The Economic Benefits of Messing with Nature

“… we argue that destroying and replacing the free gifts of nature can be an economic benefit.”
— Gowdy et al. (2012): The Parable of the Bees: Beyond Proximate Causes in Ecosystem Service Valuation via Krulwich Wonders.

Robert Krulwich has a fascinating article that summarizes a research paper that looked into what happened when people had to replace the honeybees to pollinate fruit crops in China. Apparently, from a purely economic standpoint, humans did a better job — they pollinated more flowers — and because people had to be hired to do this, it helped the economy as well.

Despite the economic benefit, summarized by the alarmist quote above, the authors of the article actually use this example to argue that it is foolhardy to use this type of economic analysis for deciding what to conserve.

We do not argue that the positive economic benefits justifies eliminating natural processes. On the contrary, the Maoxian [, China] case illustrates the danger of allowing the logic of the market to drive conservation policy.
— Gowdy et al. (2012): The Parable of the Bees: Beyond Proximate Causes in Ecosystem Service Valuation.

Dr. Sansone

Landfills: Dealing with the Smell (H2S)

Hydrogen Sulfide:
H2S

Diagram of the hydrogen sulfide system in a landfill.

Although it makes up less than 1% of the gases produced by landfills, hydrogen sulfide (H2S) is the major reason landfills smell as bad as they do. H2S is produced by decomposition in the landfill, and if it’s not captured it not only produces a terrible, rotten-egg smell, but also produces acid rain, and, in high enough concentrations, it can be harmful to your health (OSHA, 2005; Ohio Dept. Health, 2010).

Decomposition

A wall partially covered with drywall. Image via FEMA via Wikimedia Commons (Nauman, 2007).

Some hydrogen sulfide is produced when organic matter decays, but for big landfills like the one we visited, construction materials, especially gypsum wallboard (drywall), are probably the biggest source.

Gypsum is a calcium sulphate mineral, that’s made into sheets of drywall that are used cover the walls in most houses because it’s easy to work with and retards fire. The U.S. used 17 million tons of gypsum for drywall in 2010 according to the USGS’s Mineral Commodity Summary (USGS, 2011 (pdf)).

Gypsum:

CaSO4•2(H2O)

As you can see from the chemical formula, each gypsum molecule has two water molecules attached. In a fire, the heat required to evaporate the water keeps the temperature of the walls down to only 100 degrees Celcius until the water has evaporated out of the gypsum board.

A number of landfills have banned drywall because it produces so much hydrogen sulfide, but the one we visited still takes it. It’s big enough that they capture the landfill gasses, including the hydrogen sulfide, and then separate it from the other, more useful gasses, like methane, which can be burned to produce heat energy. H2S can also be burned, but they you end up contributing to acid rain.

H2S and Acid Rain

When hydrogen sulfide reacts with oxygen in the atmosphere it produces sulfur dioxide.

2 H2S (g) + 3 O2 (g) —-> 2 SO2 (g) + 2 H2O (g)

Sulfur dioxide, in turn, reacts with water droplets in clouds to create sulfuric acid.

SO2 (g) + H2O (g) —-> H2SO4 (aq)

Acid rain accelerates the dissolution of statues. (Image by Daniele Muscetta)

When those droplets eventually coalesce into raindrops, they will be what we call acid rain.

Acid rain damages ecosystems and dissolves statues. It used to be a major problem in the midwestern and eastern United States, but in 1995 the EPA started a cap and trade program for sulfur dioxide emissions (remember sulfur dioxide is produced by burning hydrogen sulfide) that has made a huge difference.

The head (top) of a well (vertical metal pipe) that captures the gas from inside the landfill.

Capturing H2S

Probably because of the EPA’s restrictions, the landfill company pipes all the gases it collects through scrubbers to extract the hydrogen sulfide. There are a few ways to capture H2S, they all involve running the gas through a tank of some sort of scavenging system that holds a chemical that will react with hydrogen sulfide and not the other landfill gases. At the landfill we visited the remaining landfill gas, which consisted of mostly methane, was used for its energy.

The Montessori Method and Free Markets

If economics ultimately boils down to the study of human behavior, and our students are ultimately human (stick with me for a second here), then economic theory ought to be able to inform the way we teach. In fact, I’d argue that constructivist approaches to education, like Montessori, work for the same reasons that free-markets outperform highly-centralized command economies: freedom (within limits) better maximizes human welfare. I think this applies both to students in aggregate (the entire student population), and to the individual student also, though you probably have to aggregate over time.

What do I mean by Economics

As a study of human behavior economics differs from psychology, sociology and the other social sciences primarily because it uses money as a metric. This gives it a lot more data to play with. The last century has clearly demonstrated the advantages of the “invisible hand” of the free-market over highly-centralized command economies in providing for the broader public good. So what lessons from the study of economics can we apply to education?

To be clear, I’m not suggesting that we should be treating our schools and classrooms as businesses. We’re not trying to maximize profits for a firm (via test scores or however else that might translate to education), we’re trying to maximize the welfare of our students, which I take to mean, helping them achieve their full potential.

Command-and-Control

As we’ve seen in our studies of economics, flexible, market-based approaches are much better (more efficient) at achieving goals that the command-and-control, dictatorial model. The evolution of EPA’s approach to regulating pollution is an excellent example of how a federal agency learned to employ the experience of economics to better achieve a public good.

The Cayahoga River on fire in 1952. Image from United Press International via NOAA.

In the 1960’s and 70’s, rivers catching on fire, smog, and books on the invisible consequences of pollution, like Silent Spring, inspired the environmental movement and spurred the creation of the Environmental Protection Agency (EPA).

The EPA’s job was, and is, to enforce the laws that reduce pollution and protect environment. In the beginning, they did this by telling industry and companies what to do: the EPA mandated strict limits on the emissions from factories; and power plants were required to install the “best available technology” to reduce pollution. These approaches sound good, and are certainly necessary for pollutants that are dangerous to places close to where they are emitted, but they can be expensive, encouraging people to look for loopholes in the rules so they also become expensive to enforce.

You get the same problems with long, detailed lists of rules in the classroom. Students try to circumvent the letter of the law, rather than adhere to the spirit of the rules. “No iPods allowed,” is forced to evolve into “No Personal Electronic Devices.” Then come the questions, “What about watches?” and, “What about iPads?” so more rules need to be added to the list. By the end of the week you’re approaching a list of rules approaching the length of the tax code, and still adding more.

In the case of environmental regulation, to deal with this type of problem, the field of environmental economics emerged. Environmental economists try to figure out how to achieve the pollution reducing outcomes that everyone wants in the most economically efficient way possible. More efficiency means lower costs to society. They found that there are usually quite a number of ways to achieve the environmental objectives, using the principles of the free market, that are much more efficient than the command-and-control approach the EPA had been using.

Economists like to use mathematics. There are lots of supply and demand curves, and lots of derivatives, which tend to force some over-simplification (in much the same way that your textbook supply and demand curves are almost invariably straight lines). However, sometimes simple models can lead to a better understanding of how people in societies work.

Cap and Trade

Trees believed to have been killed by acid rain. Image via Wikimedia Commons.

In the 1980’s coal burning factories and power plants were churning out a lot of pollutants. One of these, sulphur dioxide (SO2) would react with rainwater and to create sulphuric acid, which would fall as acid rain. Acid rain was a huge problem because lots of plants and animals living in lakes, streams and forests were finding it hard to adapt to the increasing acidity of their environment. Furthermore, more acidic rainwater was damaging the paint on people’s cars and dissolving limestone statues and buildings.

So the EPA implemented a Cap and Trade program. They had a good idea of how much SO2 was being released into the atmosphere, and they know how much they wanted to reduce it by, so they started to issue companies permits to pollute.

The trick was that EPA would only give out permits equal to the total amount of SO2 emissions they wanted, and every year they would reduce the amount of permits until they reduced the pollution enough to resolve the acid rain problem.

Now all the companies that polluted SO2 had to either buy a permit or stop polluting. If they could easily reduce their pollution, a company might have extra permits that they could sell to a company that was having a harder time. In theory, some companies could even buy up permits from other companies and increase their pollution. But since the EPA was only giving out so many permits, whatever happened the total SO2 pollution was still going down.

Doing it this way let the EPA set the goals and let the market for pollution permits allocate how the actual pollution reduction got done. Since the permits could be sold, this encouraged the companies that could easiest reduce their pollution to do so, resulting in a reduction in pollution at the lowest cost.

It also meant that companies were now starting to pay for the environmental damage they were doing. Acid rain is a regional problem so it’s hard to say that your pollution from your factory in Ohio is specifically causing the acid rain here in my forest in Vermont. The atmosphere was being treated as a common dumping ground.

Cap and trade is not without its problems, however, at least in this case, it worked extremely well.

The Innate Desire to do the Dishes

Montessori believed that children have an innate desire to learn. We’ve seen how easily praise and rewards can damage that internal drive. I have, however, found it hard to identify my student’s innate desire to do the dishes. They may want a clean environment, they may have been trained since pre-kindergarten to clean up after themselves (restore their environment), but their is quite often a reluctance to doing it themselves.

Classroom jobs market.

The relationship to the pollution issue is startling to think about at first, but really the issues are the same. After struggling for quite a while to get everyone to do their classroom jobs, recognition of the parallel between my job and the EPA’s lead me to thinking about creating the Job Market Trading Board. Students can trade jobs and when they do it, but in the end, the jobs get done. I remain impressed at how well it has worked.

The basic principle is more general though: set the goals and let the students figure out the best way to accomplish them.

Montessori, cooperation and the Tragedy of the Commons

The essence of dramatic tragedy is not unhappiness. It resides in the solemnity of the remorseless working of things.
— Whitehead (1948) via Hardin (1968)

One of the greatest challenges in designing a cooperative environment is dealing with the potential for free-riding and abuse of shared resources. When dinner needs to be made but one member of the group will not participate everyone suffers, even those who contribute fully. Often, someone else or the rest of the group will step up and do the job of the free-rider, who has then achieved their objective. But what is the appropriate consequence? The social opprobrium of their peers is enough for some, others though seem unfazed.

Overuse of resources is a similar problem, which economists refer to as the tragedy of the commons (Hardin, 1968). When the extra-large bag of M&M’s is full, everyone can grab as many as they desire and everyone is happy. When resources are scarce, however, everyone grabbing is a recipe for disaster. Scarce resources need to be rationed in a way that everyone views as fair. Yet the rational behavior of the individual is to try to maximize their utility by taking as many as they need, regardless of the desires of everyone else, and especially if they’re first in line and no-one else is counting.

Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in a commons brings ruin to all. … The individual benefits as an individual from his ability to deny the truth even though society as a whole, of which he is a part, suffers.
Hardin (1968)

The market solution to the commons problems is to make them not commons. This is usually done by assigning property rights to the previously common resource and allowing the owners to trade. This puts a price on what was once a “free” resource. Of course the price was always there; someone or someones had to go without when the M&M’s ran out (resource depletion). Unfortunately this is particularly difficult when you dealing with a non-currency economy, though I’m sure it could be done.

Reading through Hardin’s original Tragedy of the Commons article it seem that if the embarrassment of violating social norms is insufficient incentive for temperance then some sort of mutually agreed form of coercion is necessary. Interestingly, Hardin was arguing for population control, but the point still stands.

We’re due to have the small groups discuss how the worked together over the last cycle so we’ll see how that goes, but I think we’ll have to discuss the issue of the commons as a whole group when we next have our discussion of classroom issues. I’d like to raise the point that what happens in the classroom is a microcosm of larger society and get in a little environmental economics at the same time.

Education can counteract the natural tendency to do the wrong thing, but the inexorable succession of generations requires that the basis for this knowledge be constantly refreshed.
Hardin (1968)