications, several rating agencies and analytics firms are assigning ESG ratings and scores to municipal-bond issuers and their debt securities. Much of this analysis is proprietary and thus not readily available for analysis. But a recent Standard and Poor’s analysis of a San Francisco green-bond offering for additional transit upgrades does not address ridership impacts, let alone estimate the number of car trips displaced or carbon emission reductions.

At this stage, municipal ESG analysis is relatively new. But it looks like it will have to go a long evolution before it can provide meaningful guidance to investors hoping to fight climate change in the most cost-effective manner.

For now, municipal investors seem best served by pursuing strategies that maximize their risk-adjusted returns, employing traditional credit analysis. While it is theoretically possible to achieve better financial and environmental results by incorporating ESG factors, real-world benefits are likely to be elusive given the incomplete amount of available information.

A version of this column previously appeared in National Review Capital Matters.

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A primer on carbon taxes

Julian Morris — Thu, 28 Oct 2021 16:00:00 +0000

Executive Summary

Carbon taxes are again being discussed in the United States as a means of reducing emissions of carbon dioxide and other greenhouse gases (GHGs). Three main arguments are proffered in support of carbon taxes, either alone or in combination:

That by setting a price on greenhouse emissions equal to the “social cost of carbon,” a carbon tax would optimally reduce GHG emissions.
That replacing existing regulations, subsidies, and tax expenditures with a carbon tax would more cost-effectively achieve emissions-reductions goals.
That a revenue-neutral carbon tax would be economically beneficial.

These arguments are found to be wanting.

First, in theory, a carbon tax set at the “social cost of carbon” would lead to an optimal rate of greenhouse emissions. However, the “social cost of carbon” is highly uncertain. The current U.S. administration has chosen to use estimates of the “social cost of carbon” developed during the Obama administration, which would be in the region of $53 per metric ton of “carbon dioxide equivalent” emissions. This is likely significantly higher than the optimal rate.

A carbon tax applied with no offsetting reductions in other taxes or changes in regulations would increase the cost of goods and services. Energy and energy-related goods would be especially hard hit. A tax of around $50 per ton would raise natural gas prices by about 40% and gasoline prices by about 15% above recent levels. This would reduce economic growth by as much as 0.2% and also reduce employment. Even taking into account reductions in damage associated with GHG emissions, applying a carbon tax at a rate of $53 per ton would most likely cause net economic harm.

Second, numerous existing regulations, subsidies, and tax expenditures currently aim to reduce greenhouse gas emissions, including: the Renewable Fuel Standard, vehicle fuel economy and GHG emission standards, renewable portfolio standards, and tax credits for renewable energy and low-emission vehicles.

These regulations, subsidies, and tax expenditures cost hundreds of billions of dollars but do relatively little to reduce emissions. Replacing them all with a carbon tax applied at a uniform rate would in principle be both much less costly and more effective as a means of incentivizing reductions in emissions.

In practice, the likelihood of such a “grand bargain” being successfully implemented is extremely low because powerful, concentrated special interests who currently benefit from the regulations, subsidies, and tax expenditures would lobby heavily to maintain them.

Third, a revenue-neutral carbon tax, achieved by reducing either corporate income tax or the payroll tax or both, could have net benefits even if existing policies aimed at reducing carbon emissions were not repealed. However, it is unlikely that a carbon tax would be implemented in a truly revenue-neutral manner.

Many proposals from Congress and the Biden administration propose paying for new programs with carbon tax revenues, suggesting that there would be pressure to increase such revenue. This is precisely what happened in British Columbia, where an initially revenue-neutral carbon tax has gradually been increased. Elsewhere in the world, carbon taxes have almost ubiquitously been used for revenue-raising purposes.

Introduction

Governments across the world, including the U.S. federal government and many state governments, have sought to regulate emissions of greenhouse gases (GHGs) through a vast array of regulations and subsidies. Several of these have been controversial. For example, federal mandates and subsidies to promote the production and use of ethanol as a fuel have been criticized by both economists and environmentalists.

Meanwhile, vehicle and appliance energy efficiency standards became a cause célèbre in the recent U.S. presidential election.

In the face of such controversies, many economists and policy advocates (on both the political left and right) have argued that a carbon tax would be a more efficient policy to reduce GHGs emissions than these regulations and subsidies. There are broadly three arguments made in favor of introducing a carbon tax.

First, from an economic perspective, it is viewed as an efficient way to reduce GHG emissions, thereby internalizing the “social cost” of those emissions.

Second, regardless of whether a carbon tax is desirable per se, it is widely viewed as being superior to existing regulations and subsidies.

Third, even if a carbon tax were introduced on top of existing regulations and subsidies, some argue that it would have net economic benefits if it were implemented revenue-neutrally.

This brief considers the arguments for and against such a tax. It is organized as follows:

• Part 2 describes and evaluates the merits and drawbacks of the social cost argument.

• Part 3 discusses the economic effects of introducing a carbon tax without any other changes in tax, subsidy, or regulatory policy. The aim is to describe the effects of introducing a carbon tax on top of existing policies.

• Part 4 describes and critically evaluates the “grand bargain” argument, whereby a carbon tax is introduced as a replacement for existing regulations, subsidies, and tax expenditures that are aimed at reducing GHG emissions.

• Part 5 assesses the possibility and consequences of introducing a revenue-neutral carbon tax, that is to say combining the introduction of a carbon tax with offsetting reductions in other taxes so that net revenue remains constant.

• Part 6 offers some concluding remarks.

Excerpt of the Policy Brief’s Conclusions

This brief has explored the main arguments put forward in support of introducing a carbon tax.

Part 2 considered the argument that a carbon tax is justified on the grounds that carbon emissions impose a net external cost on society. While that may be true, the scale of those external costs remains uncertain. In determining an appropriate price for carbon emissions, the current U.S. administration uses “social cost of carbon” estimates developed during the Obama administration of approximately $53 per metric ton of CO2-e.

Part 3 explored the economic implications of applying a carbon tax at about that rate. Such a tax would significantly increase the cost of energy and energy-related goods. Studies show that, in the absence of any other changes to taxes, subsidies, or regulations, a carbon tax of around $50 per metric ton would cause U.S. GDP to fall by about 0.4%, lead to hundreds of thousands of lost jobs, and cause incomes to fall across the board, perhaps especially among those already on lower incomes.

While a carbon tax on its own would undoubtedly cause economic harm (notwithstanding any environmental benefits that might arise), it would likely be far less harmful than the many regulations and subsidies currently implemented to reduce carbon emissions. It would also likely be more effective than those policies in reducing emissions. So, in principle, a “grand bargain” in which a carbon tax was introduced in return for eliminating all those more harmful policies would have merit.

Unfortunately, as discussed in Part 4, the existing regulations and subsidies have created sets of concentrated beneficiaries, while the harms they cause are dispersed among the wider population. As such, any attempt to reform these policies is likely to be met with fierce and well-funded opposition.

Part 5 noted that a revenue-neutral carbon tax, achieved either by reducing (possibly even eliminating) corporate income tax or by reducing the payroll tax, could have net benefits even if existing policies aimed at reducing carbon emissions were not repealed. However, it seems unlikely that a carbon tax would be implemented in a truly revenue-neutral manner. Even if such a tax were initially close to revenue-neutral, numerous pressures would almost inevitably lead to it being increased at a rate such that it would generate additional net tax revenues.

Given the economic harm that would be caused by a carbon tax, and since most if not all the benefits from either a grand bargain or a revenue-neutral carbon tax would be generated by the reduction in other taxes, regulations, and subsidies, it would seem preferable for governments to reduce those taxes (or, at least not increase them), and remove those regulations and subsidies without imposing a carbon tax.

Full Policy Brief: A Primer on Carbon Taxes

Full Study: Evidence-Based Policies to Slow Climate Change

The post A primer on carbon taxes appeared first on Reason Foundation.

Proposed electric vehicles tax credit prioritizes labor unions over carbon reduction goals

Robert Poole — Wed, 27 Oct 2021 19:41:00 +0000

Whenever politicians win, they like to use the cliche that elections have consequences. When Democrats won control of the House and the Senate last year, a variety of policies aimed at addressing climate change were expected. But an electric vehicle provision in Congress’ evolving $1.5 to $2 trillion reconciliation bill would undermine their climate change-related efforts in order to provide an unprecedented gift to the United Auto Workers Union. The provision, in Section 136401 of the initial House reconciliation bill, would create a new, extra federal tax credit for buyers of some electric vehicles, who would receive an additional $4,500 tax credit—if they purchase electric vehicles assembled by union labor.

CNET reports:

This bill adds $4,500 to the current $7,500 tax credit available for a total of $12,500 potentially available to EV buyers. As the bill stands today an EV must be assembled in the US and with union labor, which would disqualify nonunion automakers such as Tesla and Toyota. In addition, it must use a US-built battery to qualify for the full $12,500 incentive. The bill is part of the broader Democratic-backed budget plan, though it continues to face major hurdles. It’s unclear if this provision will stick as President Biden and others in his party try to work out a compromise on the spending plan.

Back in the 1960s, when Detroit’s Big Three automakers (Chrysler, Ford, and General Motors) assembled nearly all of the cars sold in America, the term auto worker was synonymous with being a United Auto Workers member. By the 1980s, that began to change, as Honda, Nissan, and Toyota introduced popular, mostly better-built cars that became widely popular with drivers. Threatened with new tariffs, however, the Japanese car companies, along with BMW, Mercedes-Benz, Volkswagen, and others began building assembly plants in the United States. But, knowing full well the high costs, restrictive work rules, and strike potential at auto plants located in Michigan, nearly all of these carmakers’ new plants were located in Southeastern states, such as South Carolina and Tennessee. Unlike Michigan, these are “right-to-work” states, with laws that make it harder to form unions.

Today, only two of the 50 electric vehicles that would otherwise qualify for the new tax credit are assembled by union workers (at Ford and GM plants). By comparison, all the rest of the electric vehicles would become considerably more costly to consumers due to the absence of the bonus tax credit.

Every major auto company has more electric vehicle (EV) models in its pipeline, but even U.S. auto companies don’t plan to build most of them in Michigan. Both Ford and GM have announced plans for new EV production facilities in Tennessee, and the non-U.S. companies plan to keep building their vehicles (including EVs) in right-to-work states.

On Sept. 30, 12 of the largest non-U.S. auto companies sent a joint letter to House Speaker Nancy Pelosi (D-CA) and senior House members arguing that this tax credit measure would discriminate against their 131,000 American auto workers at 500 facilities in 36 states. They noted that their companies currently account for 55% of all new vehicle registrations each year.

Cody Lusk, CEO of the American International Automobile Dealers Association, told Politico, “If I want to buy a Volvo made in the US, I wouldn’t get the same benefits as someone who buys from GM in Michigan. The $4,500 credit is a huge amount and makes any non-union vehicles in a market non-competitive.”

That may be an exaggeration, but the proposed tax credit would obviously reduce the sales of electric vehicles made by every company except the Big Three’s models assembled in a handful of states. Policymakers hoping to increase the number of electric vehicles on the road should worry about the unintended consequences of this tax credit proposal. For example, if electric vehicle sales by all of the popular carmakers that would be ineligible for the $4,500 tax credit are cut in half in the coming decades because their EVs look less competitive, by 2050 the overall fraction of electric vehicles in the U.S. personal vehicle fleet could be only 25%, rather than the projected 50%.

A major emphasis of the Democratic Party’s agenda in Congress right now is implementing policies intended to reduce America’s carbon footprint. Making the transition to electric vehicles over the next 30 years is going to be a major element if that goal is successfully reached. Yet, this tax credit prioritizes labor union membership ahead of reducing the country’s carbon footprint. By trying to push buyers to union-assembled cars, Congress risks slowing the shift to electric vehicles and undercutting the carbon reduction goals it is trying to achieve.

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Evidence-based policies to slow climate change

Julian Morris — Tue, 26 Oct 2021 04:01:00 +0000

Executive Summary

Human emissions of greenhouse gases (GHGs) are contributing to a rise in global average temperatures, with potentially significant effects on the climate. In response, governments around the world have introduced policies intended to reduce emissions of GHGs. Most of these policies are “top-down” and include mandatory restrictions on emissions, mandatory use of certain “low carbon” technologies, and subsidies to specific technologies.

This study finds that such top-down policies’ approaches to controlling GHG emissions may not be as effective as bottom-up approaches that harness the natural tendency of entrepreneurs and innovators to identify more efficient and cost-effective ways to produce goods and services.

The study identifies several key trends that suggest bottom-up approaches are already delivering results:

Energy use per dollar of gross domestic product (GDP) has been declining at a fairly constant rate in the U.S. for about a century.
Emissions of carbon dioxide (CO2) per dollar of GDP have been falling faster than the rate of decline in energy use for the past half century, both in the U.S. and globally.
Over the past 30 years, emissions of other GHG per dollar of GDP have been falling faster than emissions of CO2 globally.

These trends are largely driven by improvements in efficiency and changes in the sources of energy, including a centuries-long shift toward more energy-dense, lower-carbon fuels. These improvements were mainly driven by market forces, not government intervention.

While continued improvements in energy efficiency may slow or even stop the growth in energy use, they are unlikely to lead to a reduction in energy use, let alone a reduction in CO2 emissions. As such, if reductions in carbon dioxide emissions are to occur, they will need to come primarily from a continued shift toward lower-carbon fuels.

Currently, about 90% of the world’s energy and 80% of U.S. energy are supplied by carbon-based fuels. Numerous lower-carbon energy sources are currently available and are able cost-effectively to supply some portion of current energy demand. Unfortunately, however, attempts to shift largely or exclusively to zero-carbon fuels in the short term are likely to be prohibitively costly.

Hydropower can only be cost-effectively produced in locations that are geologically suitable.
Geothermal energy can be cost-effective in certain locations and applications.
Solar and wind power can be cost-effective in a relatively wide range of locations and applications but cannot be relied upon by themselves to supply power because the sun only shines for an average of 12 hours per day and the wind does not blow continuously. For these intermittent power sources to form a significant proportion of energy supply, storage (such as batteries) or back-up generation will be needed.
Battery storage is currently not cost-competitive with natural gas as a source of back-up power for renewable energy systems.
Nuclear power remains an important source of energy in the U.S., but the cost of a new nuclear power plant is more than twice the cost of a new natural gas-fired power plant per kW of energy generated.

For low- and especially zero-carbon energy to become the dominant source of power in the U.S. and globally, continued innovation is key. The question is, which policies are most appropriate to drive such innovation?

In other cases, innovations may derive laterally from innovations in other technologies. For example, large-scale battery storage technology has already benefited from dramatic improvements in lithium-ion batteries initially developed for laptops and other small consumer electronics. Likewise, geothermal energy generation is already benefiting from innovations developed to enable the extraction of oil and natural gas from shale formations.

Because many factors are geographically specific, the optimal combination of lower-carbon technologies will vary significantly from place to place. It will also change over time as innovation drives down costs. So, policymakers should avoid one-size-fits-all, top-down approaches and instead look at ways to encourage innovation and implementation from the bottom up—both in general and specifically in energy markets.

Some of the most important factors affecting innovation in general are:

Competition, both in general and specifically in capital markets;
Flexible labor markets;
Low personal and corporate taxes; and
Streamlined, cost-effective regulation.

Meanwhile, governments could improve the prospects for low-carbon energy generation specifically by taking actions to:

De-monopolize electricity markets;
Remove trade barriers in the energy sector (both exports and imports);
Reduce subsidies and tax expenditures for energy and energy-related technologies;
Streamline permitting for all forms of energy generation, including nuclear; and
Eliminate arbitrary, technology-specific energy mandates.

Innovation has the potential dramatically to reduce carbon emissions over the course of the next half-century. Indeed, if the United States were to adopt the pro-innovation approach outlined here, U.S. GHG emissions could fall to zero, or close to zero, by about 2060. Globally, it could take a little longer, but with a concerted effort to remove barriers to innovation, greenhouse gas emissions could approach zero in the last two decades of the century without any need for explicit restrictions on CO2 or other greenhouse gases.

Introduction

Human emissions of greenhouse gases (GHGs) are contributing to a rise in global average temperatures. Concerns about the effects of increased temperature stemming from further increases in atmospheric GHG concentration have led governments around the world to implement policies that aim to reduce GHG emissions.

Unfortunately, many of the policies so far implemented have done little to reduce GHG emissions or reduce the risk of future temperature increases, at enormous cost. Unfortunately, many of the policies so far implemented have done little to reduce GHG emissions or reduce the risk of future temperature increases, at enormous cost. The Renewable Fuels Standard, discussed in Part 7 of this study, is an extreme example, but there are many others. Going forward, it is important to identify cost-effective policies to reduce GHG emissions and thereby slow the rate of climate change.

This study examines and explains the mechanisms underpinning reductions in GHG emissions and describes a set of policy changes that would achieve such reductions cost-effectively. It begins in Part 2 with a simple description of the relationship between economic activity, GHG emissions, and global warming.

Part 3 delves more deeply into the changing relationship between economic activity and emissions and offers a hypothetical projection of future emissions based on this changing relationship.

Parts 4 and 5 consider the role of energy density and dematerialization as explanations for the changing relationship between output and emissions.

Then, Part 6 assesses various factors that underpin both increasing energy density and dematerialization.

Part 7 evaluates the prospects for increasing energy efficiency both in general and through targeted policies.

Part 8 identifies technologies and policies that might lead to lower-carbon energy generation.

Finally, Part 9 draws together the several strands of policies discussed throughout the paper and offers conclusions.

Full Study: Evidence-Based Policies to Slow Climate Change

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Comments on the proposed pesticide experimental use permit for Oxitec

Julian Morris — Mon, 20 Sep 2021 00:12:00 +0000

This submission focuses on the benefits and costs associated with the issuance of the experimental use permit (EUP) requested by Oxitec Ltd. to test the OX5034 Aedes aegypti mosquitoes in the states of California and Florida, and the possible wider impacts of approving the EUP to evaluate the efficacy of OX5034 mosquitoes as a tool for suppression of wild Aedes aegypti mosquito populations.

Given current inefficient mosquito-control methods, the high burden of vector-borne diseases, and the positive results of previous field trials of the OX5034 Aedes aegypti mosquito, Reason Foundation urges the Environmental Protection Agency (EPA) to move forward as quickly as possible in approving Oxitec’s request for an experimental use permit to undertake additional field trials in Florida and California. Unfounded fears about this safe technology should not prevent it from being implemented as part of the solution to a serious health problem.

Full Submission: Comments on the proposed pesticide experimental use permit for Oxitec Download

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The Limited Role Transit Can Play In the Bay Area’s Climate Change Strategies

Marc Joffe — Wed, 04 Aug 2021 04:24:21 +0000

Many Bay Area residents are deeply concerned about climate change and actively support local transit projects to reduce greenhouse gas emissions. But building more mass transit infrastructure locally often fails to move the needle very much. Rather than build expensive new transit infrastructure, Bay Area innovators should be applying technologies to make off-peak transit on existing lines and working from home more convenient.

Well before the COVID-19 pandemic, the Bay Area’s mass transit ridership was declining. This means that the costly transit projects now in the works or on the drawing board are likely to have a much smaller effect on the climate than previously expected.

A Santa Clara Civil Grand Jury report found, “[The Santa Clara Valley Transportation Authority] VTA’s light rail system is one of the most expensive, heavily subsidized and least used light rail systems in the country.”

Yet the Valley Transportation Authority is continuing to move forward with a $468 million, 2.4-mile light rail extension from Eastridge to Milpitas. With an average weekday ridership of less than 10,000 prior to the suspension of service, the more appropriate question is whether LRT service should be reduced rather than extended.

Similarly, the recently opened BART extension to Milpitas and Berryessa cost $2.3 billion, but, as the pandemic continues, the two new stations each are currently serving only around 400 exiting passengers daily. Extending service to downtown San Jose and Santa Clara is expected to cost $6.9 billion and take until 2030, while the estimate of 52,000 daily riders, made before the pandemic, seems unlikely to materialize.

Meanwhile, San Francisco is spending $1.6 billion on its repeatedly delayed Central Subway and $346 million for a two-mile Bus Rapid Transit line on Van Ness Avenue, which is now three years behind schedule. Collectively, these projects will put no more than a tiny dent into the 940,000 private automobile trips that occur in the city of San Francisco on an average weekday.

Spending billions of dollars to replace a relatively small number of car trips is not a cost-effective approach to combating climate change, but the Bay Area has other powerful tools in its shed. High-speed internet, cloud computing, online meeting tools and project collaboration software are reducing the need for many professionals to drive to offices or fly to conferences.

Bay Area companies have contributed to these innovations and are taking the lead in reconceptualizing the workplace to support hybrid or fully remote work. And these new technologies can be implemented around the world, reducing the need for commuting and in-person meetings globally.

We can replace millions of car trips by making it cheaper and easier for employees to collaborate with colleagues from home or from co-working spaces within walking distance from home. This means making technology improvements such as higher transmission speeds, increased network reliability and better software tools for collaboration.

Transit innovations could also contribute. If transit agencies could implement driverless buses and trains, they could affordably maintain five-minute headways throughout the day rather than just at peak rush hours. As more employees return to their offices, they could begin coming in on a staggered basis without having to worry about long waits on the platform.

To the extent that Bay Area innovators can leverage autonomous vehicle technologies to implement driverless transit at low cost, they can benefit not only VTA, BART and SF Muni, but other transit systems around the country and the world.

With only 0.1 percent of the world’s population, there is only so much the Bay Area can contribute to climate change alleviation through local mass transit initiatives. Rather than build expensive new transit infrastructure, the Bay Area should find more cost-effective solutions.

A version of the column previously appeared in the Mercury News.

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Public-Private Partnerships Can Help Achieve Water Equity Goals

Austill Stuart — Thu, 13 May 2021 04:00:29 +0000

Several cities, including Baltimore, Chicago, and Philadelphia have considered, or recently enacted, measures designed to provide water services for low-income customers at reduced costs and to eliminate shutoffs for past-due accounts. Yet, these laudable goals are often tied to something that makes reaching them even more difficult —banning water agencies from contracting with private sector companies.

Many of us don’t often think about the vast resources required to ensure our tap water remains clean and our sewage is properly diverted. But inadequate water, wastewater, and stormwater infrastructure contribute to the approximately 900 billion gallons of clean water wasted by household leakage every year, according to the U.S. Environmental Protection Agency. A 2013 report from the Center of Neighborhood Technology estimates 2.1 trillion gallons of clean water is lost every year, mostly from a combination of leaking and broken pipes.

Wastewater and stormwater systems have their own problems; cities with combined (wastewater/stormwater) sewers discharge billions of gallons of diluted sewage and industrial wastewater into waterways each year. The EPA estimates a minimum of 23,000–to-75,000 overflow discharge events occur in any given year from sanitary (not combined with stormwater) sewer systems.

Many systems are falling behind from a technological standpoint, relying on an excess of manual labor to read meters and perform other tasks that could be partially or fully automated.

Finding answers to the structural and technical problems will be extremely costly—$600 billion in the next 20 years, the EPA says—and seeking additional equity goals add to those costs by lowering the ratepaying base. Getting all of these things right will require innovation, extensive education and training.

Unfortunately, the equity goals sought by water-for-all proposals are often tied with blanket opposition to outsourcing and privatization of municipal water systems. Yet, the main benefits the private sector brings through contracting include state-of-the-art practices, innovation, and improved technology—the types of solutions needed to upgrade, modernize and maintain water systems.

Some jurisdictions are utilizing the private sector’s expertise and efficiency. Atlanta (operations and management), San Antonio (water delivery), Milwaukee (wastewater treatment), and many other cities continue to renew contracts with private companies to realize their water goals at lower costs, accumulating savings that are passed on to customers.

Moreover, accessing the innovation, knowledge, financing, and construction capacity to meet the environmental and equity challenges of municipal water will often require contracts with private sector companies.

Baltimore’s private water ban went into effect last year, but the city’s many failures, as documented by the Inspector General, required contracting anyway. The Inspector General report noted late last year that the amount of “fraud, waste, and misconduct” cost “millions of dollars in lost water and sewer revenues,” “thousands of digital water meters…are not fully functional,” and over 8,000 tickets of about 12,000, mostly concerning “zero-read” (not charging customers) account-related issues, remained unresolved for over a year.

The COVID-19 pandemic has exacerbated Baltimore’s shortcomings, as the 63 Meter Shop employees, who install, replace, and repair all 400,000 water meters in the city and county, were placed on paid leave in March 2020. By the Inspector General report’s release in December 2020, only 18 had returned to work, of which only 11 had “the training and ability to handle meter-related tasks…includ(ing) reading meters,” while also being confined to the use of a single vehicle.

As a result of the city’s reduced Meter Shop, last October the county entered an emergency contract with a private firm to provide monthly readings for 210,000 meters. The city, too, despite its ban, entered over $5.7 million in water contracts last year, mostly related to repair, replacement, billing, and related software.

The water equity advocates achieved another self-debilitating victory in Baltimore this January when an attempt to outsource the Meter Shop itself was defeated. Instead of cutting costs and improving revenues through better trained and fewer staff, Baltimore is ensuring its ratepayers get the worst of both worlds: uncollected revenues from ineffective meters and a bloated, ill-trained workforce to manage the solution. Baltimore claims the employees will be properly trained to improve operations, but even getting meters functional enough to bill customers will likely be a steep uphill climb for the city to manage by itself.

Many water agencies rely on contracting with private companies because they see advantages in having a private sector company fulfill duties the public expects of its agencies. When agencies are open to innovative solutions, contracting can bring considerable value to the building, operating, repairing, and replacing of water-related infrastructure.

That value actually makes equity-focused goals more achievable.

Water equity advocates hope to achieve universal ratepaying assistance for low-income customers, as well as a ban on shutting off water services of those who cannot afford the bills. While admirable, those goals put even more pressure on municipal water agencies to provide reliable and expensive services with an even smaller revenue base to pay for them. Contracting with experienced private companies can provide effective and accountable solutions to help relieve that pressure, which is why water equity advocates should embrace private sector contracting, not seek to ban it entirely.

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The Texas Power Fiasco Shows Need to Find a Balance With Wind Power and Other Renewables

Kenneth P. Green — Mon, 05 Apr 2021 04:00:45 +0000

Round like a circle in a spiral, like a wheel within a wheel
Neither ending nor beginning, on an ever-spinning reel…

The story of wind power has never been written so well as in the song “Windmills of Your Mind,“ by Michel LeGrand, with English lyrics by Alan and Marilyn Bergman. The song, written about a great movie, The Thomas Crown Affair, is about the world of high-stakes theft and subterfuge, where all is spin and nothing is as it seems. And the blame vortex surrounding the blackouts during the recent deadly winter storm in Texas is a stunning example of this kind of rotary obfuscation.

The battle lines on the “what we learned from Texas” debate were drawn practically before the rotors had stopped spinning, either on the wind turbines, or in the gas, coal, and nuclear power plants that Texas has historically relied on to keep the lights burning. (Let’s leave solar out of this, at 2 percent of power production, it’s not relevant.)

If you wanted to scapegoat wind power, for whatever reason, as Texas Gov. Greg Abbott did, it was supposedly as obvious as the sheaths of ice on the turbines, that wind was the culprit. Responsible for producing over 23 percent of Texas electricity generation at some points of the year, a lot of the wind power didn’t work so well in the deep freeze. So, the narrative wrote itself for those looking to blame wind. They suggested wind power is unreliable because the wind is unreliable, the weather is unreliable, and so is the climate that drives the weather. Adding insult to injury, you can’t store the power to use when the wind isn’t blowing, even with Elon Musk in Texas. So, to those people, it was a wind-power failure, QED.

On the other hand, if you love wind power and oppose fossil fuels or conventional power plants, the narrative from your perspective was equally clear. The “obsolete” conventional power generation sector (fossil fuels and nukes) was to blame for a whole bunch of reasons, including a lack of proper maintenance, a failure to weatherize equipment in ways that the state had previously been warned about, an isolationist power grid separated from the rest of the country, and so on. In the face of a predictable storm, Texas’ coal and natural gas power plants weren’t ready to do the job they’re supposed to.

Both narratives are in some aspects true.

Yes, many wind turbines weren’t producing power during the storm, but it’s also true that far more coal and natural gas-powered power plants were down and unable to meet the demand of Texas customers. The Austin-American Statesman reported the Electric Reliability Council of Texas (ERCOT) breakdown of the problem across the types of facilities on Feb. 17:

ERCOT said all types of facilities, not just the ones that produce renewable energy, were affected by the statewide outages.

As of Wednesday, 46,000 megawatts of generation were offline, with 185 generating plants tripped. ERCOT officials said 28,000 megawatts came from coal, gas and nuclear plants, and 18,000 megawatts were from solar and wind.

Energy demand reached a record high Sunday and didn’t taper off as electricity usage typically does during overnight hours. The issue became critical when several of the grid’s energy generation units began to go offline in rapid progression, affecting more than half of the grid’s winter generating capacity, according to ERCOT Senior Director of System Operations Dan Woodfin.

These failing sources largely included nuclear plants, coal plants and thermal energy generators. Frozen wind turbines were a factor, too, but Woodfin said wind shutdowns accounted for less than 13% of the outages.The problem in Texas was not simply about particular sources of power, nor the politics of power, the problem was a failure to properly blend the old with the new and balancing a system capable of meeting demand under those cold conditions…

An ERCOT report on generating capacity listed the top sources of power in the state:

Natural gas (51%)
Wind (24.8%)
Coal (13.4%)
Nuclear (4.9%)
Solar (3.8%)
Hydro, biomass-fired units (1.9%)

If you want a system that is heavy in intermittent power generation, like wind, you need to have adequate backup power standing by to kick in when the wind isn’t blowing. That’s obvious. What’s not obvious is that the problem is not when the wind fails to produce power, but when it actually succeeds at producing power because while that’s happening, the backup systems are operating at partial capacity, and they’re losing the money needed to maintain their ability to pick up the slack when the wind dies down. Add to that a general political climate that heavily disfavors properly maintaining, renovating, and upgrading conventional power generation or infrastructure, and you have some of the key contributing factors to the Great Texas Winter Blackout of 2021.

This challenge, balancing the economics of wind power and its effect on conventional forms of power generation is where the overall concept of replacing conventional power with renewable power is failing and will likely continue to fail. That’s not because there’s anything wrong with wind power, or conventional power. It’s a problem of cold, hard economics and governance. The various political actors steering power systems are often not interested or not capable of looking for a way to balance the speed of renewable deployment with a way to meet the economic needs of the established power generation systems that have kept the lights on when the wind doesn’t blow and the sun doesn’t shine. Striking that balance is the key to moving forward toward decarbonizing and expanding the electrification of power systems over time.

Spinning has always been part and parcel of using and generating power: wheels, axles, pulleys, crankshafts, generators, and so on. Similarly, spinning has always been part and parcel (cynically, perhaps the greatest part) of politics. And it’s those politics that led to the power fiasco in Texas. But there is potentially a ray of light. Hopefully, in the forensic aftermath of the Texas fiasco, more knowledge will be gained about how to strike the balance when integrating more renewables, both those we know and those we have yet to discover, into an existing system with massive economic momentum built up over decades of operation.

Politicians, activists, advocates, and opponents of wind, coal, gas, nuclear, hydropower, and even solar power, all need to stop spinning around this fundamental truth: Whether one likes it or not, intermittent forms of energy generation are just as subject to the laws of economics as every other form of energy generation. We have to stop pretending it’s all one way or the other, renewable or conventional, and strive to find the proper balance that keeps the system working and from failing its customers in deadly ways as it did in Texas. And that correct balance involves technology, economics, and, unfortunately, political rationality, which often seems more fickle than the wind.

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High-Speed Rail Is Unlikely to Play a Major Role In Achieving Climate Goals

Marc Joffe — Tue, 23 Mar 2021 18:00:49 +0000

Advocates of high-speed rail projects sometimes argue that high-speed rail would help reduce emissions and fight climate change. However, the construction timelines, costs, and travel patterns of typical high-speed rail projects make that unlikely in the United States.

In terms of timelines, the obvious example in the U.S. is California’s high-speed rail system, which was approved by the state’s voters in 2008. As of this writing in 2021, there’s no sign of the trains. The latest estimates suggest that a small section of the rail system will not start until 2028 at the earliest. While some rail proponents cite China’s speedy completion of high-speed rail projects as a model to follow, that nation does not respect property and labor rights. Thus, China’s rail construction costs and timelines aren’t comparable to those in the United States.

In a 2010 University of California—Berkeley study, professors Mikhail Chester and Arpad Horvath estimated that the entire California high-speed rail project would generate 9.7 million metric tons of carbon dioxide during construction. They also estimated that it would take high-speed rail 71 years of operation at medium occupancy to offset its own construction-related greenhouse-gas emissions.

Building high-speed rail systems require steel and concrete, the manufacturing of which typically generates greenhouse gases. Trucks, bulldozers, and other construction site equipment also consume energy. Thus, during their long construction phases, high-speed rail projects add greenhouse gases. Adding lanes to existing highways also generates greenhouse gases, but to the extent that recycled asphalt is used for road paving climate impacts can be somewhat reduced.

There are far quicker, more cost-effective ways to reduce greenhouse gas emissions than high-speed rail. By the time high-speed rail projects commence service, more cars will be fully electric, so future high-speed rail systems would be replacing fewer gasoline-powered automobile trips than they would’ve been replacing decades ago. California, for example, plans to terminate the sales of gasoline-powered cars by 2035. Similar bans are being implemented in Canada and the United Kingdom. Given the California rail project’s delays and carbon reductions being achieved by new technology, like electric vehicles, it is possible that, if built, the rail system will never pay back the carbon investment required to build it.

High-speed rail projects are also very costly. California’s high-speed rail project, which was estimated to cost $33 billion when presented to voters in 2008, is now estimated to eventually cost about $100 billion to eventually connect San Francisco to Anaheim. If the California high-speed rail is completed on its current budget, the cost per mile would be approximately $192 million a mile. This compares to about $10 million for a new mile of an interstate highway or $4 million per mile to widen an existing highway.

Costs are high in other parts of the country as well. The Texas project connecting Dallas and Houston is estimated to cost $30 billion. A 2012 plan to convert Amtrak’s Northeast corridor to true high-speed service (220 miles per hour) said it would cost $118 billion.

High-speed rail’s ridership is also uncertain at best, in part, because high-speed rail rarely serves a traveler’s point of origin and destination directly. Rail typically requires connecting services. If these connecting services are inconvenient, many potential rail riders may choose to drive or choose a mode of transportation that offers more convenience or a shorter travel time.

High-speed rail best connects riders in large central cities. However, most U.S. cities are dispersed, with the majority of the population living in suburbs. Thus, in most major urban areas that would consider high-speed rail, suburban customers would either need to take another form of mass transit or drive to get the high-speed rail station, further reducing any environmental benefits of the high-speed rail system itself.

Currently, and in the short-to-mid-term future, travel, work, and leisure habits are going to be changed by the COVID-19 pandemic. When the pandemic is behind us, there may be permanent changes in working-from-home, commuting patterns, and a permanent reduction in intercity travel. As such, there are numerous reasons for taxpayers and policymakers to be wary of high-speed rail’s potential to fight climate change or replace automobile and air travel in cost-effective ways.

The post High-Speed Rail Is Unlikely to Play a Major Role In Achieving Climate Goals appeared first on Reason Foundation.

Testimony: Florida Considers Electric Vehicle Fees to Replace Gas Tax Revenue

Vittorio Nastasi — Wed, 10 Mar 2021 14:00:39 +0000

Senate Bill 140 would create annual flat fees for electric vehicles and plug-in hybrid electric vehicles in the state of Florida. It is paired with Senate Bill 138 which would direct the Florida Department of Transportation to create an Electric Vehicle Infrastructure Grant Program to distribute grants to various entities that apply, and have matching funds, in order to install electric vehicle charging infrastructure throughout the state, and would provide a one-time $5 million appropriation to implement the grant program.

There are approximately 66,700 electric (EV) and plug-in hybrid vehicles currently driven in Florida. Using this number, we can estimate that the new fees established by this legislation would equal roughly $9 million or more in revenue per year.

Fees such as that proposed in SB 140 are common across the country—26 states have imposed them already, and the fee levels proposed in SB 140 are about in the middle range compared to other states. States have been motivated to implement such fees mainly due to projections of lost transportation user fee revenue in the form of fuel taxes, which electric and hybrid vehicles do not pay or pay very little of relative to their use of infrastructure.

The Florida Department of Transportation in its EV Infrastructure Master Plan estimates fuel tax revenue losses by 2040 of between 8.4 percent to 30.0 percent, depending on how rapid the growth in adoption of EVs is. Needless to say, there will be no reduction in the need for roads and road maintenance as the mix of vehicles increasingly shifts to electric and the state’s population, economy, and vehicle-miles traveled continue to grow.

It is only fair that owners of electric and plug-in hybrid electric vehicles also pay for the building and maintenance of the roads they use. A new annual fee for these vehicles is an efficient way to do so. And the fee proposed in SB 140 will not discourage the adoption of electric and hybrid vehicles as their $1,650 average savings on gasoline per year is far more than the $135 or $150 annual fee.

Finally, the grant program in SB 138 would use the first five years of revenue from these fees to provide charging infrastructure for electric and plug-in hybrid electric vehicles, providing these drivers a direct user benefit for their user fee. In subsequent years, the fees would help pay for road maintenance in the state. Moreover, the proposed grant program uses a public-private partnership approach where private parties who need charging infrastructure for their workers or visitors share the costs of installing it with users via the state program.

These policies will help Florida achieve the growth in electric and hybrid electric vehicles that so many want to see for environmental reasons by improving electric charging infrastructure while simultaneously creating a system for those vehicles to pay their fair share for the roads they use in the years to come.

The post Testimony: Florida Considers Electric Vehicle Fees to Replace Gas Tax Revenue appeared first on Reason Foundation.