Sunday, August 3, 2008

Introducing "Issues in Environmental Economics: Summer 2008"

Welcome to our new blog, titled Issues in Environmental Economics: Summer 2008. We are pleased to have the opportunity to share our thoughts and concerns regarding issues within the realm of environmental economics with you, the reader. The authors of this blog vary by posting, representing a diverse range of thoughts and opinions on issues that are of significant relevance to modern discussions regarding environmental issues and the economic theory or applications that surround these issues.

Although this blog will not be maintained on a daily, weekly, or even monthly basis, the idea was to make public the work done by undergraduate students who completed the writing assignment for ECON 362-001, summer term 2008 at the University of Tennessee, Knoxville.

As the course instructor, I wanted to provide students with the opportunity to present their views on a topic of their choice within the context of environmental economics. By providing a less formal writing assignment, my hopes were that students would feel less inclined to spend all of their time researching a topic, but also spend some time expressing their opinions on the issue at hand. Most importantly, I wanted students to support these views using sound economic theory.

Not every post will relate to a topic of the utmost importance – we’ll leave that to the professionals. Instead, each post has a unique structure and each author uses his/her experiences to generate discussion on a topic of their choice.

We hope that you, the reader, enjoy your time scanning through our entries. Hopefully we can spark further thought and discussion by sharing these entries, or at least make you think a bit differently about an environmental or natural resource issue. If we’re lucky, maybe we’ll even make you laugh.

It is worthwhile to note that the views and opinions of the entries do not represent those of the course instructor or the University of Tennessee, Knoxville. If you have any questions or concerns, please contact us using the information in our profile.

Thanks for visiting!

Should China Compensate Ethiopia?

First, let’s review. An externality is present when the activity of an agent (or several agents) affects the utility or production possibilities of other agents without compensation. Well, I can’t think of a more crushing example of a negative externality in the realm of sports than the one brought to my attention by Tim Haab at the Environmental Economics blog, titled “What is avoiding asthma worth?”

All over the world individuals with pre-existing health conditions are being affected on a daily basis by harmful pollutants such as ozone, carbon monoxide, and nitrous oxides (just to name a few). Some areas are worse than others. Take Beijing, China, for example – the site of this year’s Olympic games – which could provide one of the worst atmospheres (as far as environmental health concerns go) for the world’s top athletes.

One athlete in particular, Haile Gebrselassie, is a gold medalist in the 10,000-meter run. Gebrselassie was eager to compete this year in the 2008 Beijing Olympics, but to Ethiopian discontent, may have to stay home thanks to China’s poor environmental conditions. At 35 years of age, this could be Gebrselassie’s last chance to add more gold to his stash.

Should China compensate Gebrselassie and/or his Ethiopian nation? What would be China’s incentive to do such a thing?

For future Olympic games bids, how could we avoid this issue? Should the Olympics be used as a way to reward those countries with better environmental conditions? (For the sake of the athletes, of course)

Either way, we’ve now added an additional cost of pollution. Thanks to China’s lax environmental policies, we won’t be able to see one of the world’s best athletes this summer.

But what’s the big deal? It’s just a gold medal. It’s not like these athletes train their whole lives for this and it’s not like we, the fans, wait every four years to witness their hard work and dedication.

Earth-1, C02-0

8.38 gigatons. Again, 8.38 gigatons. Carbon Dioxide emissions in the atmosphere were recorded in 2006 at 8.38 gigatons, up 20% from 2000. It’s hard to even fathom that figure. We are killing our planet at an increasingly rapid pace. Although economies overseas continue to flourish, so does the global CO2 output. India is building record numbers of coal-burning plants. China is averaging two new plants per week. Emissions are growing at a pace of about 3% annually. The effects on the atmosphere, the eco-system, and even our weather patterns have been evident to everyone over the last decade.

So what kind of cool stuff is being done to mitigate these effects? Thank goodness Time Magazine recently detailed several ways scientists are attempting to clean up our mess. The article’s first two solutions aim to increase our ocean’s ability to consume the carbon in our atmosphere. However, generally speaking, both strategies involve drastically changing the ecology of the oceans, which many professionals are uncomfortable with at this point in time. The other solution explains how technology, in the form of carbon “scrubbers”, could absorb the CO2 as air passes between them. One Columbia University physicist claims, “If we built one the size of the Great Wall of China, and it removed 100% of the CO2 that went through it, it would capture half of all the emissions in the world.” That’s a lot of emissions! About 4.19 gigatons if my math is correct.

The down side you ask? Well, actually… Is there a downside? “Scrubbing” produces liquid CO2. Okay, that sounds bad, right? Not so fast… Believe it or not, there’s actually a market for this. Many farmers pay up to $300 a ton for it. One method of use t is to make dry ice, which helps food services and beverage industries freeze, chill, and transport their products. So there’s no down side? Sounds fishy, right?

My suggestion? Manufacture a million of these bad boys and lets ensure our that our grandchildren don’t have to see polar bears in a museum.

Mountaintop removal: taking the “mountain” out of… well, mountains!

Familiar with mountaintop removal? If you live in East Tennessee, you’ll likely become more familiar with it sooner than later. Before long, Tennessean’s will see the effects of mountaintop removal on a first hand basis in some areas of the state. This process affects the economic activity in the area, the environmental conditions in the area, and perhaps most importantly, the communities and families themselves. Removal of mountaintops is not an easy task for coal-mining companies. But what’s worse are the negative effects that these coal-mining companies bestow onto neighboring towns.

Take explosives, for example. That’s right, explosives are used both day and night to break up and loosen the tops of mountains. These explosives can be heard and felt miles away from the explosion site. I don’t know about you but I don’t want to be sleeping at night and then wake up to what sounds like the start of World War III right outside of my window. Then, if my house and car are lucky enough to have survived the meteor shower of debris from the blasting, I can enjoy the rest of my day cleaning up after the mining companies and their dirty work.

(For the record, this has textbook negative production externality written all over it. But I digress…)

After the blasting demolition is over and I don’t have to worry about the aftershocks and dust clouds hitting my house, I can go and enjoy the outdoors (well, what is left of them). One of Tennessee’s main attractions as far as tourism and recreational lifestyle includes the outdoor activities they have to offer (It is no wonder the Smoky Mountains are consistently ranked among the most visited national parks). But mountaintop removal is slowly destroying this great aspect of the state that I have come to love (and what vacationers have come to revisit time and again). Now when visitors come to Tennessee and want to go hiking or camping, they’ll have to be weary of the map they’re reading - when they think they’re headed to the top, they’re really already there. Before you know it, a three or four-mile hike up the mountain has turned into a one or two-mile stroll that wasn’t worth the “view” in the end.

When I hike to the top of a mountain, I want to look at the beautiful scenery, not the bareness created by humans. I urge you to take a stand against mountain top removal by contacting your local politician. Otherwise our grandchildren’s grandchildren may never know what a Great Smoky Mountain looks like.

My Take on Drilling In ANWR

There is a lot of talk these days about the coming energy crisis facing America. T. Boone Pickens, oil magnate, has made headlines for calling for an “all of the above” approach to finding and using energy within America to stop us from being dependant on foreign oil. (Funny side note, you will usually only hear about his big investment in wind farms, not about his calls for nuclear energy or drilling wherever possible).

One of the areas highlighted in the media and by Mr. Pickens is the Arctic National Wildlife Refuge (ANWR) region in Alaska. This is a touchy subject for some people, and as all touchy subjects inevitably accrue, there are reams of misinformation out in the zeitgeist regarding this issue. For instance, you have some people claiming that the whole “ANWR as solution” mindset is dead wrong. They claim the impact on oil prices would only occur far in the future and would be negligible at best. They also warn of a huge environmental impact. On the other hand, others argue that the naysayers are being either sloppy in their knowledge, or looking at the question of drilling in a distorted way.

I have to say, I am all for drilling in the ANWR region. In fact, I back Mr. Pickens approach completely. I say we need it all – oil, nuclear, wind, solar, and all sorts of renewable sources of energy. I believe that the opposition to drilling is mostly due to Big Environment. I tend to believe that since the natives of the area welcome drilling, as long as the operation is subject to oversight in regards to the environmental impact, it should go forward.

Researching this topic, I have come to find that most opponents of drilling in ANWR end up making the argument that “drilling only in ANWR will not have the desired effect on the price on oil/gas.” Well, no, I suppose it wouldn’t. Not if you want the price of oil back under $90 a barrel and the price of gas back under $2 a gallon. But drilling in ANWR is a part of the solution to cheaper energy, and saying otherwise is simply bone-headed. And, as Kay Hutchinson points out, with expected energy consumption to rise worldwide (inevitably), why would we not use energy sources wherever, and however, we might find them? In other words, isn’t there a high opportunity cost to NOT drill in ANWR?

It is fine for the Gulf Stream Greens to talk about how precious the pristine landscape of ANWR is, and how it serves a very important ecological service as a mating and birthing area for many species. Well and dandy. And if that were the argument, that’s fine by me. Let the American people decide what they want: cheaper gas or a “pristine” tundra. Well, it looks like they have decided which way they are leaning! Still, we are told that drilling won’t have any meaningful effect, the natives don’t want it, it would be a disaster for the environment, and drilling would lengthen our dependency on those evil fossil fuels.

Well, America will continue to run on fossil fuels for the next couple of decades, at the least, and it seems foolish to not exploit what resources we have on our land. One last absurdity: some would have you believe that exploration and drilling opens up a potential ecological nightmare, a la the Exxon-Valdez case. But what really causes “pollution” (with regards to oil) on Earth? Why it might be the Earth itself!

Remembering the “W” Era in an Environmental Context

Lets recap the George W. Bush era (a.k.a. the “W” Era). Relatively speaking, we’ve witnessed a slow economy and we’ve managed to become the target of what I like to call World War III. All of this in just two easy steps [Step 1: Elect George W. Bush President; Step 2: Re-elect President George W. Bush]. But aside from the fact that everyone dislikes us and we have suffered through an increasingly depressed economy, lets not forget President Bush’s impact on the environment…. Or lack thereof (At least he seems proud of his accomplishments).

How is it possible for a man to accomplish all of this in just a short (or insufferably prolonged and drawn out) 8 years? After all, this is the environmentally savvy man who stated, “It isn’t pollution that’s harming the environment. It’s the impurities in our air and water that are doing it.” How could he be to blame? Good ol’ Bush? The guy who said, “I know the human being and fish can coexist peacefully”? Right…disbelief gone.

To focus on one folly (of many!) in W’s reign as President, let’s consider the Kyoto Protocol. The goals of the treaty are best understood with knowledge of a little economic idea called the global commons, which refers to common property resources shared by everyone on the planet. Think of oceans or the atmosphere to get a mental picture (maybe not such a “little” idea, eh?) Maintaining the quality of these resources is paramount in order to sustain global economic growth.

The Kyoto Protocol is intended to reduce emissions in the global commons by implementing greenhouse gas reduction levels of a certain amount by a certain point in time. These reduction levels and time periods can vary by member country. As one of the world’s leading emitters of greenhouse gases, including 25% of all anthropogenic emissions of CO2 with less than 5% of the world’s population, the United States has an opportunity to vastly improve the quality of the global commons and significantly reduce our contribution to global climate change.

Conforming to the protocol would offer huge opportunities for economic growth in the realm of green industry and it could offer a significant amount of new, green jobs. Take Canada, for example, who estimated that over the span of fifteen years abiding by the Kyoto Protocol would actually create two million new jobs. Sounds pretty good, right? Apparently not to Mr. Bush. Under the pretext that participating in the Kyoto Protocol would destroy our economy (which, by the way - Bush didn’t need the KP to accomplish that task) and allow China (remember China? the country everyone’s fussing over for having such horrendous ambient air quality… so horrendous that it threatens the lungs of our Olympic athletes? Yeah, we’re not signing if China’s not signing) to take our coveted title of Number 1 Polluter on the Planet, the Bush administration refused to comply.

Considering evidence that signing on to the Kyoto Protocol could actually boost our economy, improve air and water quality, lessen the enormous economic and environmental consequences of global climate change, and vastly reduce our chances of death by WWIII bombs (or increased python attacks?!), why are we not jumping on board? My answer? See steps 1 and 2.

So how will we remember the “W” era in an environmental context?

Do we really have to remember the “W” era in an environmental context?

How to take advantage of obesity

Imagine if residents from the city of Knoxville, TN put half as much effort into recycling as they do into preparing for Saturday home football games in the fall. The city of Knoxville was recently ranked as the 10th worst performer in terms of “carbon footprint” among all metro areas in the United States. With that being said, there doesn’t appear to be very many strides being taken by local policy makers to combat the environmental problems.

This got me thinking – what can Knoxville do? Would it be beneficial to society in the long run for there to be a recycling program for all individuals that own a home within Knoxville city limits? It couldn’t hurt, right? Perhaps this program could involve simple recycling methods, such as collection of plastic bottles, aluminum cans, and cardboard materials.

These items should be targeted for a number of reasons. But shouldn’t Tennessee, in particular, be one of the top producers of these recyclable products? One topic that typically doesn’t receive any positive credit relates to obesity in Tennessee. Tennessee is consistently among the nations leaders in obesity rates. To no surprise, it is often cited that Knoxville has more restaurants per capita than any American city of its size. A reoccurring trend that many obese people correlate with relates to high counts of aluminum beverages (such as sodas) and other recyclable products. The least Knoxville could do is recycle their (over) use of these products. Even if these materials are being recycled in Knoxville, there is no way they are being recycled at the rate at which they should be. [For the record, Nashville has some work to do too].

Also, the costs towards implementing a recycling plan shouldn’t be too high relative to the benefits involved. The costs range from providing homes with recycling bins, adding recycling trucks, and increased variable costs associated with transportation and proper handling of the recycled products. Sorting recyclables has become less expensive over time, with new technologies that are capable of sorting different products in cost-effective ways. Although this policy would not need to be accepted by all, for those who wouldn’t want to partake in recycling we could provide them with a disincentive by charging them a recycling fee.

There are a lot of things that could be done throughout east Tennessee in order to increase participation in recycling practices, but it inevitably comes down to the amount of effort Knoxville residents are willing to assume to fix the future environmental issues at hand. Still, who would’ve thought that high obesity rates could lead to increased recycling?

Guiding the Invisible Hand

As we all know by now, the end of the world is on the horizon. At least Al Gore says so. I’m also assuming we have all seen or at least read about the documentary that the former politician has been promoting. In case you haven’t, you might want to tune in to the Nobel Prize-Winning presentation that somehow managed to outshine a Polish woman’s story about saving approximately 2,500 lives during the Holocaust (she risked her life numerous times saving children from persecution, so Al Gore must be important!).

So what do we make of all this attention to the environmental concerns pertaining to Global Warming, and our responsibility in this ruination of the world as we know it? How do we go about saving the planet without having to resort to plan B (Captain Planet and Friends to save the day… oh, and the Earth, too)? I am a firm believer in classical, old-school economics. But in order to provide us with the correct policies to execute a solution to our current problems, I believe that some government intervention is necessary if our goal is to tackle the current environmental issues raised by Gore and others.

A carbon tax is a good start. Applying a Pigouvian tax on carbon emissions would provide the necessary guidance towards saving our environment while relying less on government in other areas. In theory, this is a win-win situation for citizens of any party. We can reduce the amount of carbon emissions while simultaneously increasing tax revenue, providing a possible double-dividend (assuming the politicians in Washington can properly allocate the revenues from a carbon tax). I like this solution for a number of reasons.

I strongly support small government, but I believe that it is the responsibility of the government to provide firms with the incentive to take into account not only their private costs, but also their damages to society. In addition, this policy would promote innovation by providing the incentive for firms to acquire new abatement technology relative to other pollution control policies such as command and control. It rewards firms to be more cost efficient however they choose to do so (i.e., less production, more abatement, better technology).

The tax revenue collected by the government could be used to fund more research and projects that will produce better and safer technology that will eventually become standard for all firms in order to be competitive.

Sometimes even the invisible hand needs guiding to help society achieve a more favorable outcome through a policy that forces industries to pollute less. And that’s coming from a “small-government” guy.

Urban Sprawl? Just the opposite… But are we ready?

Where’s everybody going? With gas prices so high, I guess you could say “not far”. For a number of years now, urban sprawl has remained a topic of concern in America. Will that trend continue?

Nowadays, just the opposite may occur. Many people are moving from the suburbs back to the inner city. They’re trading their large suburban homes for apartments, condos and busy streets. What used to be noisy, unattractive, cluttered living is now being redeveloped and relabeled as “spacious efficiencies”, lofts, and upscale condos. Developers are turning rundown buildings in the heart of downtown into newly improved multi-unit dwellings. Parking lots are being turned in to multi-level parking garages to accommodate the number of city dwellers that enter the city limits for business, work, or entertainment.

With many cities beginning to realize that the demand to relocate in urban areas is on the rise, what environmental effects should they prepare for? In the past, many people wanted to get away from inner city pollution, noise, and overcrowding. Now the trend is to move back to the city. There are many factors that play a role in encouraging this move, including rising fuel costs, decreased commuting time, and increased leisure time. But what impact does this shift in population have on the environment?

Will there be more inner-city garbage collection, litter, carbon/emissions, run-off from construction, and higher concentrations of health related illnesses? Or will we see fewer transactions costs associated with waste collection and a higher use of substitutes to gas-guzzling cars such as bikes and scooters? Perhaps we’ll witness an increase in the natural environment in the outskirts of the city, including more trees, grass, clean streams and animal life. Perhaps obesity will decline as commuting by vehicle becomes less frequent. In fact, maybe high gas prices aren’t so bad after all.

Here in Knoxville, we have seen a movement for increased bike paths, more efficient land-use, and a downtown facelift that should promote further loft and condo living within walking distance of work, school, shopping, and entertainment.

How will this new transition be handled? Will increased government assistance be necessary to make this transition? Can a “green” society develop in light of increased population density in urban areas?

In my opinion, the “opposite urban-sprawl” (a.k.a. “rural sprawl”) will have a positive impact on the environment. As cities encourage residents to move downtown and high gas prices provide parallel incentives, we may witness a more conscientious society with regards to the environment – one that relies more on environmentally friendly modes of transportation. In addition, with increased community engagement in the city, my hopes are that the political agenda will properly consider this conscientiousness toward a greener society when establishing new policies.

Tennessee shows Herbie the love, but have they considered all the costs?

Look out Rocky Top, that automotive icon of the 1970’s (yes, there was a lovebug before Lindsey Lohan) is on his way. Ok, so maybe not Rocky Top exactly, but the state government has lured German auto manufacturer Volkswagen to the Volunteer state by offering up some $600 million in economic aid. Yes, you read that right, $600 million. VW announced that it will build a $1 billion manufacturing facility in Chattanooga and all it’s going to cost the state is a mere $600 million*. This will reportedly be one of the biggest incentive packages ever offered to a car manufacturer.

The economic impact that the plant will have on the state of Tennessee is estimated to be profound. Sure, the state, as well as Hamilton County and the city of Chattanooga will forego millions of tax dollars over the life of the incentive package. But I’m here to tell you that I believe the incentive package will be worth the monetary costs in the long run.

In the current state of the economy, Tennessean’s should be shouting from the rooftops about a major automobile manufacturer building their first U.S.-based manufacturing plant in-state. We’re not talking about the gas-guzzling SUV’s that have seen sales drop dramatically in the last couple of years. We’re talking compact and mid-sized automobiles, the ones that are relatively kind to your wallet at the gas pump. VW has said it expects to produce 150,000 cars a year at this facility once it reaches capacity.

The real question in my opinion is the environmental impact the facility will have on the local community in Tennessee and on neighboring states Georgia and Alabama (*Maybe $600 million is a conservative cost estimate since it may not take into account the environmental impacts). Sure, the monetary concessions the state will make are relatively transparent, but what is much more difficult to measure are the long-term impacts the plant will have on the surrounding environment. We know that the benefits of Tennessee’s offer to VW include an estimated 2,000 new jobs. But what regulatory stances have been made regarding the environmental issues associated with any $1 billion assembly plant? Surely the plant will create higher emissions in east Tennessee, but will they use proper abatement methods to alleviate some of the negative effects of pollution?

While I believe the economic impact on the state will be overwhelmingly positive, it will be many years before the reality of the full impact will be known. For now, we can only hope that Governor Bredesen proceeds with caution if future firms become interested in locating in Tennessee. While I am all for the high spirits associated with the economic boost that VW’s (and Herbie’s) recruitment will bring to the state of Tennessee, I hope that we aren’t taken advantage of (environmentally speaking) by attracting the environmental consequences that could be associated with other expensive assembly plants in the future.

Who’s to Blame for China’s Environmental Conditions?

One of the most polluted countries in the world is China. Generally speaking, their lack of interest in the well-being of the environment is fueled by the idea that the Chinese think that economic growth is more important than preserving the environment. This activity has introduced new environmental challenges, not only for China, but also for countries worldwide.

On February 16, 2005, 35 industrialized countries signed the Kyoto Protocol. Today, approximately 178 countries have signed and ratified the Protocol. However, China’s responsibilities are unclear. “China, India, and other developing countries were not included in any numerical limitation of the Kyoto Protocol because they were not the main contributors to the greenhouse gas emissions during the pre-treaty industrialization period.” (To be fair, the U.S. originally did not sign the Protocol, but one major reason we did not sign is because China and India - two competing countries in terms of economic growth - did not sign either).

My Roommate studied abroad in China this summer and from the stories and pictures he has shown me, China is a very dirty place. The water that he drank was in a Dasani bottle and looked just like a bottle of water that you would get at the grocery store in the States. Unfortunately the Chinese are apparently great at making “knock offs” and they happened to use regular polluted water, put it into a Dasani bottle, sealed it, and sold it. Instead of drinking spring water, my roommate actually drank water from one of the rivers in China, which are notorious for absurd amounts of sewage. As a result, he learned to pack his own water. [By the way, China is the site of the 2008 Olympic games. I’m no Olympic trainer or anything, but if I had advice to the participants and/or traveling fans, it would be to bring your own water – my roommate can attest to that.]

Is it any wonder that a significant percent of our trade occurs with China, a country with lax environmental policies, allowing polluting firms to produce at lower costs? Are we, as Americans, to blame for demanding these relatively inexpensive goods from China, adding to the poor environmental conditions? How can the rest of the world provide China with a disincentive to continue damaging the environment at such an evil pace?

The United States is actually fueling the Chinese economy. We expect China to continue to supply goods and services at low costs, but we also expect them to maintain reasonable environmental standards. Perhaps the United States can use trade leverage to (i.e., limit our imports) with China until they start to clean up their environmental act. If we are disciplined enough to make such a contribution to the global state of the environment, we can point the finger solely at China knowing full well that we aren’t to blame for their destructive pollution activities.

Crawfish or Cancer? On the Pigeon River, your guess is as good as mine

Ahhhhh…. There’s nothing like the crystal clear waters of a mountain river or stream in the Great Smoky Mountains. An abundance of trout fishing, small children cooling off after a hot day of play, and a few deer or even a bear might be seen while visiting a river in the Smokies. Sounds great doesn’t it?

Well, not if you visit the Pigeon River downstream from Evergreen Packaging Group/Blue Ridge Paper Products, formerly known as Champion Paper Mill, in Canton, North Carolina. Since 1908 (100 years ago!), the mill in Canton has been dumping hazardous chemicals and toxins into the Pigeon River, which flows through Western North Carolina and into East Tennessee.

In my hometown of Sevierville, TN the Little Pigeon River, which flows directly from the main and larger Pigeon River, runs directly through the city park and from all my memories of attending birthday parties and other events at the pavilions next to the river we never got the chance to even step close to the water. There were (and still are) signs up stating that there are possible carcinogens in the water and to enter at our own risk. Because our parents didn’t want us to get cancer before our 13th birthday or sprout an extra arm or leg, we had to stay away (which is very hard to do when you are just a kid - all you want to do is throw rocks into the river or put your feet in to see what might crawl out from under the rocks…. but apparently that’s risky when you might catch cancer instead of a crawfish!).

Fortunately, our Governor has realized that something still needs to be done about the river, even if it’s a hundred years late. He signed a bill requiring stricter water testing in the Pigeon River within a quarter mile of the Tennessee-North Carolina border earlier this year.

For the record, one concern that I still have is with regards to the logistics of water testing. It is very difficult to measure pollutants in rivers. Particularly, it is problematic to assume that pollutants are equally distributed across an area of the body of water. Measuring pollution levels in water bodies typically involves the investigation of non-uniformly mixed pollutants.

Imagine a slow-moving part of the river that looks very dark and has dirty, stinky foam floating on top. Then imagine where the water starts to look cleaner downstream, typically near fast-moving rapids. The slow-moving water is more concentrated because the pollutants have had time to settle. This could also happen at manmade or beaver-constructed dams. Because of this problem, testing the water may never really give us an accurate assessment of how concentrated pollutants may be in specific parts of the river.

My hopes are that they are collecting samples in several different parts of the river to gauge a more accurate estimation of the water quality. The next step that our Governor should consider is how to receive compensation for the poor water quality in the Pigeon River from the North Carolina-based company. My suggestion, after ample water testing has been completed, would be to start with a simple bargaining solution (a la Coase). If that doesn’t work, increased government intervention may be necessary.

The Pigeon River may look pristine and clean from afar, but look out – there could be other “stuff” besides crawfish swimming in there. What will you catch when you visit the Pigeon River? Well, your guess is as good as mine!