%\documentclass[12pt]{book}
 \input{../preamble-regulation.tex}
 \begin{document}

\parindent 16pt

 \setcounter{chaptercounter}{6}
  \refstepcounter{chaptercounter} \label{chap12}
\setcounter{page}{1}

\pagestyle{fancy} \lhead[\ref{chap12}--\thepage]{}    \chead{Conservation}   \rhead[]
{\ref{chap12}--\thepage} \cfoot{}
%--------------------------------------




  \begin{center}

\begin{Huge}
{\bf \ref{chap12}:  Conservation} \label{s12.0}  \\
\end{Huge}


%\vspace*{\fill}

 \begin{quotation}
%\begin{Large}


{\it ``Unless profound changes are made to lower oil consumption, we now believe that early in the
1980's the world will be demanding more oil that it can produce.''} \\
---President Carter in \href{http://www.pbs.org/wgbh/americanexperience/features/primary-resources/carter-energy/}{ an address to the nation}, April 18, 1977.

\bigskip
\noindent






%\end{Large}
 \end{quotation}




% \begin{wrapfigure}{l}{0.3\textwidth}
 \includegraphics[width= .5\textwidth]{fig12-Save_Waste_Fats_for_Explosives.jpg}
 % \end{wrapfigure}

\end{center}

\vspace*{\fill}

{\small \hfill {\it October 12, 2019}}\\


{\small \hfill  \url{http://rasmusen.org/g406/reg-rasmusen.htm}, erasmuse@Indiana.edu}
 
%------------------------------------------------------------
\newpage
\bigskip
\noindent
 {\bf \ref{chap12}.1:  Introduction }\label{s12.1}

     A natural resource is a production input that exists in nature even in the absence of the humans who provide capital and labor.  Usually  natural resources still require capital and labor to be made useful--- a field of land needs a plow and a farmer, and iron ore is useless without digging equipment and miners--- but we tend to think of natural resources differently that we do other inputs. It is not that
natural resources are limited in extent, so we need to use them carefully. Capital and labor are also limited and should be used efficiently rather than wasted. The property rights to natural resources, though, present special questions.  It is quite natural for person to own his own labor and be able to sell it to whoever will pay him enough,   even though in times past people became enslaved by birth or through conquest or sale.  Capital is the result of somebody having saved and invested, and so naturally would belong to that saver.  Natural resources, however, do not always have such clear ownership, even though in many cases the obvious owner is whoever owns the land on which they are found.  

    Proper  use of natural resources--  conservation---  is important for surplus maximization.  
Many people think conservation is good for its own sake,   even if  it costs more in total resources than it saves. Unless some form of market failure is at work, though, we must beware lest an effort to save one kind of resource ends up wasting some other resource. Economics is useful in pointing out where market failure  and government failure are likely  and how to make tradeoffs between different goods. It also  can point out  where the perceived problem is not market failure.   In some cases a natural resource may be seen as too expensive, but the problem is not market failure, but markets working to give incentives to people to conserve it because it is so scarce. In other cases, the natural resource may be seen as overused--- too cheap--- but, again, it is simply markets working to show that the resource is not as scarce as it seems.   Surplus maximization   supports forcible conservation that is an answer to market failure, but surplus is diminished if the government uses  its monopoly on force to overconserve a resource  that is already being used efficiently.

 






%------------------------------------------------------------

\bigskip
\noindent
 {\bf \ref{chap12}.2: Renewable Resources and the Common-Pool Resource Problem: Hunting and Fishing
} \label{s12.2}

  Conservation is associated with a number of different ideas. The  central idea   is that without
regulation  natural resources will be used up too fast.  As so often is the case with ideas, this      is true in one
sense and false in another. It is true  that natural resources  can be used  up too fast when there is market  or government failure,  but the opposite can also be true. If the market failure is monopoly, for example, then the monopoly will overprice the natural resource and it will be used up too slowly. If the government failure is a  restriction on use of a resource where there is no market failure but the government doesn't want the country to have to import the resource, that will result in  using higher-cost substitutes unnecessarily. It is also quite possible for market and government failure to result in overuse of natural resources, and that is what we will start with.  
 

  A basic problem with natural resources is the {\bf common-pool resource problem}\index{common-pool
resource problem}    This is a version of the free rider problem, which is itself a version of the prisoner's
dilemma. The problem begins if there is  a stock of a  natural resource that nobody owns, where anyone who wants to can
take from it  till the  stock  is used up. 

Suppose the   resource is deer,   and    anybody may hunt
deer without   limit. The result will be  that if too many deer are killed, there will not be as many
deer next year because the breeding stock will be too low. If only one person had the right to hunt deer,   that
person would be careful not to overhunt. If there are 100 people, however, we are in  the situation
in Table  \ref{chap12}.\ref{prisonersDilemma}.   This table is different from our usual game matrix, because there is more than one player and the matrix focuses on  the payoff of one player, Mr. Row. He and 
 each of the other  hunters has a choice between shooting one deer or two. 
  If everyone holds back and just shoots one, Row will have a payoff of 10,
  because there will  still be good hunting the next year. Row, however, can  raise his payoff to 12 if he chooses to shoot two deer.  If the other 100 players each shoot two deer, however, hunting is ruined  for the next year. Row's payoff would be 2 in that case if  he shoots just one deer, but 3 if he shoots two.  

 
% \begin{wrapfigure}{l}{.6\linewidth}
\begin{footnotesize}
%\vspace{-28pt}
 \begin{center}
\refstepcounter{tablecounter} \label{prisonersDilemma}
{\sc Table  \ref{chap12}.\ref{prisonersDilemma}\\
   The Common-Pool Resource Problem}\\
  \vspace*{ 12pt}
 \begin{tabular}{lll ccc}
\hline
\hline
\multicolumn{5}{l}{\it   } \\
        &             &\multicolumn{3}{c}{\bf 99 other hunters}\\
        &             &   {\it  Shoot one}  &   & {\it Shoot  two}     \\
\multicolumn{5}{l}{\it   } \\
    &  {\it Shoot one}      &      10   &    & 2  \\
  {\bf Row} &&  & &  \\
  &       {\it  Shoot two}     &      12   &    & {\bf  3 } \\
\multicolumn{5}{l}{\it   } \\
\multicolumn{5}{l}{\it Payoff  to Row } \\
\multicolumn{5}{l}{\it   } \\
\hline
\hline
\end{tabular}
 \end{center}
% \end{minipage}
\end{footnotesize}
%\end{wrapfigure}
 %  \vspace*{-24pt}


 Total surplus is highest if   each hunter shoots just one deer,  but in equilibrium each  of the hunters is looking at a game matrix like Row's, where his payoff is higher from shooting two deer rather than one, no matter what the other hunters do. Thus, without regulation each hunter will overhunt, ruining future years and a hunter's payoff will be    3  instead of the 10  that could be achieved if each were limited to one deer per year. 
 

 You can think about the market failure here in two ways. One way is that there is an externality when
Row kills a deer: the deer will not have offspring, hurting all of the hunters slightly the next year even though the slight loss to the future deer population is too small to stop Row.   The
other way  is that the problem is lack of a market because nobody owns the deer--- the market failure of poor property rights.  A hunter  does not have to pay   other hunters when he shoots  a deer. If Row owned the forest and could charge fees to the other hunters, he would make the fee high enough for shooting a second deer that the deer population would not become depleted. He might make the fee high enough that no hunter would shoot two deer, or he might set it lower so that  just a few of them would take a second deer. I haven't presented enough information for us to know, because that would require knowing how the different values between 100 and 200 deer  killed would affect future hunting. 
 


The usual form of hunting regulation,  which   has
long been used in America    is to require hunters to buy licenses like the illustration in  Figure \ref{chap12}.\ref{1913-ohio-hunting-license.jpg} and limit their annual take of
game. This is a form of quantity regulation.   The number of licenses can be  reduced or expanded depending on how well the deer are thriving. It is not cap-and-trade regulation, just ``cap'',  because a person cannot buy a
license allowing him to kill one deer and sell it to someone   else.    The effect of not allowing trading of licenses is to increase the number of hunters, since otherwise some of them would sell their licenses to richer or more enthusiastic hunters who want to catch  more than one license allows. 
 

    The common-pool resource problem  is widely recognized, and has been recognized for many decades.
Unfortunately,   crept up on us  because initially in the United States  natural resources were so abundant
relative to the number of people that there was no need for property rights,  and the externality was
trivial. Consider the passenger pigeon. This    was once one of the most common birds in America, but mass hunting from 1870 to 1890 pushed it to extinction.  This happened so quickly that people hardly realized there was a problem before it was too late. Similarly,  hunting in the 1870's almost  drove the buffalo to extinction. In both cases, commercial hunting was the main culprit, since ``free'' game in a species that gathered in large groups was a profitable commodity. Or, one might say that technology was the culprit, since railroads and improved rifles made hunting pigeons and buffalo  much more profitable than they'd been in the past. 

 


 \begin{center}
\begin{minipage}[c] {.4 \linewidth}
%\begin{wrapfigure}[20]{L}{2.4in}
%\vspace{-28pt}
 \begin{center}
  {\sc Figure \ref{chap12}.\ref{1913-ohio-hunting-license.jpg}\\
 A 1913 Ohio Hunting License }
 \end{center}
\refstepcounter{figurecounter} \label{1913-ohio-hunting-license.jpg}
 \includegraphics[width= \linewidth]{1913-ohio-hunting-license.jpg}\\
  \noindent
 Source: A Ohio museum.
%\end{wrapfigure}
 \end{minipage}
 \end{center}
\vspace{18pt}

\begin{wrapfigure}[12]{L}{2.2in}
\vspace{-24pt}
\begin{center}
 {\sc Figure \ref{chap12}.\ref{12-01-codcatch.jpg}\\
  The Atlantic  Cod Catch: 1950-2005 (millions of tons) }
\end{center}
\refstepcounter{figurecounter} \label{12-01-codcatch.jpg}
 \includegraphics[width=\linewidth]{12-01-codcatch.jpg}
\vspace*{24pt}
 \end{wrapfigure}


The 20th century  also provides examples where technology   advanced so quickly that there was not time to assign property
rights before the free rider problem destroyed a resource. Cod fishing is a tragic example.  The
cod fisheries off the coast of New England and Newfoundland were immensely productive. With 19th-
century technology, fishermen did not   overfish-- indeed, could not overfish---  even though there were no catch
limits.\footnote{One of Rudyard\index{Kipling} Kipling's best novels, {\it Captains Courageous}
(1897),   describes the  codfishing life.} Figure \ref{chap12}.\ref{12-01-codcatch.jpg} shows what happened
later. Codfishing in the Northwest Atlantic peaked in the late 1960's, as new technology made it
easier to catch cod. The new technology was its own undoing, however, because  the new technology
enable overfishing which caused the Canadian government to close the Newfoundland fisheries in 1992
after the cod population dropped so low that it was barely profitable anyway.  As of 2017, the cod we eat 
comes not from the west Atlantic, but from  the east Atlantic, where the United Kingdom and Iceland were more prudent in their regulation of fishing.\footnote{See
\href{http://ram.biology.dal.ca/~myers/papers/Papers-1991-1995/biological_collapse.pdf}{``The
Biological Collapse of the Atlantic Cod off Newfoundland and Labrador,''} Hutchings, Jeffrey
\index{Hutchings} and Myers, Ransom\index{Myers}   39--93 (1995); and
Kurlansky, \index{Kurlansky}Mark,{\it  Cod: A Biography of the Fish That Changed the World} (1997).
}
 

   After the Newfoundland cod debacle,  regulation of commercial fishing has become more
farsighted. Fishing is perhaps unique in representing an important source of food that is caught
from the wild. This does not mean it is unregulated, however---in fact, it is more regulated than
most areas of the economy, since most areas of the economy lack the common-pool resource problem.  And regulation has become more sophisticated. Early regulations restricted the length of
the fishing season  and required  fishing  to stop when the regulated quantity had been reached. Predictably, this
meant that fishermen invested in as much equipment as they could and raced to be the first to catch
fish before the yearly limit was reached. Although this did prevent overfishing, it made production
  inefficient, since every fisherman had incentive to invest in boats and equipment  even
though his boat would be useless once the  season closed. In the case of Alaskan crabfishing,
the season lasted for as little as three days before the catch limit was reached. Every minute was
precious,  even if someone was injured or safety had to be slighted. As one captain  who appeared on
the TV reality show ``The Deadliest Catch''  describes it:
it:\footnote{\href{http://online.wsj.com/article/SB10001424052970204224604577030061119546228.html
}{``Making 'The Deadliest Catch' Less Deadly,''} Scott Campbell, {\it The Wall Street Journal}
(November 14, 2011).   }

\begin{bigquote}
As in a car race, boats used to line up for the minute the season began.

This intense competition was thrilling but it was also incredibly dangerous. Crabbers worked around
the clock, sometimes in terrible weather. There was no time to go back and forth to the docks, so
some boats would be overloaded with too many crab pots, making them unstable. The result was that
from 1990 to 2005 an average of five crabbers died a year.

Part of my finger was cut off during a violent storm when I got knocked off of my feet and landed on
an air compressor. I decided against going to the hospital to have it stitched back on because I
knew the fishing season could end any day and my crew had mortgages to pay. I nearly lost my hand
after developing a nasty infection.
\end{bigquote}

  In 2005 a new system called {\bf catch shares}\index{catch shares} was adopted for crabbing. Each
boat was assigned a share of the total catch limit, but boats could trade or lease their shares, so
this is a version of ``cap-and-trade'' (though limits were placed on how much any one fisherman or
company could acquire---why?). In addition, a 3\% tax was imposed to help pay for the
administrative cost, a significant cost of cap-and-trade.   The number of snow
crab  vessels declined from  189 to 78 in four years, but the value of the average remaining vessel
rose from \$125 million to \$177 million. The percentage of crabs landed alive---
important for quality---rose by 16\% for snow crab and 38\% for king crab.
\footnote{\href{http://www.nmfs.noaa.gov/sfa/domes_fish/catchshare/docs/crabrat_program.pdf}{``BSAI
Crab Rationalization Program,''}   NOAA Fisheries Service (viewed November 28, 2011).
\href{http://blogs.edf.org/edfish/2010/12/30/new-study-finds-crew-in-bering-sea-crab-fisheries-
benefitted-from-catch-shares/}{``New Study Finds Crew in Bering Sea Crab Fisheries Benefitted from
Catch Shares,''} Joshua Abbot,   Environmental Defense Fund (December 30, 2010). }  Thus, the same
amount of crab could be caught, but more cheaply and  with  better quality. Many other kinds of fishing
have also moved towards using catch shares instead of limited season lengths.

 Hunting and fishing  are examples of  {\bf renewable resources}\index{renewable resources}:
natural resources which naturally increase over time if they are not depleted too soon. {\bf
Nonrenewable resources}\index{Nonrenewable resources} such as oil or iron, on the other hand, exist
in limited amounts in nature. They may still face   common-pool resource problems, but they are
different from those of renewable resources. For renewable resources, the central problem is that a
user reduces the rate of renewal by his use. For renewable resources, the common-pool resource
problem that sometimes arises is too-rapid extraction in a race to extract before someone else does;
the resource could be extracted more cheaply if it were done slowly. The racing  crab boats were an
example of that---the catch limit was like a nonrenewable resource for the fishermen,  so they
fished as quickly as they could. We will talk more about nonrenewable resources below, after we talk
about existence value and government failure.

%------------------------------------------------------------fho

\bigskip
\noindent
 {\bf \ref{chap12}.3: The Existence Value of Hetch Hetchy Valley }\label{s12.3}

  The problems in hunting and fishing show that market failure in  common-pool resources  requires
the remedy of  either regulation or the assignment of   property rights. The crabbing example of
inefficient regulation via ``raceboat'' short seasons shows government failure---that the
government doesn't always regulate as well as it might. It also shows that governments do learn, if
the inefficiency is apparent enough and special interests do not block reform. As always, however,
government failure is a  threat in the background of regulation.  For natural resources,  government
failure sometimes pits monetary interest against monetary interest, e.g., fishermen   who do better
with no catch limits or raceboat limits versus fishermen who do better  fishing slowly and for more
years. Natural resource government failure also arises from conflict between material interests that
wish to use a resource for processing into goods and nonmaterial interests that want to preserve the
resource for viewing and study or simply wish the resource never to be used. In economic analysis,
we treat both interests the same, translating them into dollar intensity as best we can.

   A  case where this came up and led to a strange combination of political allies is the issue of
whether Hetch Hetchy reservoir should be drained. Hetch Hetchy is one of two similar canyons created
by glaciers. The other is Yosemite. Yosemite is one of the most popular parks in the world. Hetch
Hetchy was dammed in 1913 and now is a reservoir that supplies water and electric power to San
Francisco. Even in 1913, the damming of a natural wonder for the benefit of one city  was
controversial. Early environmentalist John Muir said, ``Dam Hetch Hetchy!  As well dam for water-tanks the people's cathedrals and churches, for no holier temple has ever been consecrated by the
heart of man.''
 But it was done. By the 1980's, the city of San Francisco was earning some \$50 million per year in
1986 from selling electricity from the dam.
 Conservative Secretary of the Interior Don Hodel then suggested draining the dam, just as the
environmentalist Sierra Club (founded by John Muir)  was considering organizing a petition to have
him fired.   His attempt went nowhere, however, because of the vehement opposition of San
Francisco's city government.\footnote{
  Brower, \index{Brower}David
\href{http://www.sierraclub.org/ca/hetchhetchy/restoring_hetchy_by_brower.html}{``Restoring Hetch
Hetchy,''}
  from {\it For Earth's Sake: The Life and Times of David Brower}(1990).
\href{http://www.nytimes.com/2002/10/15/us/an-effort-to-undo-an-old-reservoir.html}{ Dean E. Murphy,
``An Effort to Undo an Old Reservoir,''} {\it The New York Times}
(October 15, 2002).
Carl Pope \href{http://www.sierraclub.org/ca/hetchhetchy/undamming_hh_NovDec87.html}{``Undamming
Hetch Hetchy,''}
 {\it
Sierra  Magazine}, November/December 1987, pp. 34--38. }




\begin{center}
\begin{minipage}[c]{.8\linewidth}
\begin{center}
 {\sc Figure \ref{chap12}.\ref{HHValley-fromRoad3.jpg}\\
  The Hetch Hetchy Valley Before and After } \\
\end{center}
\refstepcounter{figurecounter} \label{HHValley-fromRoad3.jpg}
 \includegraphics[width=4in]{HHValley-fromRoad3.jpg}  \\

  \refstepcounter{figurecounter} \label{hetch_hetchy_reservoir_from_dam.jpg}
 \includegraphics[width=4in]{hetch_hetchy_reservoir_from_dam.jpg}
\end{minipage}
\end{center}


    Was this government failure? So it seems. The City of San Francisco was a concentrated
interest facing a large loss of revenue.   Environmentalists were well-organized, but it is
difficult to quickly form an alliance with an old enemy (Hodel) against someone who is usually an
ally (the Mayor  of San Francisco).  And perhaps Mr. Hodel was not serious, and just wanted to
embarass the city, though he stuck by his position even after leaving office. The main beneficiaries
would be people who would be able to visit the Canyon as tourists, and people who simply liked the
idea of there being another   beautiful canyon similar to Yosemite.  Most of these beneficiaries did
not even hear about the issue and most would care very little, though a positive amount.  I think
that if the question were put up to a national vote, San Francisco would lose, but I could be wrong.
It is notoriously difficult to measure {\bf existence value}\index{existence value}: the value
people put simply on something such as a canyon existing.  We all recognize that this kind of value
exists---that people would pay some small amount to have the canyon exist---but how can we measure
it?  So perhaps my guess that value would be increased if Hetch Hetchy were drained is wrong; after
all,  there is diminishing marginal benefit for beautiful glacier-carved valleys in California and
Yosemite might be enough.

%------------------------------------------------------------




\bigskip

\noindent
{\bf \ref{chap12}.4: Nonrenewable Resources}\label{s12.5}

  When {\bf nonrenewable resources} are used, they disappear (as with burned oil) or at least diminish (as
with aluminum that isn't 100\% recycled).  It appears that some of them, such as aluminum, are so
common that their nonrenewability is unimportant because there is no prospect of their running out
for centuries to come. Thus, their market is like that for a produced good;  most the entire cost is
for the mining and refining rather than for the raw materials. Other nonrenewable resources,
 such as oil,  are uncommon enough that they could diminish  at current rates to  quantities
economically unprofitable to extract.

  What should we do about oil? Should we burn it up in our cars as if the amount in nature is
infinite? Since economics is all about how to optimally consume scarce resources, it can address
this question. First, though, let us use a fable to look at how to maximize the value of a scarce
resource.


\bigskip

\noindent {\bf  Using up a Finite, Nonrenewable Resource: The   Mulch Problem}

  Suppose  I've just had a delivery of 6 cubic yards of  mulch for my backyard. This is special
mulch,   made up of bark from a grove of  premium  trees near town, and in the future all I'll be able to get is ordinary
  cedar  mulch.  I paid only  \$3 per cubic yard for the premium mulch, the same as the price for cedar mulch.  Premium  mulch is special,
though: you only need to spread half as much to get the same  weed suppression result as with cedar.
 Now I have a big pile of special mulch in a  corner of my yard.   I can take wheelbarrows of  it  to cover weeds in my  flowerbeds  as needed. The
enjoyment of casual gardening just balances the cost in time for me spreading the mulch, so we can
safely count my labor costs as zero.

  For me, the  premium  mulch is  a cheap, nonrewenewable resource. It is cheap, because I have
already paid for it, and I can't resell it or return it,  so its out-of-pocket cost is \$0 per cubic
yard.  It is nonrewewable because no more of it exists for me---from now on, I'll have to use cedar
mulch.

   I have to decide how often to spread mulch.  The more thickly I spread it, the better it will
suppress weeds. Last year,   I  used cedar mulch. I decided  to spread 4 cubic yards each month   at
the price of \$3 per cubic yard, because I wouldn't get enough marginal benefit from a thicker
layer.  But what should I do this year?     (1) I've already paid for the  premium  mulch, so  I will
have no out-of-pocket costs. So maybe I should spread more.  (2) On the other hand, the  premium 
mulch is  nonrenewable, so maybe I should spread less.  (3)  Moreover,    premium  mulch is twice as
effective as cedar,    another reason to spread less.

   Idea (1)  was that the  premium  mulch is free, so  I ought to use more. In fact, if it's
completely costless, why not use it all  in the first month? There's no reason to hold back when a
good is free. But of course it's not really costless. It has an opportunity cost: if the  premium 
mulch is used in the first month, it can't be used in the second month. Instead, I would have to pay
\$12     to buy 4 cubic yards of cedar mulch for the second month. The opportunity cost of the
 premium  mulch is \$6 per cubic yard, because I'd be willing to trade one cubic yard of it for 2
cubic yards of cedar mulch, which costs \$3 per cubic yard.

  Since the  premium  mulch is nonrenewable, how about   idea (2),   making it last  by using it up slowly? 
How about using 1/2 cubic yard of  premium  mulch (which has the effect of 1 cubic yard of cedar
mulch) and 3 cubic yards of cedar mulch each month? Then I'll get the  same weed suppression as I
did with 4 cubic yards of cedar mulch last year, and my pile of  premium  mulch won't run out till 12
months of use. I won't need it in the winter, but I can keep some till next year. 

  The problem with the 1/2-plus-3  plan is that I shouldn't worry about running out of  premium .  I can
always buy cedar mulch  and  suppress my weed.    I won't have to pay for cedar mulch
till the  premium  mulch runs out, and with my  positive discount rate I'd rather pay later than earlier.
And I won't have  a big pile of  mulch taking up space on my land.

 The optimal plan is to treat the  premium  as if it had a price of \$6 per cubic yard, its
opportunity cost, and use 2 cubic yards each month  to get the same weed suppression as I did with 4
cubic yards of cedar mulch. After 3 months, the  premium  will run out, and then I can switch
smoothly to cedar mulch.

     The point of the story is that just because a resource is nonrenewable does not mean we
shouldn't use it up. Rather,     it should be treated just like any other good. We should not use it
up all at once, because we wouldn't  get as much benefit from it as if we used it up more gradually.
But we should aim to use it up eventually, because it's useless if never used. And we shouldn't
delay using it up if    we'd then  have to  start using  costly substitutes earlier.

   There's a practical example of this principle:   the special  bottle of wine.     You receive a
bottle of 10-year-old Mouton Rothschild claret for your 21st birthday. It's ready for drinking, but
you wait for a special occasion. College graduation isn't special enough. The wedding isn't right---
too many people at the wedding, and you feel bad about just the two of you drinking it on the
honeymoon. First baby? Too tired. First grandchild? Well, let's wait for a really special occasion.
Retirement? Not very special. And so you die without drinking the wine. Too much thrift ends up
being waste.   The solution? Well, a {\it  Wall Street Journal}  wine columnist invented  ``Open
That Bottle  Night". ``On OTBN, which is celebrated on the last Saturday of February every year,
thousands of bottles all over the world are released from prison and
enjoyed.\footnote{\href{http://guides.wsj.com/wine/entertaining-and-celebrating-with-wine/open-that-
bottle-night}  {``Open That Bottle Night,''} Dorothy J. Gaiter and John Brecher, {\it The Wall
Street Journal} (January 2007).}






\bigskip
\noindent
{\bf  The Market for   Nonrenewable Resources }

 In the example of the  premium mulch, we took the price of mulch as given. How does the market
arrive at a price for a nonrenewable resource? It will all be gone if we do not reduce our rate of
consumption, so does that mean the price will rise to infinity? On the other hand,  we have lots of
resources like wood that are renewable, and so can be supplied in infinite quantity, so why doesn't
that drive the  price of wood to zero?

Renewable resources are just like manufactured goods.  If we use enough labor, capital, and time, we
can produce any amount of cars we want. If we use enough labor, capital, and time, we can produce
any amount of wood we want. Cars and wood aren't free, though, because  the labor, capital, and time
are costly. The price is determined by the marginal cost, on the supply side, and how much the
marginal consumer is  willing to pay, on the demand side.

  Nonrenewable resources also have some cost to produce,  and that cost depends on how much is left.
The first oil wells will   be drilled where it is cheapest to extract and transport the oil. When
those wells are running dry and extraction gets costlier, engineers will be paid to find more oil or
to drill in places where oil is known to be but is more expensive to extract. This is like using the
 premium  mulch first  and using it up before starting on the cedar mulch.

\newpage
\begin{center}
 {\sc Figure \ref{chap12}.5\\
  The Supply of Oil Shifting Back over Time }
\refstepcounter{figurecounter} \label{12-oil1.jpg}
 \includegraphics[width=5in]{fig07-6-backstop.png}
  \end{center}

 In Figure   \ref{chap12}.5 we see the supply of oil shifting back over time, as it becomes
more costly to drill in the less favorable sites. Note that the demand curve becomes flat, perfectly
elastic, at a high enough price. That is the price of the {\bf backstop technology}\index{backstop
technology}: some good that becomes a good enough substitute for oil at that price. In the case of
natural oil, the backstop price might be oil artificially made from coal, or ethanol made from corn.
The price of oil would not rise any higher, because the backstop technology would take over.  In fact, when the price reaches the level of the backstop technology, all the oil must be used up, because nobody would want to keep holding it after the price stopped rising--- it would have a higher present discounted value if sold earlier. 

  In fact, {\bf synthetic oil}, made from coal,  has been technologically feasible for a century and was used on a nationwide scale   in World War II Germany.  In 1938, Germany was using 44 billion barrels of oil per year. Imports from overseas were 
  28 million barrels, 3.8 million barrels were imported  European sources (2.8 million barrels  from Romania alone),    3.8 million barrels from domestic drilling, and  9 million barrels  produced synthetically.  By  
  1943, Germany was using 71 million barrels of oil, 36 million barrels of which was synthetic.  That was the peak, because the Allies realized that this was a bottleneck for the German economy and that since manufacturing plants had to be large, they couldn't be protected from Allied bombers. Later studies concluded that almost all of the rest of Allied strategic bombing had little effect on Germany output, but the synthetic oil bombing crippled the German military.\footnote{ \href{http://www.airpower.maxwell.af.mil/airchronicles/aureview/1981/jul-aug/becker.htm}{``The Role of Synthetic Fuel
In World War II Germany:
Implications for Today?"}  Peter W. Becker,  {\it Air University Review,} July-August 1981. More recently, South Africa built synthetic oil plants in response to the international embargo against it for apartheid in the 1980's. }

 


 Figure \ref{chap12}.6 brings in a different aspect of what happens when a nonrenewable
resource runs out: the price path over time. As we have just seen, the price rises to the backstop
technology and then no further. Now suppose, to make things simple, that oil costs nothing to
extract  but everyone knows it will run out eventually if it keeps being used at its current rate. If you own an oilfield, and the current price of oil is \$100/barrel, you have a choice. You can sell your oil now, or wait a year. If you think the price is going to stay at \$100/barrel, you should sell immediately, so you can invest the \$100 in some security that has a return better than zero. If your discount rate is 5\%, you will sell immediately unless you expect the price to rise to at least \$105/barrel. If you use the same discount rate as other oil owners, then if you expect the price to rise even more--- to \$106/barrel, say--- then you won't want to sell {\it any} oil this year; you'll wait till next year. But we can't have an equilibrium with zero oil produced (because the price is growing too fast) or with all the oil in the world being dumped onto the market (because the price is growing too slowly). We can thus conclude that the price of oil must rise at the discount rate. 


 
%\begin{wrapfigure}[14]{r}{.5\linewidth}
\vspace{-12pt}
\begin{center}
 {\sc Figure \ref{chap12}.6\\
 The Hotelling Rule and the Price of Oil }
\refstepcounter{figurecounter} \label{12-oil2.jpg}
 \includegraphics[width=3in]{fig07-7-pricerise.png}
\end{center}
%\end{wrapfigure}

 But what about when the price of oil growing at 5\% each year hits the backstop price of \$150/barrel? Nobody will want to hold oil any more. Thus, we can conclude that all the oil will be used up by the time the price hits \$150. People will sell it earlier so as not to be left with a zero-return asset.  It has to be used up {\it exactly  then}, though, because if, say,  it were used up the previous March 10    at  a price, say  of \$148/barrel, then at that moment the price would jump to \$150,  yielding an overnight windfall for anybody who had the wisdom to hold onto some of their oil till March 11.  So we know something else about the price path: it has to generate quantities demanded that will exactly use up the oil when the price hits \$150. 

Using some advanced mathematics (calculus of variations, or some other kind of ``dynamic optimization''), one can use our two equilibrium conditions--- rising at the discount rate and being used up when the price hits the backstop--- to calculate the initial price, though we will not do that here.  
 The 
idea that if there are no production costs the price of oil would rise at the rate of interest is
known as {\bf Hotelling's Rule}\index{Hotelling's Rule}.\footnote{Hotelling,\index{Hotelling}
Harold, ``The Economics of Exhaustible Resources,''
 {\it  The Journal of Political Economy},  39: 137--175  (Apr.  1931).   For a nontechnical
discussion, see  \href{http://www.investopedia.com/articles/financial-theory/08/hotelling-theory-
price-oil.asp}{``Oil As An Asset: Hotelling's Theory On Price,'' } Robert Stammers (Oct. 13, 2008).} If oil is costly to produce, then the idea needs a little elaboration. Suppose the extract cost is \$10/barrel for all oil. Then, the owner's profit from selling now  is ($P_{0}$-10) and his profit from selling in a year is ($P_{0}$ + $g P_0$-10), where $g$ is the growth in price. The {\it present value} of deciding to sell in one year is  $\frac{ ( P_{0}  +  g P_0 -10)}{1+r}$, which is what has to equal ($P_{0}$-10) for the owner to be indifferent between holding and selling.  Equating the two and solving, we get 
$$
gP = r (P-10)
$$
   Thus, the price has to rise at a rate that makes $(P-10)$ rise at the discount rate. That's going to be a smaller rate than $r$. Think about it--- if  $r=  5\%$ and  $P=15$ and we need to make $(15-10)$  rise at 5\%, all we need is growth of $.05(15-10) = .25$, so the price only has to rise to 15.25, which is much less than a  5\% growth in price. 
  

\begin{minipage}{\textwidth}
 \begin{center}
 {\sc Figure \ref{chap12}.\ref{oilprice1869.jpg}\\

 The Price of Oil from 1869 to 2011 }
 \medskip
\refstepcounter{figurecounter} \label{oilprice1869.jpg}
 \includegraphics[width=.8\linewidth]{1869oil.jpg}
\end{center}
\end{minipage}

\bigskip
     In actuality, the price of oil does not rise at the rate of interest. As Figure
7.\ref{oilprice1869.jpg}  shows, the price in 2010 dollars has  sometimes  gone up at  much more
than the interest rate, sometimes less, and sometime the price has fallen drastically.    The price
has behaved much more like that of a produced good than of Hotelling's natural resource. How can we
explain that?  It seems that sophisticated oil companies are missing the profit they could earn by
storing away oil  and waiting to sell until the price rises because it is running out. Part of the
explanation is that oil may indeed be more of a produced good than a natural resource.  Some oil is
cheap to extract, but some is marginal, so difficult to extract that the cost eats up the entire
profit from selling it, just as with produced goods in perfect competition. Also, we must lay other
effect on top  of the idea that producers look forward to the future exhaustion of the resource. The
OPEC\index{OPEC} cartel, and especially Saudi Arabia, a large low-cost producer, has market power
and knows that selling more would depress the price.  Political turmoil has made it uncertain
whether some producers will suddenly shut down---think of the two Iraq Wars and the Libyan
revolution. World demand growth is  hard to forecast. The price of the  future backstop technology
is also hard to forecast, and depends on technical change---as does the amount of oil that can be
extracted. And new oil sources are always being discovered but hard to predict. Oil companies do not
pay the cost of exploring for new oil if it seems existing reserves will not run out for too many
years. What we can conclude, though, is that experts in the market do not really think that oil is
really going to run out soon and have to be replaced by some backstop technology that costs
\$150/barrel. If they did, any of the oil companies  would be able to make tremendous profits by
delaying production till everyone else had run out.

I wish I had data on guano, a  natural resource less glamorous than oil but one largely exhausted in
the 1800's.   {\bf Guano} is sea bird excreta that piled up over the eons to hills of 150 feet or more in
Peru. It is an excellent fertilizer, but there are many other kinds of fertilizer that can achieve
the same results but are more costly to produce. Thus, it was    value-maximizing  to use up all the
hills and leave only scattered patches  not worth
collecting.\footnote{\href{http://www.nytimes.com/2008/05/30/world/americas/30peru.html}{``Peru
Guards Its Guano as Demand Soars Again''}, {\it New York Times}
  (May 30, 2008). The author of this article does not, however, understand the idea of efficient
extraction; he thinks guano was overexploited simply becuse it was all exploited. }

   To summarize,   nonrenewable resources ought to be used up eventually, because to never use the
resource would be a waste.
Market forces will work as well in determining the rate of extraction as they do in determining the
rate of production of manufactured goods.  Value maximization does not require government
intervention unless   there is some market failure present such as the common-pool resource problem
that  property rights are not well-assigned  and there is a race to extract first,  Indeed, we
should expect markets to work their best at optimal resource extraction because it is relatively
simple. If it is fclear that the resource will be exhausted too soon,   it must also be clear that
the price will soon rise drastically. The resource owners could make tremendous profits simply by
waiting to extract. Even if they were blind to those profits, others could make   profits  by buying
the resource from the blind original owners and   waiting for the price to rise before extracting
it.


%----------------------------------------------------
\newpage
\bigskip
\noindent
 {\bf \ref{chap12}.5: Recycling }  \label{s12.6}

   Related to the ideas of  renewable and nonrenewable resources is the idea of re-using goods,
recycling them. Recycling has an ancient history. We  all own  used goods---if nothing else, those
which we bought new but are now used because of our own use. Nobody trades in a car  for a new one
every month.    Antiques are fancy used goods.  More commonly we think of recycling as being the
destruction of used goods and the extraction from them of some of their components. Expensive
materials are always recycled if they have been  employed  to make something which wears out.
Nobody  throws out a gold necklace just because the clasp broke. Rather, the necklace gets repaired
or the  gold is melted down to use again. Recycling of
  plastic, paper, glass, and aluminum follows the same principle: removing  and re-using  valuable
materials from  goods that people no longer want.  ``Curbside recycling''\index{Curbside recycling}
is common now, in which householders sort their garbage into different categories, and is compulsory
in some places.

 If people recycle out of self-interest, motivated by  someone  paying them   for  newspaper and
plastic, recycling  creates value. The self-interested person incurs a cost in terms of garbage
sorting time  and the transactions cost of selling, but he earns surplus if he is paid enough.  In
turn, if the purchaser can  resell the recycled materials at a profit it must be that the ultimate
buyer gets more benefit from them than the original self-interested person would have. Most likely,
in such a case   the first purchaser would do the sorting  since there are economies of scale in
separating out different recyclables from garbage. In past centuries and in poor countries today,
this was a common occupation, that of the {\bf  ``ragpicker.''}




   Curbside recycling works differently. It is driven not by market forces but by   beliefs that it
is virtuous---that though it is costly to the person recycling, that person is doing good for others.  People
think of different objectives---to avoid waste, to help the city government by allowing it to sell
recycled materials, to help the environment. They feel good doing it, because they believe they are
doing the right thing. In many cities,  they feel it is right to force their neighbors to do the
right thing too.

 Is recycling really a good way to  reduce government costs and help the environment?   Unlike with
market-driven recycling,  the people incurring the costs of curbside recycling are  not matching the
costs  against benefits to themselves, but against benefits they believe are being generated for
someone else  and by a government that uses tax money to finance its share of the costs. The
householder rarely asks what the city is actually doing with the plastic bottles,   whether the city
is  is really reducing its costs, or whether the benefits are worth  his effort in sorting garbage
and the aesthetic and monetary cost of increasing the number of garbage bins. Even if the city can sell the recycled material, if  first it msut be  collected separately from other garbage,  then separately, and then transported to a buyer,  the city may lose money on net. 

 How about helping the environment?  What it means to help the environment, and why  that is a good thing to do,   are hard questions.
The environment is not a person, so it does not have surplus we can try to maximize. In practice,
people say that  using less water, paper, and oil helps the environment, as does mining fewer natural resources, burying less garbage, and generating less pollution.\footnote{See ``Ways to Help the
Environment,'' http://library.thinkquest.org/11353/gather/help.htm. }  The connection is more remote than in the common-pool resources we were talking about earlier, though, and it is therefore harder for voters to pin down whether recycling is the best way to address a problem.  If the problem is that landfills leak pollutants from garbage, for example, one solution is to require everyone to throw away less garbage, in the hopes that this will reduce the amount of the kind of garbage that leaks. A more straightforward solution, however, would be to regulate pollution outflow from landfills. And indeed, landfills are highly regulated, and their price per ton of garbage accepted is higher because of it. If the city collects household garbage, then this means it makes sense for the city to charge for that service depending on how much garbage the household throws away--- which in fact is done in many cities, by requiring  households to purchase a sticker to attach to each garbage can each week. 

In the case of recycling, a major concern is whether people understand that
recycling can be wasteful as well as  frugal, using up resources rather than conserving them.  They may think they are donating their time for a good cause that has significant benefit, but they  have only a hazy idea of what that benefit might be.  When we throw things away, we hate to waste them. This is clearest in the case of throwing away some working product---  it seems terrible to throw away a  gigantic old TV set that still works, because you are replacing it with a flatscreen high-definition TV. Yet thrift shops will not accept those old TV's, because their economic value is zero--- nobody wants them. It also seems a shame to throw away a perfectly good glass bottle, or even plastic bottle. If only something useful could be done with  it! And so we are happy to recycle, thinking that throwing away the bottle won't be a waste. The problem is that the labor and energy used in recycling may end up costing more than making an entire new bottle.  
Recycling  effectively doubles the amount of
containers picked up and the recycled materials require some processing before being sold.  Googling
newspaper articles quickly shows that when city councils discuss  recycling, the concern is over
paying for the extra cost---they do not expect to earn any profit.\footnote{See, e.g.
\href{http://www.dispatch.com/content/stories/local/2011/12/01/recycling-plan-questioned.html}
{``Council Questions Coleman's Recycling Plan,'' }.
 \href{http://www.leavenworthtimes.com/highlight/x917958378/Lansing-Council-approves-new-trash-
contract}  {``Lansing Council Approves New Trash Contract''}.
\href{http://www.tulsaworld.com/news/article.aspx?subjectid=593&articleid=
20111201_11_A1_Tulsas110509}  {``Campaign OK'd for New Trash System''}.} In addition,  the
unprofitability of recycling has increased as   recycling has become more common, because   an increase in
the supply of recyclable plastic bottles reduces the prices cities can get for them.



    The costs to the city governments  are not the only costs. Households perhaps incur the biggest costs, if we combine the time and effort of all of them. 
  Science news writer John Tierney describes his attempt to
quantify the costs:\footnote{\href{http://web.williams.edu/HistSci/curriculum/101/garbage.html}
{``Recycling Is Garbage,''}
  John Tierney, {\it The New York Times Magazine} (June 30, 1996). Tierney's article inspired tremendous 
outrage.  One response is  \href{http://www.proprecycles.org/Commentary
20about 20Recycling.html}{``Commentary on `Recycling is Garbage,' ''} Richard A. Denison, John F.
Ruston (July 18, 1996).  See also
\href{http://econlib.org/library/Columns/y2007/Mungerrecycling.html}{``Think Globally, Act
Irrationally: Recycling,''} Michael Munger (July 2, 2007).}
\begin{bigquote}
  ``I tried to estimate the value of New Yorkers'
garbage sorting by financing an experiment by a
neutral observer (a Columbia University student with
no strong feelings about recycling). He kept a record
of the work he did during one week complying with
New York's recycling laws.

It took him eight minutes during the week to sort,
rinse and deliver four pounds of cans and bottles to
the basement of his building.''

``If the city paid for that work a typical janitorial wage (\$12 per
hour), it would pay \$792 in home labor costs for each ton of cans
and bottles collected

And what about the extra space occupied by that recycling
receptacle in the kitchen? It must take up at least a square foot,
which in New York costs at least \$4 a week to rent. If the city had to
pay for this space, the cost per ton of recyclable would be about
\$2,000.

That figure plus the home labor costs, added to what the city
already spends on its collection program, totals more than \$3,000
for a ton of scrap metal, glass and plastic.
For that price, you could find a one-ton collection of those
materials at a used-car lot---a Toyota Tercel for instance---and drive
home in it.''
\end{bigquote}

   Thus, if one looks at costs and benefits,    it seems that recycling is generally a cost to
cities and citizens, a cost that is disguised because the cities fold their recycling expenditures
into the garbage  disposal budget generally and  households are not paid   for their work.  Is there
a corresponding benefit to recycling? Less landfill space is used. But that is taken into
consideration in cost-benefit analysis. Doe landfills  have externalities? They certainly do,  but
they are heavily regulated, and if they were not, the solution would be to increase regulation, not
to put less garbage in them but let them be unsfe.   In any case,   materials that are recycled such
as paper and plastic  are not those that we worry about leaking from landfills. We do not recycle
disposable diapers, though we could at some price.

Nor is  landfill space running out.  This idea arose in the 1980's, when the  EPA and   media
focussed on a decline in the number of landfills.    They failed to notice that the landfills that
remained had grown so much  in response to tightening EPA regulations that created economies of
scale  that capacity actually was increasing. J. Winston Porter, the EPA Assistant Administrator
responsible, has since admitted that the EPA's key study was misleading.   One of the authors  of
the study, Allen Geswein, said,  ``I've always wondered where that crap about a
landfill-capacity crisis came from.'' The trade association for landfill and recycling companies
has estimated  that it would take 20 years for current landfills to reach capacity at current
disposal rates.   By then, it would be profitable for    companies to open new capacity, even though
if presently there is too much excess capacity for new landfills to be profitable.
To the extent that landfill space is scarce, landfills raise their prices, so any scarcity is
already reflected in the price per ton of garbage.\footnote{
\href{http://www.perc.org/files/ps47.pdf} {``Recycling Myths Revisited,''} Daniel\index{Benjamin}
Benjamin, PERC Research Study No. 47 (2010), p. 7.}


 How about the waste of resources from burying recyclables?  If such waste existed, it  would be
reflected in the price of recyclables: companies would pay you to recycle.  If the profit from
recycling is negative, we can conclude that recycling itself is wasteful. It does not waste plastic,
but it wastes labor, trucks, and gasoline.

    What about the fact that recycling means we can reduce our use of costly inputs such as oil for
plastics and sand for glass, and our use of energy? We certainly can reduce those costs---but only
by increasing other costs. The major cost is labor. Take, for example, the household labor used in
sorting recyclables from garbage. Isn't it worth a little effort to reduce the amount of oil used to
make plastic bottles?  It is worth it, but only if the effort really is small enough since the
amount of oil is trivial too. A dime's worth of labor effort is no smaller a cost than a dime's
worth of oil.

Nor is labor any more renewable than oil. As   novelist Michael Crichton  put it:


\begin{bigquote}
 From your point of view, your time is a nonrenewable resource. If you use up an hour, it is gone
forever. Of course, from the point of view of the government, your time is a renewable resource.
Stalin could view human labor as an input much the same as cattle---scarce, but renewable, as long
as he didn't use up too much at once. For  Ivan Ivanovich, however,  a year in a work camp was a
year less of his time on earth.{\bf  Indeed, human time is more clearly in short supply than oil,
and more vulnerable to wasteful depletion.  Burning oil practically always has some value,but
burning time often is completely useless.}  Moreover, you cannot be sure whether oil will run out
within your lifetime---but you can be sure your time will, by definition. You can be absolutely
certain that all of your time will be used up within 130 years---and it might be used up twenty
minutes from now, if your heart is weaker than you think.\footnote{Michael Crichton,
  ``Environment as Religion,'' speech.
Commonwealth Club,
San Francisco, California
(September 15, 2003).}
\end{bigquote}




 This idea that the cost of inputs is shown by their prices is perhaps the most important economic
point to be made about recycling. It is  a variant on Chapter 1's idea that  value is maximized at
the market equilibrium. If the price of raw materials is low, that shows that  they are cheap to
produce and the marginal  buyer does not value them enough as a substitute for other goods to pay
more than a low price. It is easy to confuse the role of prices in signalling which inputs to use
and what outputs to produce with the value of goods in terms of  the value of the first unit
consumed.  Food is not infinitely expensive, even though it is necessary for life, because it is
cheap enough to  produce that we are not willing to pay an infinite price for the quantity supplied. 

   When we look at the price of an input, we should think of it as the value of the marginal unit,
not as the value of all the units of that input. It is not necessary to conserve water just because
  water is necessary for life. The question is rather whether slightly reducing the amount of
water you use is worth the cost of giving up something else--- how clean you get in the shower, for
example, or the extra soap  needed to get just as clean with less water. So too with recyclables:
their value is shown by their market price. If the market price is negative, they are  more
accurately considered as garbage   than as raw materials, and consumers will have to give up more
goods and services to recycle them than to treat them like other garbage.

  The most important resource in the modern economy is labor, which is also   the highest cost for
garbage disposal and  recycling.  Over the centuries, or even the decades, labor has been
becoming more expensive relative to raw materials. Production of goods increasingly has substituted
cheap raw materials and machinery for  scarce labor. The prices reflect how people value these
things in exchange.  From the   viewpoint of surplus maximization, it is wasteful to use  people's
time to save slightly on cheap raw materials.  Each hour of labor is far more productive than it
used to be, but the usefulness of raw materials has not increased proportionately.

   Thus,   the test for whether recycling maximizes surplus is simple. If recycling   makes the most
efficient use of all resources, human and natural then the buyer of the recycled materials  is able
to break even even if it   pays enough to compensate for the consumer's time.









%-------------------------------------------------------



\bigskip
\noindent
 {\bf \ref{chap12}.6: Conclusion } \label{s12.7}

 Conservation of natural resources presents the standard issues of surplus maximization  with a few twists.  The key to understanding them is to look for market failure. Many resources encounter the common-pool resource problem--- that property rights are ill-defined, so   people use the resource now, because they know that if they wait other people will use it up. If property rights are well-defined, though, the problem of using up a natural resource is the same as that of consuming any other good.  Nonrenewable resources ought to be used up, because leaving them unused is a waste. The big question is when to use them. If someone owns a piece of the resource, market prices tell him how much to use and how much to save.  As with ordinary goods, market prices synthesize the information about costs and benefits of everyone in the market, enabling them to make surplus-maximizing decisions. The same is true of recylable goods.  There is a cost to recycling a product that can be compared to the cost of making a completely new item. The company's cost of making a new item has a market price, but the cost of recycling is more difficult to assess because not all parts of the cost enter into the price the company pays for the used materials. Part of that cost arises from household effort, and part from subsidy by the city government. Recycling maximizes surpus if it would be profitable after subtracting those costs, and otherwise consumes surplus and is not thrifty, but wasteful. 

 %-----------------------------
 \vfill

%\cleardoublepage
\newpage
 




\begin{center}
{\sc   Review Questions }
\end{center}
 \begin{enumerate}
\item
   What is the common-pool resource problem?
\item
   When should a good or resource be used up?
\item
   What does the Hotelling model say about the path of consumption and price
   of a nonrenewable resource over time?
   


 \item
  How can we tell if recycling a particular product increases total surplus? 
  
  \item
 Why do people recycle?

 \end{enumerate}



 



    \vspace{.21in}

%\cleardoublepage
\begin{center}
{\sc  Readings }
\end{center}
 \begin{enumerate}

\item
\href{http://www.motherjones.com/environment/2015/06/recycling-myths-blue-bins}{``4 Big Recycling Myths Tossed Out: 
No, ``blue bins" are not what's causing America's trash problem,''} Luke Whelan, 
{\it Mother Jones}.
 
 

\item
\href{http://www.washingtonexaminer.com/industry-not-environmentalists-killed-traditional-bulbs/article/2541430}{``Industry, Not Environmentalists, Killed  Incandescent Bulbs,'' } Timothy Carney, {\it The Washington Examiner}.





\item
\href{https://www.bloomberg.com/view/articles/2012-05-03/recycling-eyeglasses-is-a-feel-good-waste-of-money}{``Recycling Eyeglasses Is a Feel-Good Waste of Money,''} Virginia Postrel, {\it BloombergView}. 
 


\item
  \href{http://fortune.com/2015/09/03/waste-management-recycling-business/} {   ``The American Recycling
Business Is a Mess: Can Big
Waste Fix It?'' } Claire Groden, {\it Fortune}.



\item
\href{https://www.cato-unbound.org/2013/06/03/michael-c-munger/recycling-can-it-be-wrong-when-it-feels-so-right}{``Recycling: Can It Be Wrong, When It Feels So Right?''}
 Michael C. Munger, {\it Cato Unbound}.  
 
 


\end{enumerate}


 \end{document}




 