Economy x Ecology
Professors and students within the Orfalea College of Business are working toward a greener economy — and a better and more productive world.
1. Jobs, Offshore Wind Farms and The Local Economy
Over the past several years, economics professor Steve Hamilton has been thinking about the economic value of wind. Through the lens of his field of study, he’s been doing research into the value of implementing an offshore wind farm along the coast of San Luis Obispo County. He says he believes it could create numerous jobs and serve as an effective, renewable source of energy for the area.
Offshore wind energy is produced using massive turbine blades that spin when the wind blows, generating energy that is then carried to land through cables on the ocean floor. An offshore wind turbine can create more energy than land wind turbines because the wind blows harder and more consistently over the ocean.
As part of his plan to tackle climate change in the U.S., President Biden recently announced that he and his administration want to “expand opportunities” for offshore wind power as part of a more comprehensive plan that will allow the U.S. to transition from fossil fuel energy to renewable energy at a national level.
“In general, as a renewable resource, the impact is a lot lighter in terms of the total footprint on the planet,” Hamilton says. “It’s much smaller than fossil fuel. To displace a natural gas plant with offshore wind energy, in my opinion, would be fantastic.”
Hamilton began looking into offshore wind in San Luis Obispo County about four years ago and found that the Morro Bay area is an optimal place to install the turbines, due to the high wind speeds and surrounding infrastructure. He estimates that a 100-windmill farm would have the capacity to produce about 1 gigawatt of power, which is equal to more than the amount of energy 1,200 land windmills would produce.
“Offshore wind power is a really interesting subject because it just has so many benefits. It really is the future of sustainable energy, and it’s awesome to think that small towns like San Luis Obispo can play such a huge role in that transition.”
Scaling upward, there is potential to develop more than 7 gigawatts of offshore wind capacity on the central coast, which could power somewhere between 2 million and 5 million homes. “There’s an opportunity to more than replace Diablo Canyon [Power Plant], which is going to go offline in 2024,” Hamilton says.
He says he believes the Diablo Canyon Power Plant has suitable land that could be converted into a specialized wind port, which could then employ some Diablo workers who will lose their jobs. “The jackpot for jobs will be at the ports,” Hamilton says. “If San Luis Obispo County wants the economic benefit of all those jobs and replacing the Diablo jobs with green energy jobs, those jobs will be at the port.”
In order to estimate the number of jobs an offshore wind development would create, Hamilton used REMI and JEDI modeling. “What these software systems do is they come up with the total supply chain needs and they predict the jobs, not just there at the port for workers involved with the actual construction and maintenance of the offshore wind, but all the affiliated supply chains,” Hamilton says.
Economics sophomore Ben Stephan and graduate student Christopher Almacen worked with Hamilton on his research. Almacen assisted with the REMI modeling and provided results that helped Hamilton write the report, and Stephan did research and assisted in writing the report, according to Hamilton.
“Offshore wind power is a really interesting subject because it just has so many benefits — from creating hundreds of jobs to saving the environment,” Stephan says. “It really is the future of sustainable energy, and it’s awesome to think that small towns like San Luis Obispo can play such a huge role in that transition.”
Although there are environmental and monetary costs to implementing the offshore farm — such as the large upfront cost, and its potential to disrupt fishing in the area — Hamilton says he believes it would be a beneficial investment even though the payback time is long. A one gigawatt wind farm would cost over $4 billion, which would need to operate every day for over 15 years to generate positive economic returns. However, according to Hamilton, an upside is the investment would more than offset the loss of Diablo Canyon Power Plant on taxpayers, resulting in increased tax revenue for the county.
“The economics is really interesting because it’s a massive investment upfront and then these things just quietly spin energy into power, off the coast,” Hamilton says. “Every day it’s producing energy, and there’s not a lot of marginal cost.”
The federal government recently approved the first offshore commercial wind farm in the country to be built 15 miles off the coast of Martha’s Vineyard, Massachusetts. It’s expected to create jobs and provide power to about 400,000 homes and businesses in the state.
Hamilton’s research has the potential to generate substantial economic growth and serve as a template for the future of power generation in San Luis Obispo County.
2. Microplastics, Eco Certification and Consumer Decision Making
Assistant professor of economics Jacqueline Doremus is studying toothpaste. More specifically, she’s been working on research surrounding microplastics, beads of plastic debris smaller than 5 millimeters in size that cannot degrade or dissolve, in consumer products for about two years.
During her time in graduate school, Doremus heard an NPR story that covered microplastics in the Great Lakes. She began researching the topic and found that microplastics were everywhere, including in our toothpaste and cosmetic products, used as an exfoliant, and to increase the shelf life of certain products.
She then began applying economic modeling to collect data on consumer behavior and hopefully inform policy to reduce microplastic pollution.
“I used to work for the U.S. Agency for International Development,” she says. “What motivated me to study and do my Ph.D was we would be making decisions about how to spend money, or different policy decisions, and we didn’t always have the research I wish we had when we made those decisions. So I always have in the back of my mind, ‘How can this help somebody make a better decision?’”
She has also studied the effectiveness of consumer boycotts against products that contain microplastic beads. She said that consumer activism can play a role in putting pressure on manufacturers to reduce the use of plastic in cosmetics.
“I think boycotts can be really powerful to effect change immediately from firms and, particularly in an era of social media, consumers can get behavior change faster than legislation can,” Doremus says.
In her model, she included a variable that tracks Google searches about products known to contain microplastics. She said it was a way to collect data and gauge people’s interest in those products to make the model as representative of reality as possible.
In addition to a boycott, Doremus has explored the use of eco-certification, which is a label that appears on a product and ensures it was made using sustainable practices.
“It’s been harder and harder to pass legislation due to polarization in the U.S., and so one way to get around that is we won’t formally regulate, but we’ll use tools like a boycott or the eco-certification label, and we’ll use those as ways to make the world around us a cleaner, greener place,” Doremus says.
In addition to her work surrounding microplastics, which are now federally banned in cosmetic products and toothpaste, she has continued to research plastic pollution in water and on beaches. Cigarette butts are the world’s most common source of litter on beaches, according to the Ocean Conservancy. The filters are made of a plastic called cellulose acetate that takes at least 10 years to decompose.
“I think that boycotts can be really powerful to effect change immediately from firms and, particularly in an era of social media, consumers can get behavior change faster than legislation can.”
Doremus’s beach litter and water research is focused on California, and while the state has banned single-use plastic bags and put regulations on plastic straws, there has been no ban on cigarette filters, which offer no health benefit and are the most common form of beach litter. This research will look into how effective plastic policy is at reducing plastic waste.
“I’m working with the California Ocean Litter Strategy, a group guiding policy for ocean litter. There I provide expertise and guidance and feedback on plastic policy for California and what we can do to slow down ocean plastic pollution,” Doremus says.
She’s also looking into microplastic pollution in tap water and plastic water bottles. Clothing manufacturing, car tires, beach litter and even doing laundry contribute to microplastic pollution in water systems, which ends up in oceans, freshwater and in our taps.
Doremus says she frequently works with students on her research, whether they work as co-authors or on senior projects. “I try to bring students into my work as often as I can because it helps me and it helps them and it just makes it more fun,” Doremus says.
Former economics student Grace Westle helped Doremus get the beach litter project up and running. She found data on plastic use and beach clean-ups and would sort, clean and research data and policies. Doremus says she has helped mentor more than 20 students since she began working at Cal Poly, many of whom tend to be underrepresented in economics.
“Economics has a gender and race problem,” Doremus says. “We have not made progress in terms of the share of professors or just the whole pipeline from students to professors that are female or from diverse backgrounds.”
She also points out how economic modeling can be used to address racial and income inequality. For example, pollution tends to affect low-income and Brown and Black communities at higher rates than white, affluent communities.
“It’s a powerful framework to help you understand economic activity and who is affected by that economic activity,” Doremus says. “It can be used to think about the effectiveness of different policy tools for people who don’t speak English, or people who do and don’t have trust in the institutions around them.”
Ultimately, she says she believes pollution needs to be limited at the producer level. It’s more cost effective, and preventing pollution is a better strategy than cleaning it.
Microplastics are everywhere, and we consume them every day. According to Doremus, the best thing we can do right now is to collectively put pressure on companies and lawmakers to address plastic pollution in whatever ways we can.
3. Food Waste, Online Grocery Shopping and Methane
In addition to his work on offshore wind power, professor of economics Steve Hamilton has been using economic modeling to strive for a solution to reduce food waste. Along with faculty from Cornell University and Arizona State University, he has been researching causes and impacts of food waste among farms, grocery stores and households.
About 30%-40% of food that is supplied in the U.S. is wasted, according to the U.S. Department of Agriculture (USDA). Hamilton says this waste usually ends up going to a landfill, where it cannot compost, or down the garbage disposal, where it may end up in a water treatment plant. Food that is not composted rots and emits a potent greenhouse gas called methane.
Additionally, food waste accounts for 25% of fresh water loss every year. When food is thrown out, the water used to irrigate that food is also wasted. “If food waste were a country, it would be the third biggest carbon emitter in the world,” Hamilton says.
Hamilton and his team have been researching this topic for about five years under a series of grants from the USDA.
“It’s become more of a social issue,” Hamilton says. “The USDA started putting out numbers flagging the amount of waste, and researchers started getting pretty interested in it. We started looking at this and really exploring all levels of the food chain.”
Hamilton and one of his colleagues won the Atlas Award, an international award for research contribution, in 2018 for their paper about using apps to reduce farm level food waste. The paper explored the use of matching services that would allow consumers to buy “ugly” food items that wouldn’t sell in a grocery store directly from farmers.
“For example, if a farmer had a double-headed carrot — that wouldn’t make it to the shelves,” Hamilton says. “But, if someone was making a shepherd’s pie, a double-headed carrot really doesn’t matter. It’s a little bit like Craigslist for farmers.”
He says the goal is to create a market for imperfect food. “Usually economists would suggest imposing a tax on food waste to make it more costly to throw away food,” Hamilton says. “But, since food waste from a particular individual is virtually impossible to track, creating markets through application development is one way to combat waste.”
“We found in the study that as the number of produce items increases on the imperfect produce app, consumer demand goes up massively,” Hamilton says. “So, that suggests that these applications are a very viable platform for reducing food waste. Sure enough, it’s taken off.”
Most food waste happens at the household sector, Hamilton says. Consumers can contribute to limiting food waste through actions such as meal planning, using leftovers and composting.
Food that is not composted rots and emits a greenhouse gas called methane. “If food waste were a country, it would be the third biggest carbon emitter in the world,” Hamilton says.
He says he and his team have also been researching online grocery shopping. In a digital market, the thinking goes that shoppers wouldn’t rely on their senses such as sight and smell, which may lead them to buy less food. Although there isn’t a lot of research on this specific topic, it’s something Hamilton says he feels is worth exploring.
Best buy dates are another issue that often “trip up consumers,” Hamilton says, which leads to more waste. There is a difference between a best buy date and a spoil date, so people often throw away edible food they think is expired.
“Yogurt is a great example,” Hamilton says. “Typically, yogurt will last two to three weeks beyond the best buy date and still be safe to eat and taste perfectly fine. People have talked about using biosensors that change colors to indicate the freshness of the product, which will tell you when there’s actually bacteria in the yogurt.”
The USDA and the Environmental Protection Agency set a goal to reduce food waste by 50% by 2030. Although it’s impossible to completely eliminate food waste, it can be minimized, Hamilton says.
Economic modeling helps gather detailed information which can help inform policies to combat food waste at every level. “We’ve got a lot of people on this planet. We need to do a better job of feeding them without throwing stuff away,” Hamilton says.
His research applies to industrial nations around the world that have similar food supply chains to the U.S. “I’m an environmental economist, so I ride my bike to work, I try not to drive a car, I’m very careful and conscious about my own food waste. It’s just something that I care deeply about,” Hamilton says. “I also care about developing better policies that will create incentives for people who don’t care much about it.”
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