Tag: sustainability

John Cochrane looks for a new framing

I’ve been following John Cochrane’s blog, “A Grumpy Economist,” for a while now. I love the self-depricating title and, of course, the material. In a recent Substack post, he tackles the question of climate change, government subsidies, and the groups of people who win and lose.

https://substack.com/@grumpyeconomist/note/p-178684057?utm_source=notes-share-action&r=73dqu

In short, he is saying that the massive subsidies that all US taxpayers have been funneling into electric vehicles are not generating the intended return. Not at all. They are bills being scattered in the wind.

OK– but how? and why? And what else should be considered? In short, what is the new framing that would better capture the intentions, levers, and incentives to address this issue?

Consider first the who. There are the EV activists. They have provided voice to the issue of climate change. And have been successful in securing financial subsidies from US citizens at large. The population of the US is the greater group. They too care enough to syphon off funds for the cause. But John Cochrane points out that the who is really the global population. Climate change flows over political boundaries. Reductions of pollutants in California can easily be negated by activity elsewhere on the globe.

The implication here is that to solve the issue of climate change, the anchor of discretion lies in with global population. To have an impact, activity across this group must have a measurable effect. Otherwise, a small group of earnest adjusters will work and sacrifice (in the EV example, US taxpayer dollars) to no beneficial ends. Lots of effort. Lots of signaling. No results.

Lastly, Cochraine mentions time. The time frame over which the analysis is best observed is one hundred years. To bully and berate neighbors into small gestures in the name of climate change is counterproductive, he says. The perspective is global, marked over centuries, and thus requires intentions and drive measurable within that framework.

Zap

Utility flagging for underground cables

If you’ve ever had to dig in your yard, you know the first step is to call the power company. Before a shovel hits the dirt, utility crews mark the lawn with a rainbow of little flags, showing where buried lines and cables run. Those markers are a reminder that beneath every property lies a web of infrastructure you don’t own but rely on every single day. This network is owned and maintained by your local electric company—the same one that sends you a monthly bill. Whether electricity enters your home through an overhead mast or a buried cable, the reliability of service rests with these local players.

Behind the Flags: How Power Reaches Homes
The electricity that hums through a house begins far away, at generating stations powered by natural gas, wind, solar, hydro, or nuclear energy. High-voltage lines move that power long distances until substations step the energy down to safer levels. From there, your local utility takes over, operating the distribution system that delivers electricity to neighborhoods and households.

For homeowners, the poles you see on the street—or the lines you don’t see underground—are not just background scenery. They are the lifelines of everyday living. Flicking on a light switch, charging a laptop, or running an air conditioner all depend on the quiet, constant work of utilities keeping those lines in good order.

Reliability and Perception
While utilities don’t often feature at the top of a buyer’s checklist the way school districts or commute times do, reliability still shapes homeowner perception. Most people only notice electricity when it fails, but repeated outages or slow restoration times can quickly create frustration. Just like trash pickup or snow plowing, electricity is a municipal-style service that residents take for granted—until it stops.

In this sense, dependability forms a kind of background preference. A household may not choose a neighborhood primarily for its utility provider, but they still form judgments, even if peripheral, about whether the service is reliable, responsive, and trustworthy. When those expectations aren’t met, the dismay can be just as real as when other civic services break down.

The Household–Utility Relationship
Every month, the bill you pay reflects both the energy you used and the infrastructure behind it. Rates cover not only the electricity itself but also the upkeep of poles, wires, substations, and the crews ready to respond when trouble strikes. For families on tight budgets, these costs can feel heavy, which is why many utilities offer assistance programs or rebates to help households manage expenses.

More Than Wires
Ultimately, the connection between utilities and homes is about more than cables and meters. It’s about ensuring every household can reliably plug into modern life. From the flags in your lawn to the wires above your street, utilities provide the unseen backbone of comfort, safety, and opportunity—making sure that when you flip the switch, the lights always come on.

Ownership Issues – Water out West

Water is a slippery issue. You can pump water from the ground if you have your own well. It costs you the electric bill. As an owner of the lot, you have rights to the water swelling through the subterranean substrate.

The farmers who arrived first in the West have rights to the water in rivers through the first possession doctrine— a similar principle to land and mineral rights. Under this doctrine, historical patterns of water use give rise to de facto property rights. Specifically, whoever historically has diverted water and put it to beneficial use gains a legal right to continue diverting water for beneficial use in the future. Farmers diverted flows from rivers and streams through dams and irrigation ditch networks. Projects by the Bureau of Reclamation, part of the U.S.

Department of the Interior, augmented these systems and after 1926 would contract only with irrigation districts for water delivery. The fact that farmers have rights to and use vast quantities of water in an arid region is not a problem, in theory, if those water rights could then be traded to urban users who might value them more. But the history of water trading in the West offers a cautionary history about how difficult it can be, in practice, to facilitate true markets and arrange trades through property rights. (The West Needs Water Markets, but Achieving That is Tough, Peter Van Doren)

When you pay a water bill in an urban area to your local municipality, you are paying for the infrastructure to pipe the water to your home, as well as the water treatment process. Private property rights determine the type of access: well, municipal, irrigation ditches… The value of the water shows up as capital in the plot of land with access rights.

To obtain Owens Valley water for the aqueduct, the Los Angeles Water Board purchased over 800 farms and the water rights that came with them. Negotiations were difficult because of bilateral monopoly. The board was the only buyer and was under pressure to buy because Los Angeles was in a drought in the early 1920s. Large farmers formed pools to collude as sellers. Sellers wanted the surplus from the increased land values in Los Angeles arising from the water availability. The city’s board offered compensation based on agricultural revenue from the farms.

The LA people wanted to buy out agricultural land based on farm use. The farmers realized they were selling access to water. Thus they based their price on the value increase of the properties receiving their water rights in LA. This makes sense.

But then there can be no complaints when the agricultural land can no longer be farmed. The property’s use value transformed, and the transaction compensated the sellers at market value.

What I like about this paper

A recent paper, Houston, you have a problem: How large cities accommodate more housing, by Anthony W. Orlando and Christian L Redfearn, offers a new reading of real estate data.

Consider the stylized fact that unmet demand is most-inexpensively delivered on low-cost land at the periphery of the commuting shed, known as a “greenfield” site. This type of development uses low-cost, low-density construction methods. However, in productive and desirable urban areas, low-cost land—especially close to jobs and retail—is quickly consumed, pushing single-family home builders farther away from the amenities that make these urban areas attractive. Eventually, this progression reaches a limit in which commuting back to these amenities is too costly. At this point, the greenfield land is effectively “built out,” and developers are forced to look inward to more expensive land closer to the core where spatial amenities are valued by renters and buyers. When this “infill” development becomes a larger share of new housing supply, the marginal cost of supplying a new housing unit will increase, and the elasticity of supply will fall. Thus, even in the absence of different regulatory regimes, an MSA with more population and more density will appear to have a steeper supply curve because large and growing urban markets naturally progress in this direction.

Real estate has a history of being talked about in static numbers. Orlando and Redfearn discover a dynamic in their research. A city grows along the fringe where the developers can build over large parcels of undeveloped land. This is the most consumer-friendly by meeting the desired structure for the lowest cost. But at some point, the authors observe that the commute to a central business district causes infill projects to gain in status. At that point, a city gains new units within the old infrastructure instead of in the greenfield.

Much of what we have learned in the two decades since DiPasquale (1999) first prompted the field to investigate housing supply is aggregate and static in nature. The goal of this empirical work is to document the location of housing stocks within several MSAs over a long time of growth. The results presented in the article are largely descriptive. It is abundantly clear that aggregate analyses miss the compelling dynamics we documented.

Why stop at the trade-off between low cost fringe housing versus commute time? There are many other interesting dynamics to expore.