Progress 10/01/08 to 09/30/11
Outputs
OUTPUTS: The purpose of this project is to provide the background research necessary for Vermont's citizens and legislators to make informed decisions about proposed legislation for a Vermont Common Assets Trust (VCAT). We seek to identify what common assets should be included in the trust, how the trust should manage and allocate these assets, and how much revenue the trust could generate. We also propose a payment for ecosystem services scheme through which trust revenue could be used to pay private landowners to manage their land for public good benefits. We surveyed Vermonter's attitudes towards a VCAT for atmospheric waste absorption capacity and for water. Two students completed their master's theses on VCAT, with a third currently underway. We also conducted graduate and undergraduate level courses on VCAT. We expect articles from the course and the theses to be published in a special issue of Ecological Economics on VCAT, edited by Joshua Farley and Robert Costanza. Flomenhoft prepared and published an updated Green Tax plan for the state of Vermont, and testified numerous times to the legislature about Green tax and common asset reforms. Testimony and press coverage from the Tax Commission can be found online at: http://www.leg.state.vt.us/jfo/Tax%20Commission.htm. We are currently working with the planning departments of Newport, St. Albans and Rutland to research the impacts of a land value tax shift in growth centers there. Our students and we have met several times with the planning departments and city councilors, presenting research results. Graduate student Brian Kelly was recently awarded a $10,000 grant from the NSRC to continue his research on the integration of water into the VCAT. Farley received $3000 from the Robert Schalkenbach Foundation to write a paper entitled Institutions for Sustainable, Just, and Efficient Resource Allocation: The Vermont Common Assets Trust, and present it at the SCORAI (Sustainable Consumption Research and Action Initiative) conference, Socio-technical Transitions, Social Practices, and the New Economics: Meeting the Challenges of a Constrained World. Mountain Lakes House, Princeton, New Jersey. Legislation for the VCAT was introduced to the Vermont House in April, 2011. Results of this research have contributed to a special issue of Ecological Economics on Payments for Ecosystem Services (PES), 12 peer reviewed journal articles, 5 book chapters plus 6 others completed or in press, an accepted book proposal, 9 published conference abstracts, 4 full conference papers published or in press, 9 keynote and plenary addresses, and at least 10 other invited presentations by Farley and co-authors, all of which explicitly address common assets and/or payments for ecosystem services We have recently submitted a $3.9 pre-proposal to NSF PIRE to continue the research on PES, and another $75,000 pre-proposal to the Wallace Global Fund to continue research on VCAT. Flomenhoft has also received several additional grants to continue research on VCAT. PARTICIPANTS: PI: Joshua Farley, Community Development and Applied Economics Research Associate: Gary Flomenhoft, Community Development and Applied Economics Graduate Students: Dan Kirk, David Propen and Brian Kelly,Community Development and Applied Economics TARGET AUDIENCES: Vermont citizens and legislators. Worldwide audience of policy makers and academics interested in common asset trusts and payments for ecosystem services. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
The past year was dedicated to research on integrating water into the VCAT and assessing the distributional impacts of a cap and auction for CO2 emissions. Survey results showed that the an overwhelming majority of Vermonters believed that water belongs to all Vermonters, and private businesses who extract it should compensate Vermonters for doing so. However, the market for groundwater appears to be very competitive, those who sell ground water to bottlers appear to earn very little. Taxes as low as a few cents per gallon could lead bottling companies to water from other states instead of Vermont. Concerning distributional impacts of CO2 cap and auction, we learned that transportation accounts for 47% of CO2 emissions in Vermont, and Vermonters in most income deciles spend relatively similar absolute amounts on gasoline. This means that a cap and auction system would be highly regressive. However, research on the Regional Greenhouse Gas Initiative in Vermont suggests that government funding of energy efficiency is far more effective than the auction price signal in reducing emissions. Furthermore, there is enormous potential for energy saving investments. The cost of savinga KWH of electricity through efficiency measures is less than $0.03, while a KWH costs about $0.15. This suggests that investing the returns from a cap and auction in energy savings for lower income households could more than offset the regressive impacts of the auction scheme itself, while further reducing greenhouse gas emissions. We believe that our current economic system fails to make sustainable, just or efficient use of many common asset resources, and these resources are becoming increasingly scarce and increasingly important to society. Our results will help policy makers and citizens make intelligent choices concerning the conservation, fair distribution and efficient allocation of the shared natural and cultural heritage of Vermont.
Publications
- J. Farley, A. Schmitt F., J. P. Alvez, and P. M. Rebollar (2010) The farmer's viewpoint: Payments for ecosystem services and agroecological pasture based dairy production. Advances in Animal Biosciences 1:490-491
- Pascual, U. and R. Muradian (coordinating lead authors), L. Brander, E. Gomez-Baggethun, B. Martin-Lopez, and M. Verma (lead authors), P. Armsworth, M. Christie, H. Cornelissen, F. Eppink, J. Farley, J. Loomis, L. Pearson, C. Perrings, S. Polasky (contributing authors) (2010) The economics of valuing ecosystem services and biodiversity. in TEEB, (2010) The Economics of Ecosystems and Biodiversity: The Ecological and Economic Foundations. Earthscan Press
- Farley, J. (2010) Ecological Economics. In R. Heinberg and D. Lerch (eds.) The Post Carbon Reader - Managing the 21st Century's Sustainability Crises. On-line: http://www.postcarbon.org/reader
- Farley, J. 2011. Green Growth: Restorative Economics for a Post Carbon Planet. Conference proceedings (powerpoint and abstract) from Green Korea 2011 Green Growth: Challenge, Strategy and Cooperation. September 15, 2011, Seoul, Korea
- Farley, J. 2011. Institutions for Sustainable, Just, and Efficient Resource Allocation: The Vermont Common Assets Trust. Conference proceedings (complete paper) from SCORAI (Sustainable Consumption Research and Action Initiative) conference, Socio-technical Transitions, Social Practices, and the New Economics: Meeting the Challenges of a Constrained World. Mountain Lakes House, Princeton, New Jersey.
- Farley, J. 2011. The Foundations for an Ecological Civilization (in English and Chinese). Conference proceedings (complete paper) from Fifth International Forum on Ecological Civilization: Toward an Ecological Economics. April 28-29, 2011, Claremont, CA, USA
- Farley, J. (2011) Institutions for a Green Economy: The Vermont Common Assets Trust. Conference proceedings (abstract) US Society for Ecological Economics 2011 conference. Building a Green Economy. Michigan State University, East Lansing, Michigan June 26-29, 2011
- Farley, J. (2011) The Economics of Information in a Green Economy. Conference proceedings (abstract) US Society for Ecological Economics 2011 conference. Building a Green Economy. Michigan State University, East Lansing, Michigan June 26-29, 2011
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Progress 10/01/09 to 09/30/10
Outputs
OUTPUTS: The purpose of this project is to provide the background research necessary for Vermont's citizens and legislators to make informed decisions about proposed legislation for a Vermont Common Assets Trust (VCAT). We seek to identify what common assets should be included in the trust, how the trust should manage and allocate these assets, and how much revenue the trust could generate. We will also propose a payment for ecosystem services scheme through which trust revenue could be used to pay private landowners to manage their land for public good benefits. In 2009-2010 we conducted a survey of Vermonter's attitudes towards a VCAT for atmospheric waste absorption capacity. Two students completed their masters theses on VCAT. We co-edited a special issue of Ecological Economics on Payments for Ecosystem Services. We also prepared and published an updated Green Tax plan for the state of Vermont. Gary Flomenhoft testified 3 times to the legislature about Green tax and common asset reforms. Testimony included the VT Senate Finance Committee, the VT House Ways and Means Committee, and the "Blue Ribbon Tax Commission". Testimony and press coverage from the Tax Commission can be found online at: http://www.leg.state.vt.us/jfo/Tax%20Commission.htm. Flomenhoft also met with the Main St. USA organization on property tax reforms, specifically to discuss incentive taxation in Downtown zones by creating a split rate tax, increasing taxes on land, and decreasing taxes on buildings. Several state "downtown" organizations are interested in implementing a tax-shift by taxing buildings less and land more. In the coming year, we will be working with planning departments of Newport, St. Albans and Rutland to research the impacts of a land value tax shift in growth centers there. Over the coming year, we have scheduled two more UVM courses with a focus on VCAT, one undergraduate and one graduate. In the graduate course we will prepare and submit a proposal for a special issue of Ecological Economics dedicated to Common Asset Trusts. In the undergraduate course, we will translate academic results into simple language and shorter pieces to communicate to legislators and citizens. PARTICIPANTS: Individuals who worked on the project include Joshua Farley, Associate Professor, CDAE, who was away on sabbatical for most of the year; Gary Flomenhoft, Research Associate and Lecturer, CDAE; Dan Kirk, Masters Student, CDAE; David Propen, Masters Student, CDAE; and Brian Kelley, Masters Student, CDAE. Partner organizations, collaborators and contacts include Vermont Law School environmental law clinic (David Mears, Director); Vermont Natural Resources Council (Jon Groveman and Stephen Holmes); Statewide Mainstreet USA "downtown" organizations (Leanne Tingay, Director); Smart Growth Vermont (Noelle McKay, Director); Senator Hinda Miller; Representative Dave Sharpe; and Michael Costa, director of Blue Ribbon Tax Commission. TARGET AUDIENCES: The target audience for our efforts include policy makers and those affected by a VCAT, which includes the Vermont State Legislature and Vermont Citizens, Businesses and NGOs. Another target is academics interested in the theoretical issues. PROJECT MODIFICATIONS: Not relevant to this project.
Impacts
Our major findings this year were from the Vermonter poll. The poll found considerable support for key elements of a VCAT. 78.1% of respondents believe that the atmosphere is threatened by pollution. 95.2% believe that Vermont's atmosphere is a resource that belongs to all Vermonters equally. 82.5% believe that individuals or companies should be charged money if they pollute the atmosphere. The biggest surprise to us was how respondents thought that the revenue from pollution charges should be spent. We hypothesized that most would favor the money be returned to citizens as a dividend. Surprisingly, In response to the question "If individuals and companies in Vermont were charged money for polluting the atmosphere, how do you think that money should be spent", only 6% of respondents believed that it should be divided up and returned to each Vermonter as a payment check, while 65% believed it should be invested into preserving natural resources like clean air and clean water for the public's benefit. The remainder were about equally divided between favoring investment into providing social wellbeing like education and healthcare for the public's benefit, and a combination of a check and investment in public benefits. We believe that the poll results provide information critical to making informed decisions about a Common Assets Trust. Testimony from previous research results was highly relevant to a number of legislative decisions this year concerning use of common assets, including higher discharge fees on Vermont Yankee nuclear power plant for cooling water discharge into the Connecticut River, an increase in the penalty for conversion of current use property for development, and a proposal for higher fees on water bottling. We believe that our current economic system fails to make sustainable, just or efficient use of many common asset resources, and these resources are becoming increasingly scarce and increasingly important to society. Our results will help policy makers and citizens make intelligent choices concerning the conservation, fair distribution and efficient allocation of the shared natural and cultural heritage of Vermont.
Publications
- Farley, J. and R. Costanza (2010) Payments for Ecosystem Services: From the Local to the Global. Ecological Economics 69:2060-2068
- Kemkes, R., J. Farley and C. Koliba (2010) Determining When Payments Are an Effective Policy Approach to Ecosystem Service Provision. Ecological Economics. 69: 2069-2074
- Costanza, R. and J. Farley (2010) What Should Be Done With the Revenues From a Carbon-Cap-and-Auction System Solutions, 1:1 online: http://www.thesolutionsjournal.com/node/429
- Kirk, D. (2010). Allocating Vermont's Trust; Dividends Or Public Investment From Carbon Cap And Auction Revenues. 113 pages. Masters Thesis in Community Development and Applied Economics. University of Vermont, Burlington.
- Propen, D. 2010. Institutional And Community Characteristics for Climate Change Mitigation. 104 pages. Masters Thesis inCommunity Development and Applied Economics. University of Vermont, Burlington.
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Progress 10/01/08 to 09/30/09
Outputs
OUTPUTS: The purpose of this project is to provide the background research necessary for Vermont's citizens and legislators to make informed decisions about proposed legislation for a Vermont Common Assets Trust (VCAT). We seek to identify what common assets should be included in the trust, how the trust should manage and allocate these assets, and how much revenue the trust could generate. We will also propose a payment for ecosystem services scheme through which trust revenue could be used to pay private landowners to manage their land for public good benefits. In our first year of research, we used the Vermont Common Assets Trust as the central problem in an applied, service-learning course, CDAE 237, The Economics of Sustainability, for two semesters. Students from the first semester continued their work in a special topics course, CDAE 291. Working with students, we drafted 5 separate papers that will eventually become at least 4 journal articles. One paper estimated the revenue from a cap and auction system for Vermont's CO2 waste absorption capacity for several different caps, as well as the share to be paid by different sectors. A second paper assessed the ecological and distributional impacts of distributing revenue equally to all citizens (cap-auction-dividend) versus using the revenue to invest public goods, including publicly available low carbon energy technologies (cap-auction-invest). A third paper assessed the impacts of offsets on VCAT revenue and atmospheric carbon. A fourth paper focused on a VCAT for Vermont's water, and a fifth defined criteria for inclusion in a trust. We presented two papers resulting from this project at the US Society for Ecological Economics 2009 conference. Research results contributed directly to a successful Fulbright proposal to develop a payments for ecosystem services project for Brazil's Atlantic Forest. In the coming year, we expect to finalize and submit at least 3 journal articles based on research conducted so far. We will use existing results along with experienced gained during the Fulbright to design a payment for ecosystem services project funded by VCAT revenues. The project will also result in two master's theses, to be completed by August, 2010. PARTICIPANTS: Joshua Farley is the principal investigator. He used the project as the central case study in CDAE 237: The Economics of Sustainability for two semesters, guiding students in their research. He co-taught CDAE 291: Applied Ecological Economics, in which CDAE 237 students continued their research. He also mentored two masters degree students writing theses on the topic, authored and presented one peer reviewed conference paper and co-authored another. Gary Flomenhoft is a principal collaborator. He helped advise students on their projects related to the course, applied for additional funding for the project, and co-taught CDAE 237. Dan Kirk is funded to work on the project, which will result in his master's thesis. He has co-authored one journal article nearly ready for submission, and helped direct undergraduate student researchers. He also co-authored and presented a peer reviewed conference paper. David Propen is working on the project for his Master's thesis. He has co-authored one journal article nearly ready for submission, and helped direct undergraduate student researchers. Jonathan Maddison was an undergraduate student in CDAE 237 and 291. He co-authored a peer reviewed conference paper which will be submitted for publication this coming year. TARGET AUDIENCES: The target audience includes Vermont's legislators, citizens of Vermont, policy makers addressing climate change and the management of natural and cultural assets, and academics. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
Major findings so far concern a VCAT cap and auction system for CO2. Revenue will obviously differ dramatically for different caps and over time by the development of new technologies. Another important factor will be whether or not carbon offset projects such as methane reduction or reforestation are allowed. Preliminary estimates suggest that cutting carbon emissions by 80% by 2050 could generate between $100 million and $400 million per year in revenue depending on various assumptions. Because the demand for energy is inelastic, allowing for carbon offsets could dramatically reduce the revenue from a cap, though it would also reduce the costs of compliance to citizens and businesses. In terms of net revenue for the VCAT and net carbon emissions, it would be better to avoid offsets and simply fund carbon sequestration or emission reduction projects from VCAT revenues. A straight cap and auction would be regressive in that it would capture a higher percentage of income from poor households than from wealthy households. A cap and dividend policy in contrast, in which all of the revenue is returned to citizens, would increase the income of the poorest 60% of households. However, if the dividend is spent in approximately the same proportion as current citizen expenditures, 65% will be spent out of state. Since Vermont has one of the lowest levels of carbon emissions per dollar of income in the US, this means that many of the emissions reductions will be reduced by increased consumption of higher carbon imports, reducing the ecological impact of the cap. VCAT expenditures in contrast could be spent in state on public goods, in a cap, auction and invest strategy. Investments in energy efficiency and carbon sequestration would strengthen the ecological impact of the cap, while investments in health care, education and affordable housing could lessen the negative distributional impacts. The fact is however that even if Vermont emissions fell to zero, this alone would have negligible impact on global climate change. The only way that Vermont could meaningfully affect global climate change would be to invest the revenue in clean energy and energy efficiency technologies. Making these resources open access would maximize their impact. VCAT patents on the technologies in contrast would generate more revenue by rationing use of the technologies to those that could afford them, increasing the likelihood that poorer countries will continue to burn coal. These findings will help Vermont's citizens and legislature make informed decisions about a Common Assets Trust. The results will be generally relevant to other states or countries interested in this policy tool as well. If climate change is as serious as many studies suggest, we must choose effective policies based on careful analysis of the options.
Publications
- Maddison, J, J. Farley and D. Kirk. (2009) Revenue Generation and Distributional Impacts of The Vermont Common Assets Trust: The Case of Atmospheric Carbon Dioxide Absorption Capacity. Abstract book of the US Society for Ecological Economics conference, Washington, DC. May, 2009
- Farley, J. Vermont's Common Asset Trust: A Practical Application Of Georgist Ecological Economics. Abstract book of the US Society for Ecological Economics conference, Washington, DC. May, 2009
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