Natural resource dependence

Resource and Energy Economics is has a manuscript on the economic growth associated with natural resource rich areas:

James, A. & Aadland, D., 2010, The curse of natural resources: An empirical investigation of US counties, Resource and Energy Economics.

From the abstract:

Research consistently shows that natural resource dependence tends to be associated with lower economic growth. However, the studies typically focus on differences across nations or states. We fill a gap in the literature by testing the so-called resource curse at a more disaggregated county level. Our results show clear evidence that resource-dependent counties exhibit more anemic economic growth, even after controlling for state-specific effects, socio-demographic differences, initial income, and spatial correlation. A case study analysis of Maine and Wyoming, and the counties within, highlight the growth effects of specializing in natural resource extraction.

I like the idea they have here, of testing counties, but I have some problems with the execution. They argue that looking at counties lessens the problems associated with differences in state regimes, which is true–there are over 3,000 counties.

They cover several theories on the resource curse, including “Dutch Disease”–where specialization in sectors unrelated to manufacturing minimizes that sectors’ growth potential via returns to scale and production externalities. There’s also what you might call the ‘trustafarian’ idea, where resource endowments cause people and governments to be overconfident in their economic returns, so they do not invest other sectors or human capital to the degree they should.

The authors also briefly bring up institutional differences, include a weak discussion of the role of civil strife. Here is where I have problems.
In other fields, such as sociology, the “curse of oil” or diamonds hinges on how the resources tie the economy to past colonial economic arrangements (with global corporations instead of imperial governors), concentrating wealth into privileged classes (often market-dominant ethnic majorities) who then use control over the military to enforce their economic hegemony. This cycle systematically impoverishes the remainder of the population and suppresses other possible avenues of economic growth.

It’s for me hard to tell what effect James and Adland really find here with their association between lower growth rates in resource dependent counties in the US in terms of testing these theories. We don’t really have an explanation here; it seems quite clear to me that in the presence of property regimes, different sorts of resources have different returns, and there’s no reason to believe that value or profit stays in the place it is created: ranch owners are corporate and asset wealthy; ranch workers are most assuredly neither.

I’m also not sure that we can treat agriculture as a natural resource endowment in the way diamonds and oil are.

Zheng, Kahn, and Liu on property values, pollution, and Chinese cities

UCLA economist Matt Kahn has the nice manuscript along with Siqi Zheng and Hongyu Liu in Regional Science and Urban Economics: Towards a System of Open Cities in China: Home Prices, FDI Flows and Air Quality in 35 Major Cities. They have a hedonic analysis that shows a nice negative correlation between home values and particulate matter and sulfur dioxide. These are city-level regessions, though, with a limited number of observations. Their take-away point however, stands, in that it seems that at least some Chinese cities are moving from manufacturing- to service-based employment, and that there is labor sorting. I tussle with their conclusion somewhat; merely shifting away from being manufacturing regions does not itself suggest sustainability–not if the manufacturing activity simply moves and dirties another region.

Cheetah Conservationists and ecologist win this year’s Tyler Prize

Many people do not know that my university, the University of Southern California, is the custodian of the Tyler Prize, an honor given to those working in environmental science, health, and energy. The point of the prize is, not unlike the Nobel, to recognize work that has made exceptional contribution to the environmental field.

This year’s honorees are Laurie Marker of the Cheetah Conservation Fund and Stuart Pimm of Duke University. Both are conservationists; Marker is an expert in ecological restoration. Pimm is a conservation biologist who has written many, many policy papers on the fields.

Here’s the press release:

Winners of 2010 Tyler Environmental Prize Announced – USC News

And here is a listing of past laureates.

California needs a high speed rail connection to ABBAWORLD

In the oh-no-they-didn’t category of sustainable development, developers have brought us our heart’s desire: ABBAWORLD, a theme park in London themed on…well, ABBA:

ABBAWORLD theme park opens in London – MSN Music News

These types of development opportunities are once in a lifetime, so I have gone ahead and scientifically determined (back off; I’m an experty expert) an optimized HSR route, which clearly needs a perpetual and infinite Congressional earmark because of its national significance.*

Here is the map:

Just THINK of the efficiency benefits and the jobs that will be created by building high speed rail from my house, on 9th street here in my little berg, all the way across the US and across the Atlantic to stop at ABBAWORLD. It’s carbon efficient!

Yes, some misguided souls may wring their hands over cost, but it’s all about livability and keeping America great and…GETTING TO ABBAWORLD. What child in America should grow up without ever visiting the World’s Largest Rubber Band Ball or ABBAWORLD? How will these children, our children, know that they must keep their eyes on the stars if not so inspired to give flight to their dreams? Did Edison’s parents oppose High Speed Rail or keep the young man from visiting the World’s Largest Thingies? Did Einstein’s? No! Of course they didn’t!

Think of all the real estate development. Maybe the Vatican could put a satellite campus in Pigeon Hole, Tennessee right by the Days Inn Dollywood. The possibilities are endless. Endless!

Someday, one day, that glorious trip between my house and ABBAWORLD will be a reality on comfortable and fast HSR. Until then, here’s ABBA with their superfantastic silvery shiney sparkly minis and gold go-go boots (can you have too many pairs? I think not!) and bubblicious candy-color-balloons-floating in-a-transparent-tube set on Japanese tv:

HT to Go Fug Yourself.

*If by any chance my dean is reading this, you should know all this is publishable research. Highly publishable. I’m on the cutting edge of something big here.