Utah State University

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The Unseen Costs of Electricity

Modern energy plant

April 20, 2016

“In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.” —Frederic Bastiat, 1848

Introduction:

These reports explore both explicit and implicit factors that influence the cost of producing electricity from four different types of energy: coal, natural gas, wind, and solar. The explicit, or seen costs of electricity generated from these sources, include cost components such as power plant development and construction, operation & maintenance, and transmission infrastructure costs. Often overlooked, however, are the implicit costs of energy, caused by government subsidies, mandates, and regulations that distort the electricity market. These reports do not estimate an actual value for the cost of producing electricity , rather, they identify and analyze those factors that policymakers should consider.

Rather than creating a new cost estimate for each of these energy types, we analyze the findings of prominent cost studies by experts in the energy field. Each study includes different factors in its estimate of the cost of power produced from coal, natural gas, wind, and solar. We break down each of these factors and explain their significance within the reports. These factors include: capital costs, operation and maintenance costs, capacity factor, transmission costs, baseload cycling, social and environmental costs, and the cost of government subsidies. Other factors are more difficult to quantify, but nevertheless add to the cost of producing electricity using these sources. Such factors include: opportunity cost of taxpayer dollars, reduced reliability of the grid, and higher electricity prices. We conclude that, when estimating the cost of producing electricity, all of these factors should be included.

The Unseen Costs of Coal Powered Electricity:

Download Full Report here.

Download Condensed Report here.

The Unseen Costs of Natural Gas Powered Electricity:

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Download Condensed Report here.

The Unseen Costs of Wind Powered Electricity:

Download Full Report here.

Download Condensed Report here.

The Unseen Costs of Solar Powered Electricity:

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The Unseen Costs of Electricity

Dam

 

December 3, 2015

The Reliability of Renewable Energy reports are an examination of the five most common sources of renewable electricity generation: wind, solar, biomass, geothermal, and hydro. The studies assess each source’s economic, physical, and environmental aspects.

Reliability of Renewable Energy: Wind

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Download Condensed Report here.

Reliability of Renewable Energy: Solar

Download Full Report here.

Download Condensed Report here.

Reliability of Renewable Energy: Biomass

Download Full Report here.

Download Condensed Report here.

Reliability of Renewable Energy: Geothermal

Download Full Report here.

Download Condensed Report here.

The Reliability of Renewable Energy: Hydro

Download Full Report here.

Download Condensed Report here.

 


The Unseen Costs of Electricity

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The Unseen Costs of Electricity

2013

Energy in National Monuments.

By Randy T Simmons and Ryan M. Yonk, 2013.

Under the Antiquities Act and through their respective management plans, national monuments fall under strict protection. Because of this, development of potential energy resources is often impossible. This study shows the opportunity cost of designating national monuments by illustrating how much of our potential energy is locked up in these protected public lands. In exploring the natural resources in each national monument we considered both conventional, fossil fuel-based energy potential as well as renewable energy potential. We found that five out of the twelve monuments explored in detail had significant potential for oil and coal development. We also examined solar, geothermal, and wind energy potential in national monuments. Ten monuments had the potential for at least one type of renewable energy development with the majority of these examples being solar potential. Four monuments had the potential for more than one of these types of renewable energy development.


 

Politics, Economics, and Federal Land Designation: Assessing the Economic Impact of Land Protection—Grand Staircase-Escalante National Monument.

By Ryan M. Yonk, Randy T. Simmons, and Brian Steed, 2013

Published in Mountain Plains Journal of Business and Economics, Volume 14, 2013

This paper seeks to investigate the conflicting belief regarding the economic impacts of federally designated Wilderness through empirical statistical analysis of the economic conditions present in Wilderness and Non-Wilderness Counties over time. Using U.S. Census Data for all counties across the United States we study the impact of Wilderness by examining whether there is an identifiable difference within the economies of Wilderness and Non-Wilderness Counties over time. Our statistical analysis of economic conditions shows that once federal transfers are controlled for neither total tax receipts nor total payroll appears to be affected by the presence of federally designated wilderness. In other words, Wilderness does not have a positive, monetary affect on the counties in which it resides.


 

Boon or Bust; Wilderness Designation and Regional Economies: An Overtime Analysis of Wilderness Designation

By Ryan M. Yonk, Brian C. Steed, and Randy T Simmons, 2013

Published in The Journal of Private Enterprise, Volume 31, Number 3, Fall 2016

Wilderness designations are often praised by conservationists and bemoaned by local government officials. This study uses a quasi-experimental, time series design to evaluate the economic impact of the designation of Wilderness on regional economies. Using census data, we test claims made by many in the environmental community of economic boon resulting from the change in land status and countervailing claims by local political elites of economic disaster. We find a significant negative relationship between the presence of Wilderness and total payroll, tax receipts, and average household income. Thus, there may be some justification for local political elites and residents to be concerned about new Wilderness designations.


 

2012


 

Conservation and Economic Growth.

 By Randy Simmons and Ryan Yonk, 2012.

In an attempt to reconcile, or at least to understand the reasons for differences between competing claims about public lands management, we conducted an analysis of relationships between different public land management regimes and economic conditions in rural counties. For our analysis we use data from the Bureau of Labor Statistics and U.S. Census data for each county in the U.S. dating back twenty-five years. In general, we find that counties with federal lands (especially Wilderness lands) do not have higher per capital income or higher tax receipts. The presence of federally designated Wilderness is associated with a decrease of $679,456.70 per year in total business activity. This finding is both statistically significant and substantive enough to have serious implications for a county’s economic growth. These results are in sharp contrast to claims that Wilderness designations are a draw for visitors and significantly increase economic growth.


 

2011


 

Treasured Landscapes and Energy Resources

By Ryan M. Yonk, Randy T Simmons, and Brian C. Steed, 2011

Establishing national monuments generates a great deal of controversy over the size, formation of boundary lines, restrictions on the use of extractive resources, and other specifics of protection. These controversies have often pitted local officials and residents against broader environmental concerns. The most recent example of controversy over designating national monuments occurred in 2010 over a Department of the Interior (DOI) memorandum titled “Treasured Landscapes.” This internal memorandum from the Department of the Interior highlighted fifteen potential areas that the DOI believed were worthy of increased protection, protection that would most likely come in the form of national monument status.

In conducting the inventory of energy potential for each site we focused on both traditional fossil fuel energies, and the renewable potential of each site. We found that relatively few of the sites identified as candidates by the DOI had significant fossil fuel reserves, although many had the potential for shale extraction, including oil shale. We also evaluated the possibility of renewable energy development in each of these potential monuments and found that most of the potential monuments have significant renewable energy possibilities that would be foreclosed by support both the preservation of landscapes like those proposed in the “Treasured Landscapes” memorandum, and who also support increased production of renewable energy. The most significant lesson we draw from these data is that conflicts between priorities, including environmental priorities, will inevitably require trade-offs. Indeed the potential monuments pose significant costs to renewable energy production if the preservationist impulse is followed.


The Local Impact of Wilderness: An Overtime Analysis of Wilderness Designations on Local Economies

By Ryan M. Yonk, Brian C. Steed, and Randy T Simmons, 2011

This paper seeks to investigate the conflicting belief regarding the economic impacts of federally designated Wilderness through empirical statistical analysis of the economic conditions present in Wilderness and Non-Wilderness counties over time. Using U.S. Census Data for all counties across the United States we study the impact of Wilderness by examining whether there is an identifiable difference within the economies of Wilderness and Non-Wilderness Counties over time. Our statistical analysis of economic conditions shows that once federal transfers are controlled for neither total tax receipts nor total payroll appear affected by the presence of federally designated wilderness.


 

 

Something Different? Local Government Revenue, Expenditures and Wilderness

By Sarah Reale, Randy T Simmons, Ryan M. Yonk, and Brian C. Steed, 2012

Each of the 3,141 counties in the United States is unique, with varying physical characteristics. Among them approximately 287 have areas designated as Wilderness within their boundaries. Arguments about the costs and benefits of having these designated lands within a county have been consistent and often acrimonious. Explorations of the impacts of Wilderness protection on local economies, quality of life, and the tourism industry have been explored in the scholarly literature. Despite these explorations to date no research has been completed in regards to the effects Wilderness Lands on local government tax revenue or spending patterns that are core contentions in the academic and policy literatures.

 


 

The Economic Costs of Wilderness.

By Brian C. Steed, Ryan M. Yonk, and Randy T Simmons. 2011.

Wilderness is one of the most contentious issues in American public lands management. Local officials often bemoan Wilderness designations as creating economic hardships by limiting extractive industries, outdoor recreation, and the siting of transportation corridors, water and power lines, and telecommunication facilities. In direct contrast, many environmentalists allege that Wilderness creates economic benefits for local communities through increasing property values and from benefitting the tourism industry. This study explores the economic claims by examining empirical evidence of identifiable differences in the economic conditions of Wilderness and Non-Wilderness Counties. Some Wilderness can have positive economic impacts but our findings indicate that this is not the general rule. We find that when controlling for other types of federally held land and additional factors impacting economic conditions, federally designated Wilderness negatively impacts local economic conditions. Specifically, we find a significant negative relationship between the presence of Wilderness and county total payroll, county tax receipts, and county average household income. By working together with local communities to address their concerns, environmentalists can help develop balanced policy that genuinely acknowledges the local economic costs associated with Wilderness.

 

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