Austin Contrarian

What's "The Tree" worth?

This story has generated a lot of buzz and twitter.  On Tuesday, Austin's Planning Commission denied a variance to remove a big tree on a downtown property at Bowie and W. 5th.  The denial might -- and likely will -- obstruct the construction of a tall, dense residential or office tower on a piece of property that City Council just zoned for a tall, dense residential or office  tower.  

The backup packet for the PC agenda item (TP 10617196 Bowie Street (311, 313, 315)) is here (pdf). 

I'll have more to say about this issue in later posts.  But for now, I'd like to focus on just one question:  What's The Tree worth?  We put an implict value on a tree every time we insist the tree be preserved or allow it to be removed.  Insisting that a tree be preserved means we deem the tree's benefit to the community outweighs the cost to the community of lost tax revenue and positive spillovers from the development.   And vice versa. 

It's not obvius how one should value a "protected" or "heritage" tree.  I think the valuation is intrisically subjective, which is one of the problems with the heritage tree ordinance.  But there's no way to avoid implicitly pricing the tree.   The Planning Commission implicitly valued The Tree at more than $90,000 $70,000 because it rejected the developer's offer of $90,000 $70,000 for "mitigation costs."

I'd like to hear from readers what you think The Tree is worth.  How much do you think the City should be willing to pay to buy The Tree outright?  What is the maximum amount of tax revenue the City should forego to preserve The Tree?  If the City were to sell the right to remove The Tree, what minimum price should it demand?  The three questions should yield the same answer.

I'm not interested right now whether you think the project is feasible with The Tree in place, or your estimate of the lost tax revenues, or whether you think PC has the authority to consider a tree's benefits when weighing a variance, or whether you think PC's decision complied with the heritage tree ordinance criteria.

The Tree is a pecan tree.  It is approximately 60 years old.  It is 57' tall and has a roughly symmetrical canopy with a 55' diameter spread.  It has a 32.0 inch diameter at breast height.  The City arborist rated The Tree in "good" condition, and the developer did not dispute that The Tree is healthy and in good condition.  It is set back 90' or so from Bowie Street and approximately the same distance from W. 5th St.

Here are some photos.

These photos were taken from the driveway entrance to the property.  This is the only street-level vantage from which The Tree is visible from root to crown.  I'm sure some residents of the Monarch high-rise just across Shoal Creek have a full view.

Here are a couple of closer shots:

Here is aphoto of the property looking south from the other side of W. 5th.  The small buildings lining W. 5th are not part of the property at issue and would not be torn down to build the project.

What say you?

NB.  Because valuations like this are intricially intrinsically subjective and personal, there are no right or wrong answers.

Another NB.  The Tree cannot be moved to another site because its roots are too deep, if that affects your valuation.

A UCLA economist tells us how to adapt to another hot, dry summer and it's what you would expect

There are credible predictions that the drought will persist through next summer.  That's scary.  Lake Travis, one of our two main reservoirs, is 47 feet below full.  We are in trouble if this trend line continues for another year:

Matthew Kahn, UCLA economist and author of Green Cities, offers helpful advice on how we should adapt:

If the people of Texas forecast that the summer of 2012 will resemble the summer of 2011 what actions can they take over the next year to reduce the impact on their economy and their quality of life?

I would hope that water prices are allowed to rise so that people with grass front lawns will think about replacing that beautiful stuff with plants that require less water. 

Electricity prices should also rise on hotter days.  As electricity demand rises due to rising air conditioner use,  I would hope that the region's grid has excess capacity to built in for peak days.  There should be more use of critical peak pricing for both residential, industrial and commercial consumers so that demand side responses (i.e people using less electricity on high demand days) help to minimize the probability of blackouts on those really hot days.  If people face higher electricity bills, then they will demand more energy efficient appliances and the world's firms will figure out how to make them.  Demand creates supply.

Water is the more pressing concern and the good news is that Austin Water Utility has adopted tiered, block pricing that charges hefty premiums to high water users.  And, wisely, AWU has proposed price increases to kick in in November.  It will raise the marginal price of 1,000 gallons of water for each residential tier by 4.7-5.4%.  AWU is tacking on a monthly $6 "water sustainability fee," which is regressive and superfluous as long as it's pricing the water properly.

More price increases will be necessary if this drought continues.  But we know that price is an effective way to ration water, more effective than mandatory conservation (and oodles more effective than voluntary conservation).  While demand for water is inelastic, it is not perfectly so:  estimates of the price elasticity of demand by residential water users fall between -.33 and -.64.  See this study at p. 23 (pdf).  A 1999 study of Texas cities (see here (pdf) at p. 19) estimated Austin's price elasticity at -.17, but this included commercial and industrial users, who are likely less sensitive to price.  Regardless, long-run elasticities will be higher if there is a credible commitment to high prices, as homeowners do what Kahn suggests and switch to more efficient appliances and replace grass with drought-resistant plants.  AWU has made a credible commitment to high prices.   

Because price is so effective at conserving water, I find it absolutely bizarre that many local environmentalists are opposing the new rate hikes.  But the rate hikes will raise revenue because the demand for water is inelastic, and the City intends to use the extra revenue to pay for the new water treatment plant.  Opponents of the plant are so determined to block the plant that they have been citing the rate hikes as a downside of the plant even though they know (or should know) that raising rates  is the most effective strategy for conserving water and will be necessary even if the plant is not built.   They should stick to arguing that WTP4 is a bad use of taxpayer money and not front arguments that undercut water conservation.

Did Sao Paulo get what it wanted?

This doesn't have any relevance to Austin, but it's still interesting.

A few years ago, Sao Paulo banned essentially all outdoor advertising.  Not just billboards but virtually any kind of sign.  The Golden Arches are gone.  So are signs painted on the sides of buildings.  Neon signs, too.  Even storefront signs.

The ban was widely lauded at the time.  A blow against "visual pollution" and corporate manipulation of virtuous but sadly suggestible consumers.

The advertising is now gone.   This is a strictly subjective opinion, of course, but the result isn't pretty.  "Cleansing" the city of advertising did indeed focus attention on the underlying architecture.  But, judging from the pictures and videos,  the city's architecture doesn't warrant attention.  It looks drab, blandly utilitarian.  Even seedy.

I wonder what impact this has had on commerce in the city.  Outdoor advertising is actually useful.  All those signs served a purpose.  They provided information, mainly by cutting search costs.  But the ban was motivated in part by anti-commercial sentiments, so I suppose the city's residents got what they wanted.  (Maybe I'm wrong, but Latin American and South American countries seem to have an abiding dislike of markets.)

Judge for yourself.  A few Flickr photos.  Video.  Video.  And a few other photos here and here.  

No

I agree with Ryan Avent that this WSJ piece makes a bizarre argument against congestion pricing:

By requiring car drivers to pay a fee to drive in a city at peak hours, congestion pricing reduces traffic and raises money that can be used to support public transit—both worthy goals.

Yet congestion pricing has dubious environmental value. Traffic jams, if they're managed well, can actually be good for the environment. They maintain a level of frustration that turns drivers into subway riders or pedestrians.

The author contends that by improving traffic flow, congestion pricing induces more driving, which in turn increases environmental damage:  "If reducing it merely makes life easier for those who drive, then the improved traffic flow can actually increase the environmental damage done by cars, by raising overall traffic volume, encouraging sprawl and long car commutes."

Ryan makes the right arguments.  I think Owen's got the economics flat wrong, which I'll elaborate in another entry.  He's wrong because congestion pricing does not induce more traffic and because congestion pricing encourages more compact cities rather than sprawl.

But Owen's also got the environmental impact wrong.  He ignores that traffic jams impose a cost -- a significant cost -- not imposed by free-flow traffic.  That's health.  Traffic jams concentrate particulate emissions in one location.  High levels of particulate emissions are bad for people.  They cause all kinds of health problems -- asthma and other respiratory illness, obviously -- but also higher risks of infant mortality.

If you need evidence, read this spanking new paper (h/t Matthew Kahn).  It compares infant mortality rates near toll plazas to infant mortality rates after the toll plazas were replaced with an EZ pass system.  They found that the EZ pass system "reduced the incidence of prematurity and low birth weight among mothers within 2km of a toll plaza by 10.8% and 11.8% respectively."  Because toll plazas are notoriously congested and highways with an EZ pass system are not, this is a good proxy for the health effects of traffic bottlenecks.

Environmentalism is not only about carbon emissions.  The wellspring of the movement was Rachel Carson's crusade against environmental contaminants that (allegedly) made people sick.  Any calculation of environmental cost that omits the costs of making people sick is not just a bad cost-benefit analysis, it's bad environmentalism.

Legacy costs

Here's a thoughtful piece from Aaron Renn on an unintended consequence of the Clean Water Act.   EPA mandates are forcing Cleveland to spend $5  billion to overhaul its sewer system.   That's a lot of money for any city, but especially for a struggling rust-belt town.   Cleveland will be forced to raise water and sewer rates dramatically, and probably a bunch of other taxes, too.

Cleveland can't go anywhere, but its residents can.   (This is a city where the police and firefighters openly celebrated an Ohio Supreme Court ruling that allows them to move to the suburbs.)  Renn predicts -- accurately, I think -- that the higher taxes will speed up the depopulation of Cleveland as homeowners have one more reason to move to the suburbs.   In fact, the mandate will kick the city twice:   Cleveland must not only raise taxes, but it will lose money that it could have spent on other improvements that would have attracted suburbanites back to the city.

Cleveland needed to make dramatic improvements in water quality; after all, this is the city whose river famously caught fire in 1969 (which itself provided much of the momentum for the Clean Water Act).  But the Cuyahoga is now clean; residents fish from it, in fact.  Spending another $5 billion to get that last 10% improvement is a bad use of money when Cleveland has more pressing needs.  And it is counter-productive to drive residents to the suburbs to leave rotting infrastructure sitting unused in the central city.

Renn suggests that the federal government assume the cost of replacing ancient sewer systems.  That might be the only solution.  The federal government has no incentive to weigh costs and benefits accurately when it can simply issue a mandate.  And the moral hazard risk is smaller than one might think:  the city's main "crime" is being old enough to need a new sewer system.

Guarding against strategic behavior by a city is tricky anyway since, again, its residents can simply move when things get bad.  Rather than stick central cities with crippling legacy costs, it makes more sense for the federal government to issue reasonable regulations and pick up the tab for unforeseen costs.  

Watch what people do, not what they say

A mischievous Katherine Gregor posted this piece about Berkeley’s environmentalist NIMBYs on the ANC listserve just before the 4th of July weekend.  The debate over there is just now petering out.

The point of the piece was not that all environmentalists are NIMBYs.  Just the opposite, in fact.  Berkeley activists have blocked new housing and development for many years using environmentalist and affordability rhetoric.  It finally occurred to the more thoughtful environmentalists in the area -- the sort of people who, you know, actually worry about the environment -- that if Berkeley doesn’t make room for newcomers, those turned away will not teleport into another dimension but instead will find some other place to live.  Probably in distant suburbs where they will eat a lot of green space and burn a lot of gasoline.  It nicely illustrates the principle that you should watch what people do, not what they say.  If you are a green then you will fight for denser infill development at least some of the time.  If you claim you are a green but fight infill density tooth and claw, then you are not a green; you are merely anti-growth.

We don’t normally see environmentalist rhetoric deployed in small, garden-variety neighborhood spats.  Homeowners in those kinds of disputes are likely to be perfectly honest about the fact that they don’t want new people or a different class of people in their neighborhood, or that they like things just the way they are, or that they’re worried about their property values.  It’s not always pretty, but at least it’s honest.

Environmentalists should advocate water pricing, not conservation campaigns

Environment Texas is lobbying City Council to increase its water conservation budget by one-third.  We're in a severe drought, you know.  Just like we were last year.

We're also in a recession.  The city has no spare change lying around.  Why, it's even offering an on-line budget "simulator" so ordinary citizens can see first-hand the hard trade-offs the city must make.

If only there were a way to encourage deeper conservation during this parching drought while simultaneously protecting our city budget.  If only there were some way to make our good residents understand just how precious water is right now without another million-dollar advertising campaign by the city.

There is, of course.  Just raise the price.  I assure you -- no, I swear to you -- that there is a price that will bring water use down to the necessary level.  As a bonus, the city will garner more revenue that it can use to plug its budget gap.  As a bonus on the bonus, the city can dispense with its costly conservation and rebate programs and use that money to plug the budget gap.  And as a triple bonus, Austin's residents can get out from under the stringent water restrictions.  They will be able to water their yards when they want -- but they will use a lot less water, if they choose to water at all.

I understand the political opposition to raising prices, even if I despise it.  The suburban lawn-watering lobby is a powerful player in this town.  But I don't understand why environmentalists refuse to get on board.

I know that some of them do support price increases and some of them helped push through price increases last year.  But those price increases were not nearly high enough and, anyway, prices need to be flexible.  We should charge high prices during a drought and lower prices when water is plentiful.  I haven't seen any environmentalists pushing that pricing scheme.

But the real problem with the environmentalists' approach is their willingness to buy both boots belts and suspenders.  Even those who want to raise prices also want to impose watering restrictions and pay gobs of money for conservation programs.  If we price water right, these last two are unnecessary.  In fact, they are a dead-weight loss.  They make us collectively poorer without providing any corresponding cost-justified gain.

So why don't environmentalists support pure water pricing?  I think it is the kumbaya spirit that animates many environmental groups.  A kind of "we're all in this together" mentality.  And a tinge of moralizing, which makes them more comfortable with imposing a code of conduct like the city's watering restrictions and issuing solemn commandments such as, "Thou shalt not waste water."

I'm not mocking them.  Well, I sort of am, but I don't mean to be mean-spirited.   Environmentalists' collective action and earnest commitment are valuable commodities in a society that often seems determined to squander its natural resources as quickly as possible.  But communitarianism is very, very expensive.

(Cross-posted at Urban Returns.)

We're number six

Smarter Cities (NRDC) has released its ranking of the most sustainable cities.  Austin is sixth!

Of course, like most city rankings, this one is based on an arbitrary weighting of an arbitrary list of factors. For example, they include "standard of living" as a category. What does this have to do with sustainability?.   Unless the goal is to jack up the ranking of wealthy California cities.

They omit a variable for land-use patterns. If you're worried about open space -- and I'm sure NRDC is -- this omission is inexplicable. I'm more sanguine about suburban development than many, but even I am surprised by this omission.

But mostly the problem is how they weight the factors. If climate change is the most pressing problem facing us today, then shouldn't energy consumption get the most weight?  I think it should.  And Austin fares very poorly on energy consumption.  It's 100+ degrees here in the summer.   My air conditioner runs virtually non-stop, and will until late September.  Adding a relative handful of low-energy buildings to the existing housing stock won't budge our average energy consumption.

Ditto with transportation. TTI just yesterday released a report identifying Austin as one of the most congested cities its size. I don't know what NRDC means by "sustainable" (I think the word has essentially lost all meaning through overuse), but does NRDC really believe that spending an inordinate amount of time in traffic, burning extra fuel, is a sustainable transportation pattern?

I could go on. Water. Yes, we've got pretty stringent water controls. But then we live in an area that is frequently parched. Each Austin resident puts a greater strain on local water resources than each resident of, say, Cleveland.

This will piss a lot of Austinites off, but probably the greenest Austinite is the one who moves to a city with a milder climate, more water, and less congestion.