Eco-nomics: What Are the True Benefits of Wind Power?

A friend called me when the WW cover story on wind energy came out. He thought Jacquiss missed a big part of the story. I have been meaning to post on this for a long time (as you can see by the date on the story) but I have not had time to poke around more.

The basics are thus: Jacquiss points out the heavy subsidy that wind energy gets through things like the Business Energy Tax Credit. This is often thought of as a good thing because wind energy displaces environmentally damaging coal and natural gas based power generation. But the reality is not nearly so simple.

Since we get a lot of our energy from hydro we have a source of energy that is easily adjustable - much easier than a gas or coal fired power plant which can't just stop and start easily. So PGE and other wind utilities pay Bonneville to spill water when the wind is blowing hard.

This is not at all to say that wind energy credits are not worth it, or that in the long run we are better off if we subsidize the infrastructure now, rather it to simply say that if we are going to accurately weigh the cost of all of these subsidies to the state (and Jacquiss does a good job of this) we need to be clear about the actual benefits of wind power.

So if you are a customer of wind energy (like I am) it might come as a surprise that your wind sourced power is not offsetting coal and natural gas at anything close to one-for-one, in fact you might be offsetting hydro much more than coal and natural gas.

As I said above, I thought it might be fun to poke around and see what I could find out, but then I remembered that I have a real job. So if you know something about this chime in and add or correct at will.

[Photo credit: Thomas Boyd/The Oregonian]

Economist's Notebook: Urban and Rural

Two things occurred the other day that got me thinking about the urban and rural divide. First, an old friend of mine (and fellow L&C economics major) called today and mentioned that he took issue with my assertion that we should necessarily give rural residents a break on gas taxes. He thinks we subsidize rural living too much and that urban living is more efficient - and not just in terms of energy usage and environmental harm, but efficiencies in our ability to (in his example) offer more choice to school children. The second thing was my coming across this article by Ed Glaeser that uses The Lorax as a jumping off point to discuss his research on the 'green-ness' of urban living.

First, a digression. I, like Glaeser, think The Lorax is a very good lesson on externalities and public goods and the importance of protecting the environment in the face of market incentives that will not. However, the Once-ler is not an archetypical capitalist as I assume Seuss intended, in fact he is a miserable failure of a capitalist. He fails to replant trees to ensure the future success of the business even though the incentives to do so are clear. However, in his willingness to go after the short-term gain and sacrifice the long-term health of the business, he is perhaps a good model for the bank executives that managed to screw that industry up royally.

Anyway, I believe in density and I believe the future of humanity is largely urban, not rural. I understand urban living has drawbacks: lots of concrete, heat islands, etc. But on balance (and in general) the ability to live efficeintly is greatly enhanced in urban areas and Glaesers research seems to confirm this. So I look very favorably on residential high rise developments in the city center because it is important to have downtown residents that live and work locally.

Personally, I chose to live in my neighborhood in Portland because from my house I can walk a few blocks to the park, the library, a New Seasons and a QFC (this was especially handy during the big snow storm), the bakery, coffee shops, restaurants, the bank, the hardware store and even the river. I am close to a multi-use path that takes my wife and her bike downtown to work most days, I can walk with my children to their schools and there are bus lines a couple of blocks away. I rarely have to get in my car to do anything. When I lived in Corvallis, I was in and out of my car all the time, because though it is a nice bucolic college town it is spread out. I feel my current lifestyle is healthier for me and my environment.

This is not to say that I pass judgement on those that choose to live in rural areas, but as a general trend I hope to see more density in America's urban cores and less sprawl to the exurbs. If you want to see what that is like, visit Denver - though the downtown has come a long way in the last 10 years it is still largely deserted after business hours.

But this vision of an urban ideal does create some conundrums. My wife and I disagree, for example, on agriculture. I tend to think some aspects of large scale agriculture is good. Production happens where it is most viable, economies of scale are large and a relatively small number can support all of the urban residents. My wife is very supportive of local agriculture, the farm-to-table movement and has, as an ideal, small local farms that sell directly to urbanites and do not rely on chemical fertilizers and pesticides. There are valuable aspects to both systems and it is hard to know where the right balance is, but I worry that this local ideal is highly correlated with wealth and it does not provide answers for the poor depend on highly productive agricultural sectors.

Clearly the two sectors, urban and rural, are complementary and we would not be able to live densely without the support of rural agricultural areas. But finding the balance between living efficiency and sustainably on one hand, and being less reliant on industrial agriculture and living 'closer to the earth' is not an easy task - nor is the appropriate balance obvious.