Missing WASDE

In the absence of a USDA WASDE report tomorrow (due to the government shutdown), AEDE Farm Management Program Manager Ben Brown (with editorial help from AEDE Student Services Coordinator Sarah Cole) penned a poem expressing his shared frustration:

Twas the night before the planned release of the WASDE, and all through USDA,

not a creature was stirring, as work remained at bay.

The speculators keeping close watch on Brazil and their rain,

have gained control of setting the price for our grain.

While Congressmen and women spend time debating a wall,

some farmers- in need of their FSA office- worry if they’ll make it to fall.

The expected positive price news in the USDA report will have to wait,

till the impasse breaks way and we get a new update.

Apparently the government shutdown affects the psychological well-being of more than just the government workers.

Nice job Ben.

I think.

Why a $1 per gallon gas tax might make sense (cents?)

This is modified from a post I wrote a while ago for my own blog “Environmental Economics.”  There I spend a good bit of time trying to convince people that the easiest solution to many environmental problems is to get the prices right.  Markets are a really good way to organize economic activity.  Markets allow individuals and businesses to make decisions based on the benefits and costs that accumulate to them.  The trade-offs associated with these benefits and costs, and therefore the ‘value’ of the thing being traded, are reflected in the market price.  Unfortunately, sometimes we make decisions that not only benefit ourselves, but also impose costs on others.

Take for example, driving.  When I drive, I benefit me.  To drive I need to buy gas.  When people want to drive more, gas prices rise (think Memorial Day).  When people drive less, gas prices fall (think winter).  The price of gas reflects the value of driving…to me.  But, when I drive, I also impose costs on others.  Stuff comes out of my tailpipe that makes it difficult for some to breath (asthmatics).  My driving might also cause traffic–an inconvenience for you.  Burning gas releases carbon which contributes to climate change.  These costs on others, however, are not reflected in the price of gas, so people consume too much gas based on the total costs of driving. Economists call these externalities (we like big words for simple ideas).

So how might we fix the externality problem if the problem is too much driving?

Here’s my proposal (trust me, read to the end…there’s a twist):  All cars are subject to an annual fee based on miles driven.  The fee will be per mile driven and will be inversely proportional to the EPA calculated city fuel efficiency figure.

Here’s how it would work.  Each year, drivers will be required to have their mileage checked at an authorized service facility.  Based on the EPA certified city fuel efficiency rating provided by the EPA for the specific type of car, the car owner will pay a fee (call it F) per mile driven. The fee will be equal to the inverse of the EPA fuel efficiency figure.

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The Challenge of Climate Change

Posted by Brent Sohngen (sohngen.1@osu.edu)

The science of climate change is settled, so the scientists have told us. Recent reports from the United Nations and the U.S. government have told us the human signature is written all over the floods, hurricanes, fires and other devastation we see around us. The future holds even darker realities as global average temperatures continue to rise.

Although the science may be “settled,” what the scientists seem not to understand is the scale of economic and political challenge that confronts us. As they paint ever scarier pictures of the impacts to come, they seem to forget that real efforts to solve the climate problem will have real costs. And those costs will affect lots of people.

We need to look no farther than France to see the effect of even modest costs. There, the government proposed a 25-cents per gallon tax on gasoline to combat climate change and faced four weeks of sometimes deadly protests. This outcome must be incredibly surprising to the political elite who have staked climate goals on the successes of countries in the European Union.

From 1990 to the present, France reduced its carbon-dioxide emissions by 13 percent. Given what they had already accomplished, it did not seem so far-fetched to their government that they could do a bit more. But I guess if you are already paying $7 or $8 per gallon for gasoline, as they do in France, a few more cents actually is important, especially if you are in the middle class and you have to drive to work every day.

As the world has watched events unfold in France in recent weeks, it has become abundantly clear that the pictures of future devastation that scientists have tied to today’s weather calamities are no match for the economic displacement of most proposed climate policies. While the science is becoming clearer by the day, the policy is still just as muddled as ever.

Consider this: Ohio’s carbon-dioxide emissions are down about 22 percent since their peak in 2005. Most of this reduction has occurred as we have shifted electricity production from coal to natural gas and renewables due to our past alternative-energy standards and federal subsidies.

We also are consuming less energy because of energy-conservation efforts and less driving. But if we want to meet the United Nations goals for avoiding catastrophic climate change, we need to reduce emissions by 60 percent by 2030 and by 100 percent by 2060. This means we have to switch all of our electricity needs to solar, wind and geothermal and we have to transition all of our vehicles to electricity by 2060.

We have no blueprint for doing this, and we especially have no blueprint for doing this cheaply. The United Nations suggests that the costs could lead to carbon prices above $5,000 per ton by 2050, or $45 per gallon of gasoline. If we all end up driving electric cars in the next decade or so, of course, high gasoline taxes are irrelevant. But how do we make sure that happens?

Unfortunately, the problem of climate change has nothing to do with debates about whether climate change is real. If it was that simple, we’d have the problem solved by now. No, the real problem is figuring out how to manage this enormous global transition away from fossil fuels. We all probably agree that technology has changed amazingly rapidly, pushing us toward LEDs, battery-powered lawnmowers and better automobile fuel efficiency. But emissions are still increasing globally, not decreasing.

The only way to make the transition happen faster is to adopt aggressive new policies that force us to change, and these will be costly. Ohio’s alternative-energy standards have reduced our emissions by 2 to 3 percent and have had minimal impacts on electricity prices, but the legislature still wants to get rid of them. How in the world are we ever going to solve the climate problem if we won’t tax ourselves to do it? Until the scientists figure out how to solve that problem, all the scary pictures of future devastation in the world will do nothing.

Appeared in the Columbus Dispatch, December 13, 2018


Common Sense on P Pollution

Post by Brent Sohngen (Sohngen.1@osu.edu)

Gov. John Kasich recently fired his director of the Ohio Department of Agriculture over concerns about water quality. One of the things the former director, David Daniels, said to The Dispatch in a recent article was that ”…there’s not enough available expertise, financial assistance and farm-specific information to help the owners of 7,000 farms come up with plans to manage and reduce fertilizer runoff, particularly phosphorus.” This quote sounds good of course, and perfectly plausible, but it couldn’t be further from the truth.

First, expertise is not lacking. There probably is not a more-studied public policy problem in Ohio. Opioids are a more important problem, but until the past few years, they haven’t gotten near the research effort as Lake Erie.

The state of Ohio and the federal government have put millions of dollars into understanding the problem, and it’s actually fairly well understood. Farmers put phosphorus on their farm fields, and some of it makes its way off their fields and into streams and Lake Erie. There is a direct correlation between how much they put on their fields and how much comes off.

Over the years, farmers have used techniques like conservation tillage, grass waterways and cover crops to trap some of this phosphorus in their fields for a while longer, but it eventually comes out anyway. Given the extent to which these practices have been used in the Lake Erie watershed, lots of phosphorus is trapped but still coming out. This just means that it is even more important to reduce current applications to reduce the current problem.

Second, financial assistance is not lacking. The federal government has spent more than $30 million per year for years in the Lake Erie watershed to try to fix the problem. Few problems receive this much attention. Opioids recently got $26 million from the federal government statewide. But farm conservation payments have been going on for years.

Since the mid-1980s, the federal government has sent over $1.3 billion to farmers in Ohio — $600 million of it in the Lake Erie watershed — for them to clean up water pollution. Simply put, there is not a lack of money available to help farmers clean up their pollution. Maybe lots of that money has been wasted or not spent on the right things, but it is not accurate to say that financial assistance is lacking.

Third, farm-specific information is not lacking. Farmers have enormous resources at their disposal, from farm consulting services that charge money, to extension services that provide lots of information for free. The state requires farmers to get education before applying pesticides and nutrients, and Ohio State University Extension provides this education at highly subsidized rates. Education and information simply are not lacking, and state law already requires most farmers to take advantage of low-cost information sources like OSU Extension.

But even if education or information are lacking for any farmer, the question is, whose responsibility is it to get that information? Shouldn’t farmers have the responsibility to gather information on their soils, their inputs, their outputs and everything else about their business on their own? Surely it is not state’s responsibility to tell every farmer exactly what to do.

Actually, the problem in Lake Erie is relatively clear: Too much phosphorus is being applied to fields, whether from fertilizers or manure. The solution is also clear: Less needs to be applied. The question is, how are we going to get less applied?

If we decide to regulate or subsidize, we may be able to reduce costs by targeting regulations to specific farmers who have too much phosphorus in their fields already. But either way, we cannot afford to waste money on things that don’t work like we have in the past. We need a new approach, and perhaps this is why the governor has decided to change directions.

Published in Columbus Dispatch November 11, 2018