“My research on the economics of atrazine shows that its benefits are greatly exaggerated. Corn yields and farm incomes would barely be affected by switching from atrazine to the next-best alternatives.

“Why is atrazine controversial? Everyone agrees that it kills weeds. But there are two rival stories about its health risks. Industry-sponsored research and agribusiness lobbies say that atrazine is completely safe and has been used for decades without harm to humans. Independent university researchers and peer-reviewed scientific literature say that it is a powerful endocrine disrupter that makes male frogs into hermaphrodites at very low concentrations and causes neural damages and cancer in laboratory animals.”

Read the full Des Moines Register column.

See Ackerman’s original study on atrazine.

Congress has – once again – considered a new climate and energy bill, and then blinked, instead of passing it. As in the movie Groundhog Day, they seem condemned to keep starting, over and over, until they get it right. It’s a good thing there’s not much at stake, aside from the fate of the earth’s climate, the disastrous dependence on oil, and the costs to the American taxpayers to clean up this mess.

In a recent study, released by Economists for Equity and the Environment (E3 Network), we analyzed the economic impacts of climate policies on households throughout the country. We found there are two basic principles for designing a fair and effective climate policy. First, we need to put a price on carbon dioxide emissions, to send a clear market signal that these emissions need to be reduced. The higher the price, the faster the reduction in emissions – regardless of how wisely, or not, the carbon revenues are used.

And second, we should use the revenues wisely. If most of the carbon revenues are refunded to households, on an equal per capita basis, then a large majority of Americans, including the average household in every state, will come out ahead. That is, the refunds will be larger than the amount you pay for carbon emissions – regardless of how high the price is set.

What would a successful policy look like? To reach the widely discussed goal of a 20-percent reduction in greenhouse gas emissions by 2020, the price of emitting a ton of carbon dioxide in that year should be $75. That sounds scary by itself: It could mean a price hike of 75 cents per gallon at the gas pump. But remember, you’re going to get it back, and more, in your refund check. If 85 percent of the carbon revenues are refunded to households, then four-fifths of the country, including a majority in every state, will come out ahead. The other 15 percent of the revenues can be used for investment in energy efficiency, providing additional jobs while reducing emissions even more.

All of the bills proposed in Congress this year contain some useful elements, but none would do enough, either for the climate or for the taxpayer. They typically have limits, which are much too low, on the allowable price on emissions – keeping it at around $40 per ton or less in 2020, roughly half the level that is needed. And they typically distribute some money, but not enough, to households. The Cantwell-Collins bill comes closest to our recommendation, with a 75-percent refund, but according to our model, even that is not quite enough.

We are not – like Bill Murray in the movie – doomed to repeat our past mistakes. Congress can get this right, avoiding the worst climate damages while building a new, high-tech green economy, and putting money in the pockets of most Americans.

Elizabeth A. Stanton is a senior economist with the Stockholm Environment Institute (SEI-US).

It’s time to stop blaming BP – alone. At least four other oil companies hired the same firm to write their plans for handling spills in the Gulf of Mexico. They ended up with nearly identical plans, complete with thoughtful concern about impacts on walruses. The CEO of ExxonMobil called it “unfortunate” and “embarrassing” that the plan included walruses, which have not been present in the Gulf region for millions of years.

On the other hand, according to U.S. Rep. Ed Markey, the oil industry’s standard plan for Gulf spills never mentions hurricanes or tropical storms, which do appear in the region on an annual basis. This makes perfect sense under only one interpretation: the oil companies were certain that accidents never happen. If there are no oil spills, your spill response plan can talk about unicorns, and no one will be the wiser.

We are, unfortunately, wiser now. We are leaving the era of low-risk, conventional energy supplies; for the future, everything depends on how we manage the risks of finding and producing fuel. Last year, 30 percent of U.S. oil production came from offshore wells, almost entirely in the Gulf of Mexico. Since U.S. onshore production is rapidly falling, our dependence on offshore drilling is bound to increase.

Drilling safely and responsibly is sure to raise the cost of producing oil. Hopefully the industry will learn the most obvious lesson from the Deepwater Horizon disaster, and install better blowout protectors on drilling rigs. Although this looks expensive, it is quite the bargain when compared to the alternative of cleaning up a major spill. But the next draft of the spill response plan really has to talk about hurricanes.

The 2005 hurricane season, which devastated New Orleans and other coastal areas, was even more intensely violent over the open water. The top three storms of 2005, Katrina, Rita, and Wilma, were all Category 5 hurricanes in the Gulf of Mexico. One thing that the troubled Minerals Management Service (MMS) did right was to commission a detailed oceanographic study of that year’s hurricanes, in order to understand their effects on offshore drilling.

Katrina vs. offshore oil

Katrina reached its maximum intensity in an area just south of Louisiana, full of oil wells and coincidentally close to the site of the Deepwater Horizon accident. It had sustained wind speeds of 175 mph, and may have created 80-foot waves. Katrina destroyed 50 offshore oil platforms and drilling rigs, and did serious damage to Shell’s Mars platform, the top producer in the Gulf. Mars is a 36,500-ton structure, which cost $1 billion to build. The storm knocked a 1,000-ton drilling rig off the top of the Mars platform, into the center of the structure. The repairs to Mars required eight months and 600,000 person-hours of labor.

According to MMS statistics, total U.S. offshore oil production was one-third lower in the eight months after Katrina than in the eight months before. If nature is going to wipe out one-third of the industry from time to time, drilling in the Gulf of Mexico doesn’t sound like much of a plan for energy security.

Or maybe the 2005 hurricane season was an outlier, a once-in-a-century event that we don’t have to worry about in normal life? Between disasters, it’s always more appealing to ignore risks and avoid the costs of being prepared; that’s why New Orleans had such shoddy levees in 2005. This option doesn’t really hold water, though: Climate change is making hurricanes, on average, more intense.

By one reckoning, a hurricane season as destructive as 2005 would have occurred once in 110 years without climate change, but will happen once every 40 years with climate change. And that doesn’t mean 39 trouble-free years for every Katrina! Moderately dreadful hurricanes, perhaps bad enough to knock out only one-sixth of the industry for a few months, will happen more often than once every 40 years. We’re already being warned that BP’s ill-starred attempt to control the Deepwater Horizon blowout could be blown away by this year’s tropical storms.

So we’re overusing fossil fuels, causing climate change – which intensifies hurricanes and makes our fuel supply less secure. We could try building bigger and bigger platforms, to withstand stronger and stronger winds and waves. Or we could look for an alternative source of energy.

Wait a minute, we’ll think of something. I hope.

Despite talk of a moratorium, the Interior Department’s Minerals and Management Service is still granting waivers from environmental review for oil drilling in the Gulf of Mexico, including wells in very deep water. Until last month, most of us never thought about the risk that one of those huge offshore rigs would explode in flames and then sink, causing oil to gush out uncontrollably and befoul the oceans. The odds seemed low, and still do: Aren’t there lots of drilling rigs in use, year after year? Twenty years ago, your elected representatives thought that you’d be happy to have them adopt a very low cap on industry’s liability for oil spill damages.

Nuclear power was never quite free of fears; it was too clearly a spin-off of nuclear weapons to ignore the risk of a very big bang. Yet as its advocates point out, we have had hundreds of reactor-years of experience, with only a few accidents. (And someday when Nevada’s politicians aren’t looking, maybe we can slip all of our nuclear waste into a cave in the desert.) Again, the risks are so low that you’d be happy to learn about a law limiting industry’s liability for accidents, wouldn’t you?

Environmentalists have long warned that the world could run out of energy and resources, from the “limits to growth” theories of the 1970s to the more recently popular notion of “peak oil.” The response from economists has been that prices for energy and raw materials are still moderate, and declined over the course of the 20th century; if we are running out of something, why doesn’t its price skyrocket?

The problem is that what we’re running out of is low-risk conventional energy supplies. Because our economy conceals and socializes energy risks, prices remain deceptively low for an increasingly risky energy supply.

The market wasn’t supposed to work this way. In the mythology of perfect competition, each individual business bears the entire risks of failure as well as reaping the rewards of success. Almost all small businesses quickly fail, a point which is glossed over in the cheerleading for competition – but the damage is normally limited to the loss of savings and derailing of careers for the unlucky proprietors.

This model of competition and individual risk-bearing may be a great way to decide which restaurants should stay in business. For offshore oil rigs and nuclear reactors, it’s not so good. The risks are enormous, potentially affecting large numbers of innocent bystanders. The costs of these energy technologies are high enough that large companies are the only candidates for using them. And large companies don’t like to bet the existence of the company on uncertain risks from dangerous technologies. Most large companies don’t fail, ever; they do everything they can to avoid bet-the-company risks.

That’s where Congress has stepped in, to socialize the risks of energy supply. The Oil Pollution Act of 1990, adopted in the wake of the Exxon Valdez accident, imposes a tiny tax on the oil industry, currently 8 cents per barrel, to finance the Oil Spill Liability Trust Fund, which now contains $1.6 billion. In exchange for the tax, the Oil Pollution Act limits industry liability for spills to actual clean-up costs plus $75 million. That amount is a pittance for a giant oil company, and is far below the economic losses to the communities affected by BP’s recent spill in the Gulf of Mexico. While BP has said it will voluntarily pay more, U.S. law does not require it, and BP shareholders might not tolerate it.

No utility would ever invest in any reactor without the Price-Anderson Act, which puts a strict upper limit on industry’s liability for a nuclear accident. The limit is now up to about $10 billion (to be shared by the industry as a whole), higher than for oil spills but still far below the damages that could be caused by an accident at a reactor, especially one close to a major city. The federal government has, in addition, guaranteed that it will find a final resting place for nuclear waste from reactors around the country, although Yucca Mountain, the only site seriously debated in the first few decades of discussion, has apparently been rejected.

That’s why risky energy technologies look cheap: Congress has decided that we, the taxpayers, are the industry’s insurance policy. Unlike insurance companies that know what they’re doing, though, Congress doesn’t bother to calculate the real risks and set premiums on that basis. Instead, they pretend that the worst will never happen; happy days and low prices are here again, and again.

We are in danger of applying the same short-sighted approach to the biggest energy risk of all, namely climate change. Pretending that the worst case couldn’t possibly happen is all-important to those who want to go slow on climate policy; the most likely climate outcomes for this century are unpleasant and expensive, while the worst cases are truly catastrophic – and too large and irreversible for anyone to pay for the damages. But not to worry: Those catastrophes are at least as unlikely as an oil rig capsizing and filling the Gulf of Mexico with petroleum.

For the first time, the U.S. government is working to limit carbon emissions – most notably through new fuel efficiency standards unveiled April 1. To inform cost-benefit analyses of proposed policies, the Obama administration has relied on an interagency group’s estimates of the “social cost of carbon,” the socioeconomic impact of every ton of carbon dioxide that goes into the atmosphere. The higher the social cost of carbon (SCC), the more stringent the regulatory standards that will be deemed to be worthwhile.

So far, no definite SCC has been set, but the interagency group has proposed $21 per ton. In a new Economics for Equity and the Environment (E3 Network) white paper, Liz Stanton and I analyze the economic models used by the interagency group. They find significant shortcomings, and show how they lead to substantial underestimates of the risks and costs of climate change.

Once upon a time, “There’s Only So Much Oil in the Ground” was a popular song that could be heard on the radio. The year was 1974, and Tower of Power, an Oakland-based soul and funk band, was enjoying some commercial success. They made the year’s top 100 with “What is Hip?” In addition to the important topics of being young, hip, and falling in and out of love, they sang about the energy crisis. Following a brief OPEC oil embargo, the price of crude oil (in today’s dollars) jumped from $23 per barrel in 1973 to $41 in 1974. Everyone was thinking about the world’s finite and diminishing supplies of oil. As the song continued, “Sooner or later there won’t be much around.”

Now it’s later. What have we learned in the decades since OPEC, Tower of Power, and others brought the oil crisis to our attention? Back then, the Nixon administration’s energy policy included a big push to open the outer continental shelf to offshore oil and gas production. In 2010, the Obama administration has announced plans to open more of the outer continental shelf to oil and gas production.

We’ve been there, done that. And it didn’t work. Despite plenty of drilling, U.S.crude oil production reached its all-time peak in 1970 and began to fall rapidly and steadily after 1985. By 2008 it was barely half of its 1970 level.

What was the Obama team thinking? This administration is full of people who are way too smart to believe that offshore drilling will supply any noticeable part of our long-term energy needs. In the overly clever mode of partisan triangulation – is there any other mode in Washington? – it smells like a concession designed to get a few Republican votes for a climate change bill. Oddly enough, our national policy is now to increase fossil fuel production, in the hopes of winning support for reducing fossil fuel consumption.

We can learn a painful lesson from the sorry state of energy policy today – and it’s not just that the hypothetical-filibuster rule, allowing 41 senators to effortlessly stop a vote, prevents Congress from taking action on almost everything.

Reflecting on the fact that there’s only so much oil, some environmental advocates have adopted the “peak oil” theory: When the world as a whole passes the peak and production starts to fall (as it already has for the United States), the fast-growing scarcity of oil will create a deeper crisis, forcing us to change our ways. As Tower of Power said, “Soon enough the world will watch the wells run dry.”

Although there’s only so much conventional oil, there is a much larger amount of oil shale, tar sands, extra-heavy oil, and other geological formations from which oil and gas can be extracted – at the cost of vast environmental damage. When oil was readily available at low cost, it wasn’t worth the effort to destroy large areas of Alberta to extract oil from tar sands. With oil currently hovering around $70-$80 per barrel, however, northern Alberta is one of the hot new properties for oil companies.

Counting the oil that could be extracted from tar sands, Canada is second only to Saudi Arabia in oil reserves. Venezuela, which is rapidly running through its conventional oil, has gigantic amounts of very heavy, dirty oil, perhaps exceeding the Saudi reserves. The United States has large oil shale reserves, under the Colorado River basin, and other formations from which natural gas could be extracted – including a big one under upstate New York, Pennsylvania, and West Virginia. If industry is allowed to experience the joy of breaking rocks, along with the resulting air and water pollution, big chunks of the Western Hemisphere could be pulverized to produce more fuel.

Solving our energy problems, without a change in direction, will lead to increasingly costly and environmentally destructive production – either deep offshore, or deep in the rocks below existing communities and watersheds. We need a tax (or a fee resulting from an allowance system) on energy, to keep the cost to consumers high enough to encourage conservation, while holding the price for producers low enough to discourage the pursuit of the worst fossil fuel deposits.

And the real answer to our energy problems? As Tower of Power told us, back in the day, “Alternate sources of power must be found.” It’s got a beat; you could dance to it.

A version of this post appeared in Foreign Policy in Focus.

What will the US do about climate policy? The ongoing paralysis in Congress makes it clear that failure actually is an option. For those who long for success, the best hope may be EPA regulation of carbon emissions. Yet far from setting an ambitious new course, EPA may be following the worst of traditional economics – effectively arguing, in opaquely technical language, that climate change isn’t such a big deal, so the right policy is to do almost nothing.

The story began when several states and environmental groups filed a lawsuit, Massachusetts vs. EPA, to force EPA to regulate greenhouse gases. In 2007 the Supreme Court ruled for the states, ordering EPA to determine whether greenhouse gases harmed the environment and public health. The Bush EPA ran out the clock, saying almost nothing on the subject, but Obama’s new EPA administrator, Lisa Jackson, swung rapidly into action. Last April, EPA declared greenhouse gases to be pollutants that endanger public health and welfare, qualifying them for regulation under the Clean Air Act. A proposal was published for comment in September; my comments were among thousands that EPA received. A final ruling is expected soon.

Buried in the 336-page EPA proposal is a short section on the “social cost of carbon” – the dollar value of all damages caused by emitting one ton of CO2. There is, of course, no such number. Many damages to human life and nature are priceless, as I’ve argued elsewhere. In a cost-benefit analysis, however, the price tag attached to damages is all that matters. The higher the price, the more it’s worth doing to avoid them. That’s why the strength of US climate policy may depend on EPA’s social cost of carbon.

Every $1 per ton of CO2 is about a penny per gallon of gasoline, so $5 per ton would be a trivial price incentive of 5 cents a gallon. At $50 per ton, or 50 cents a gallon, you’d start to notice. An increase of $500 per ton, or $5 per gallon, would put us in the realm of gas prices in many European countries where people buy smaller cars and use public transportation a lot more than we do.

$500, though, isn’t in the running. In the September proposal, EPA offered a range of values from $5 to $56. It sounds to me like the high end was included to mollify critics, while the low end is what EPA’s economists prefer.

How could US climate policy shrink down to a mere nickel per gallon of gas? There are three steps in the construction (or constriction) of EPA’s social cost of carbon estimates; each of them draws on the narrowest and most dated version of climate economics. (For details, see my comments on the proposal.)

First, EPA only considers peer-reviewed economics articles – specifically, only the latest estimates from three simple models, DICE, FUND, and PAGE. The peer review criterion excludes the Stern Review, the massively researched, widely discussed study commissioned by the British government. Stern’s social cost of carbon estimate was $85 per ton, well above EPA’s recommendations.

The focus on three models erroneously suggests that they represent the state of the art. In fact, each of the three contains hidden biases which serve to minimize climate damages or even imply spurious benefits from warming. Meanwhile, many other models and studies contain valuable additional information about climate damages.

Second, EPA considers discount rates of 3% and 5% for future damages. EPA’s proposal quotes, but ignores, an Office of Management and Budget recommendation to consider discount rates below 3% for intergenerational analyses. EPA cites five academic sources on discount rates, four of which recommend or use rates of 2% or lower. The lower the discount rate, the greater the weight of future damages, and the higher the social cost of carbon will be.

Finally, EPA mentions but fails to incorporate recent research by Harvard economist Martin Weitzman on catastrophic climate risks. As Weitzman demonstrates, the value of reducing catastrophic risk can, technically speaking, be infinite – a paradox that calls for a precautionary approach to climate policy.

In the best of all possible worlds, if Congress came to its senses, this debate might be unnecessary. But I wouldn’t bet the fate of the earth on it. Controlling climate change is an experiment that we only get to try once. To have a good chance at a happy outcome, we’ll need to start with a much bigger number for the social cost of carbon.

You can follow this discussion, and related work on climate economics, on Public Goods, the new blog just launched by my colleague Liz Stanton.