Rezachek & Associates'
Energy & Environmental Resources

Avoided Cost Determination/Externalities

Externalities

An Analysis of the Environmental Impacts of Energy Crops in the USA: Methodologies, Conclusions and Recommendations Concerns about global climate change and air quality are driving increased interest in biomass and other energy sources that are potentially CO2-neutral and less polluting. Large-scale bioenergy development could bring significant environmental benefits -- or equally significant damages -- depending on the specifics. In particular, the land requirements for biomass production could be immense.

Assessing Externalities Like any energy supply option, some renewables pose societal or environmental problems. In many cases, these externalities are less than fossil and nuclear externalities, Olaf Hohmeyer and other researchers suggest. In some cases, the externalities of renewables are offset by other, socially valuable attributes. Fortunately, a combination of energy efficiency, waste reduction, reuse, and recycling, and a diverse mix of solar and renewable resources should keep states from pursuing any renewable resource beyond ecologically sustainable limits.

Economic Analysis of Land Degradation and Incentives for Soil Conservation in Smallholder Farming: A Theoretical Development Today, land degradation is perceived as the most important environmental problem in the developing world. This paper develops a suitable theoretical framework for economic and institutional analysis of the problem of land degradation in the context of smallholder farming. It presents the conditions that lead to deviations between privately and socially optimal levels of soil conservation and factors that lead to the divergence between private and social user costs of soil use.

Environmental and Natural Resources Program (ENRP) The Environmental and Natural Resources Program (ENRP) was formed to bring focus, coordination, and visibility to all environmental and natural resources activities in teaching, research, and extension.

Environmental Assessment and Costs The main instrument for assessing the environmental impact is the Environmental Impact Statement. The EIS process has resulted in significant improvements to proposals as first put forward and reviewed in the original EIS. The process enabled a large number of interested persons and organisations to review the original proposals.

Environmental Costs of Energy ME3 was part of an environmental coalition (Coalition) which intervened in a proceeding to quantify the environmental cost of generating electricity in Minnesota. In 1993 the Minnesota legislature ordered the Minnesota Public Utilities Commission (PUC) to quantify the environmental costs of electricity (Docket No. E-999/CI-93-583). On March 22, 1996, an administrative law judge delivered his findings to the PUC. The PUC issued its final order. They adopted the following externality values on July 2, 1997.

Environmental Externalities in Electric Power Markets: Acid Rain, Urban Ozone, and Climate Change An article by John Carlin. Electric power plants that burn fossil fuels emit several pollutants linked to the environmental problems of acid rain, urban ozone, and the possibility of global climate change. Damages caused by those emissions are viewed by many economists as "externalities" and an inefficiency of the market when electric power rates do not reflect, nor ratepayers directly pay, the associated social costs.

Externalities - The Hidden Corporate Tax on America In this era of debate over gas taxes, and tax structure in general, there is a single minded focus on public taxes which are imposed by government. This viewpoint is blind to the fact that the greatest tax is not levied by government, it is imposed as an invisible and private tax by corporations. The mechanism through which corporations impose this hidden tax on the American people, is through the artificial concept of 'Externalities'.

Fuel Cell Buses and Externalities Excerpts from: Is clean enough? - The influence of environmental externalities on markets for fuel cells in transport. This paper explores the economic situation of a novel energy conversion technology - fuel cells - in transport applications. The situation of the fuel cell is investigated by setting up a model of a fleet of urban buses, widely regarded as one of the earliest applications for these devices, for a time in the near future (five to ten years from now). Most cost parameters correspond to the present, except the assumed cost of the fuel cell of $300 per kilowatt, a value that has not been achieved today but that is believed possible in the future. The private cost for the fuel cell driven bus exceeds that of its diesel counterpart by between 23 and 33 per cent, depending on the vehicle size. However, the fuel cell can become competitive through economies of scale in the chemical plant required to generate the hydrogen fuel. The inclusion of environmental externalities in the framework of a social cost calculation fails to shift the balance unanimously in favour of the fuel cell, in spite of the superior environmental performance offered by this technology.

Incorporating Externalities Has Negligible Impact on Electric Utility Resource Planning State regulatory actions that assign monetary values to environmental externalities and require electric utilities to incorporate them into their resource plans have had negligible impacts on recent electric utility resource planning decisions, according to an Energy Information Administration (EIA) study released today. "Externalities," as used in this context, are the environmental impacts caused by the emissions of certain pollutant gases (sulfur dioxide, nitrogen oxides, and carbon dioxide) emitted into the atmosphere during the process of burning fossil fuels to produce electricity.

Internalizing Societal Costs The price of electricity does not reflect all the costs society pays. For example, pollution is a major hidden cost. EPA estimates acid rain pollutants, cause more than $12 billion per year in damage nationwide, much of it due to coal- and oil-fired power plants. Uncertainty can also lead to enormous societal costs. Over $20 billion has been wasted when partially constructed power plants have been abandoned because of reduced utility demand, unforeseen exorbitant cost overruns and improved, more costly, safety regulations.

Issues In The Valuation Of PV/Renewables: Estimating The Present Value of Externality Streams With A Digression on DSM A paper by Shimon Awerbuch This paper continues and extends previous research dealing with the role of financial risk measurement in the valuation of renewable and conventional energy technologies. This previous work [Awerbuch, 1993] concludes that proper valuation of resource alternatives in the context of IRP can be made with the application of market-based, (risk-adjusted) discount rates, as opposed to the present practice of discounting all revenue requirement components at the firm's weighted average cost of capital (WACC).

On the Environmental Externalities of Global Trade Global deforestation, this study's litmus of environmental lateral pressure, is tested against domestic GNP, population growth, and a new variable, trade connected GNP, which accounts for the trade effects among nations. This model specifically addresses the ongoing debate between economists and evironmentalists over the costs and benefits of free trade. Economists defend free trade citing evidence that domestic GNP increases, spurred on by the gains from trade, reduce environmental degradation because rich countries can better afford to address such concerns. This study replicates these results, but then it tests trade effects directly and finds that they add to rather than detract from global deforestation. Moreover, these trade effects are consistently more significant, stable, and influential than the countervailing domestic GNP effects.

The Environmental Externality Costs of Petroleum While measurement and especially costing of environmental externalities is analytically difficult and rather controversial, there is a substantial and steadily growing literature on the external costs of energy. Table 1 is the result of a recent review and analysis of this literature with regard to petroleum and petroleum-derived fuels. This analysis concluded that, on the basis of the existing scientific literature and current environmental data, the externality cost of petroleum (as defined by air pollution alone) is approximately $45 per barrel. When this estimate is combined with a nominal world oil price of approximately $15 per barrel the analysis implies that a "truer" cost of oil, ie., a cost that includes the cost of environmental damages which oil use imposes on society at large, is $15 plus $45, or $60 per barrel.

Valuing the Environment: Some Practical Use Examples Full-cost accounting frameworks are tools that can help decision makers make better choices (i.e., choices that encompass information about a broader range of issues), and assess the "fairness" of these choices. However, in order to develop a full-cost accounting frameworks, it is necessary to first identify what are the issues of concern, and then to place a value on them.