ECO 498C
Senior Seminar in Economics
Spring 2014
3 credit hours; 3 hours lecture
Section 1 TTh 4:00-5:15
Section 2 TTh 5:30-6:45
Room 111 FCB
Instructor: Professor Dean Smith: Office: Rm. 304 Phone: 3-7396
e-mail:
Office hours: TTh 2:00-3:30 and by appointment
Class website:
http://franke.nau.edu/about-the-fcb/faculty/dean_smith
“Arizona’s water problem is grave. The beautiful scenery, fine climate and fertile soil, like those of other southwestern states, have combined to entice an even larger number of people to settle there, and water demands have grown accordingly.”
1963 USGS
“The goals set for the next 50 to 100 years should address the needs of sustainable development and preservation of water supplies for future generations of Arizonans. They should include achieving safe-yield in certain areas and looking beyond domestic, industrial and agricultural uses to the effect water use and allocation have on riparian areas, the environment and our overall quality of life.” (Seventy-first Arizona Town Hall, 1997)
I. Catalog Description:
A senior-level research course designed to give students research experience in their major field. This course serves as the capstone for the B.S.B.A in economics only.
II. Prerequisites:
Courses: ECO 384, ECO 385 and Senior Status (ECO 385 may be taken as a co-requisite)
Justification: This course builds upon the theories of microeconomics and macroeconomics.
III. Course Learning Outcomes: Upon successful completion of this course, the student will:
1. Be able to complete primary research
2. Be able to complete secondary research
3. Be able to undertake complex economic analysis with regard to business or government strategic issues.
4. Be able to explain in written communication forums the results of said analysis.
5. Be able to explain in both written forums conflicting aspects of said analysis.
6. Improve research and writing skills
7. Further develop oral communication and argumentation skills
IV. Course Materials:
Required books
The Great Thirst, Revised Edition, Norris Hundley, Jr., University of California Press, 2001
See the class website
Additional Suggested Readings (in a purely random order)
Fire on the Plateau, Charles Wilkinson, Island Press, 1999
Cadillac Desert, Marc Reisner, 1993, Penguin Books
A Great Aridness, William deBuys, Oxford University Press, 2011
To Follow the Water, Dallas Murphy, Basic Books, 2007
Water in the 21st Century West, Char Mill, ed., Oregon State University Press, 2009
Whose Water is it?, Bernadette McDonald and Douglas Jehl, eds., National Geographic, 2003
The Owens Valley and the Los Angeles Water Controversy, Richard Cook Wood, University of the Pacific, 1973
Water: The Fate of our Most Precious Resource, Marq De Villiers, Houghton Mifflin, 2000
William Mulholland and the Rise of Los Angeles, Catherine MulhollandUniversity of California Press, 2000
Dry Spring, Chris Wood, Raincoast Books, 2008
Water and the West, 2nd edition, Norris Hundley, Jr., University of California Press, 1975
Introduction to Water in California (revised), David Carle, University of California Press, 2009
Crossing the Next Meridian, Charles Wilkinson, Island Press, 1992
Dead Pool, James Lawrence Powell, University of California Press, 2010
The Secret Knowledge of Water, Craig Childs, Little Brown & Company, 2000
Managing Water: Avoiding Crisis in California, Dorothy Green, University of California Press, 2007
Water and Power, William L. Kahrl, University of California Press, 1982
The Owens Valley Controversy and A.A. Brierly: The Untold Story, Robert A. Pearce, 1999
Vision or Villainy, Abraham Hoffman, Texas A&M University Press, 1981
The Story of Inyo, W.A. Chalfant, Community Printing and Publishing, 1922
Storm Over Mono, John Hart, University of California Press, 1996
V. Teaching Methods:
Teaching methods vary and include lecture and extensive classroom discussion on historical, theoretical and current issues in economics.
VI. Mechanisms for Feedback:
The professor provides written comments and evaluations on all assignments for this course. Students also have the opportunity to interact with the professor during office hours and through the campus e-mail system.
VII. Evaluation Tools:
Theory review: Each student has been assigned a random number. A list of review questions has been developed. This will be distributed during the first day of class. During the second day of class each student will turn in a ONE page, hand written answer to the assigned question. The answer may include graphs or equations as deemed appropriate by the student. During the second class period, each student will also provide a 2-3 minute oral presentation to the class explaining the answer. (You may use the classroom boards to draw graphs.)
Western Governors’ Association Analysis: The WGA has recently released a new report “Clean, Reliable Water Supplies for the West.” Each student will analyse this document and submit a 5-8 page summary.
A Tale of Two Cities: Hundley analyses the water development of both San Francisco and Los Angeles. Additional analyses can be found among the books on the reading list. Each student will submit a 5-8 page report comparing the political and economic actions of these two cities.
Research Project: each student will complete a senior research project. The final draft should be 8-10 pages plus references. This project is the culmination of the economics programs at Northern Arizona University. In completing this project, the student should refer to all previous course work and skill acquisition (including from your internships and other employment) that has taken place. Those skills and tools previously developed will be vital for the development of the project. However, there will be differences between skill and tool sets for different students. Thus, while some students will use econometrics to analyze various data sets, other students will use analytical tools to explain various policy instruments, and other students will use theoretical analysis to explain various market and non-market outcomes regarding water issues in the West.
Grade Distribution
Review Question 5%
Western Governors’ Association Review 15%
San Francisco vs. Los Angeles 15%
Research Project
Research question 5%
Outline Meeting 10%
Draft 1 10%
Draft 2 10%
Poster 10%
Presentation 10%
Final Report 10%
Topical Areas:
Mono Lake economic issues
The Mono Basin on the eastern side of the Sierra Nevada Mountains in California is the sole water input into Mono Lake. Mono Lake is a unique ecosystem and an important feeding area for migrating and nesting birds. The withdrawals from the major streams feeding the Lake by LADWP have had substantial impacts on the level of the Lake. In 1983 a major legal decision was finalized to increase the inflows. This research topic will look at the ongoing issues from an economic perspective.
http://www.monolake.org/
LADWP economic issues
The Los Angeles Department of Water and Power is responsible for providing resources to the City. A lengthy history of water acquisition for the arid location is extremely interesting. This research area will look at the current economic conditions facing the Department.
https://www.ladwp.com/
Mono vs. LADWP economic costs/benefits
The long history of withdrawals of water from the Mono Basin by the LADWP has created an atmosphere of conflict and collaboration. The research project will investigate the current issues regarding the conflict. Recent documents should be investigated.
Desalinization cost/benefit
One method of increasing water supplies is to desalinate (clean) either sea water or ground water. This project will investigate various technologies and the cost/benefits of each.
Conservation Programs costs/benefits
Most water supply entities have some kind of water conservation program. These vary from water reduction requirement (enforced) to rebates programs (incentives) to simple information programs. Most states and the federal government have programs. The research programs will look at the cost/benefits of these programs from both the consumer and the supplier perspective. Students may complete this project from a general perspective or by investigating specific water supply entities.
Water quality cost/benefits
The Clean Water Act places specific requirements on water suppliers. This research project will investigate the cost/benefits of the CWA from the prospective of the suppliers (implementation) and the consumers (health).
Developing rational water markets vs. current structures
From an economic perspective most water supply and consumption programs are irrational since there is no “market” pricing. This research will investigate the literature concerning rationalizing water markets from an economic perspective. This research must also investigate the legal and political barriers to transitions.
Colorado River Compact vs. rational markets: Water transfers and Water Banks (WGA)
The member states of the CRC tend to agree that the Compact does not rationalize water use. This research will investigate the ideas being developed, particularly by the Western Governors Association concerning water transfers and water banks. What is the current status of these programs and how will they improve, if fully implemented, water use from an economic efficiency perspective? What are the legal and political barriers to implementation?
Utilitarian uses (domestic, agriculture, commercial, flood control) vs. non-utilitarian uses (recreation of wild and controlled water, fishing, recreation etc.) see Verde Project (off stream vs. on stream uses)
Surface water has many possible uses. In many instances these uses are mutually exclusive. Alternatively, water storage (reservoirs) systems developed for utilitarian uses also provide non-utilitarian uses. This research will investigate the trade-offs between these distinct uses. See the Verde River project, Mono Lake issues and Hetch Hetchy. See also John Muir’s writings concerning Hetch Hetchy for an early philosophical discussion.
Private goods versus public provision of water services
From a philosophical and economic theory perspective, this research will investigate the Samuelson distinction between private and public goods. What are the historical precedencies for determining the classification of water resources (see Hanemann)?
Non-market valuation methodologies
Most non-utilitarian uses (fishing, boating, and recreation) have no market valuation. This research will investigate the variety of economic tools to evaluate the methodologies for valuing these resources.
Current Federal Water programs (Army Corps of Engineers, Bureau of Reclamation)
Given the charges of ACE and the BR, what are the current programs of these governmental agencies? Are there other governmental agencies involved in water management? How efficient are these programs?
Historical analysis of Bureau of Reclamation costs and revenues
The basic charge of the Bureau was to manage water resources for agricultural purposes. Supposedly, the Bureau was to be basically self-sufficient. Has this been the case? Have the acreage limits itemized in the original 1902 legislation been followed? Has the Bureau been efficient in developing water projects?
Water/energy nexus
The water/energy nexus is very confusing. In some cases water is used to convert potential energy into electricity (hydropower). For example the Bureau of Reclamation has built dams to provide water storage for flood control and irrigation. These dams have produced electricity for sale. On the other hand, water pumping requires the substantial conversions of energy as water is pumped upward. This research will investigate the “net” use of energy for various water projects.
Econometric Modeling
Use your technical skills to develop an econometric model to investigate water resources. This research will investigate the development of a model with dependent variables and independent variables. For example, what is the relationship between indigenous precipitation, water usage, water rates, population growth and economic growth?
Klamath
Klamath River Basin, which covers 10.5 million acres in southern Oregon and northern California, has been long renowned for its lakes, rivers, hunting and fishing opportunities and strong agricultural economy. The Basin is home to six federally-recognized tribes and several National Wildlife Refuges, Parks and Forests.
The Klamath Basin has been in the forefront of national attention due to contentious resource issues including water allocation, water quality, and threatened and endangered species. The Klamath River has been the third-largest producer of salmon on the West Coast, following closely behind the Sacramento and Columbia rivers. In 2002, a massive die-off of over 33,000 adult salmon on the Klamath River brought renewed attention to this area.
Impact studies
What are the economic impacts of water projects? What are the water impacts of economic projects? What are the water and economic impacts of legal decisions? This research will investigate one of these questions. Three examples come to mind. First, presume a new irrigation system is being proposed or a dam is proposed to be decommissioned (removed), what will be the economic impacts of this project? Second, presume a new economic development project is being proposed – a steel plant or a saw mill – what will be the water impacts, including secondary and tertiary, of this project? Third, consider, for example the Mono Lake diversion issue, when an environmental policy impacts water management, what will be the reverberating impacts on water and economic resources? For each of these projects, build a model to explain the linkages between variables.
Collaborative Water Management
Most water management projects involve numerous stakeholders. For nearly any project these stakeholders have mutually exclusive goals and aims. This research will investigate the literature concerning CWM methodologies and systems. Specific examples should also be explored.
Indian Water Rights
The Winters Doctrine provides legal standing to Tribes’ water rights. The 1922 Colorado River Compact ignored the Tribes. What is the current standing of Tribes’ water rights? For example the Navajo rights have been reasonably determined and the Navajo Nation has developed several proposed projects to implement their rights. Other tribes throughout the West are in similar situations. This research will investigate this issue in general or a specific tribe. This project will focus on the economic implications of the rights issue.
Other
Be creative and come up with your own topic that is clearly attached to the current water issues in the West.
Research Process
Obviously, there is great overlap in the above Topical Areas above. The initial due date of February 4 is to simply pick an overall topic area. This is called picking a "universe." The month of February is then to be used to explore that "universe." Using as many resources as possible - given time constraints and all that - simply explore the specific topic area you have selected. The next due date is at the end of February. By this time, you should have explored the "universe" and selected a slice of that universe to study in detail.
On February 25, turn in a 1 page Research Question. You need to develop a specific question that is important to understanding the current crisis. If the answer to your question is easily found in the existing literature, then you do not have a meaningful question. In your 1 page effort, you need to include a discussion as to why this is an important issue. (Why should you get "paid" for the next 10 weeks of work?) Finally, you need to present a discussion as to how you plan to develop an answer to your question. (How will you earn that "pay?") If you want to develop an econometric model, what data will you use? If you developing a theoretical model, what foundations will you be using?