April 7, 2025 • 41 mins
Welcome to Buffalo HealthCast, the official podcast of the University at Buffalo's School of Public Health and Health Professions 🎙️
In this episode of Buffalo HealthCast, Dr. Michael Shelly delves into the intricate relationship between environmental sustainability, economics, and public health. He explores how environmental policies and sustainable practices can influence economic systems while addressing pressing global health challenges. Dr. Shelly emphasizes the importance of balancing economic growth with ecological responsibility, illustrating how investing in sustainable infrastructure and renewable energy can yield long-term public health benefits. He also discusses the role of environmental justice, highlighting how marginalized communities disproportionately bear the burden of environmental degradation and advocating for equitable policy interventions.
Furthermore, Dr. Shelly sheds light on the economic aspects of sustainability, explaining the financial implications of pollution, resource depletion, and climate change. He underscores the need for interdisciplinary collaboration between policymakers, economists, and public health experts to create a future that prioritizes both economic stability and environmental well-being. The episode serves as a compelling call to action, urging listeners to consider how individual and systemic efforts can drive meaningful change in public health, economic resilience, and environmental sustainability.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Vennela Damarla (00:00):
Hi. Welcome to Buffalo healthcast. This is
Vennela Damarla, PodcastProducer today we have Dr
Michael Shelley, a seasonedenvironmental economist with
over 25 years of globalexperience. Dr Shelley is a
research assistant professor atUBS renew Institute specializing
in environmental impactanalysis, recycling and the
(00:24):
economics of sustainability. Hiswork has shaped projects ranging
from climate change mitigationto valuing ecosystem services,
and he is passionate aboutpreparing future leader in this
critical field. We are excitedto hear his insight on
environmental economics andsustainability. Thank you so
(00:45):
much. Dr Michael shelly forjoining us today.
Dr. Michael Shelly (00:48):
Well, thank you for hosting me.
Vennela Damarla (00:50):
Thank you so let me start with the first
questions. Can you share whatinspired you to pursue a career
in environmental economics andhow your experience on five
continents shape yourperspective on sustainability.
Unknown (01:06):
Okay, well, to tackle the first one, I ended up in
environmental economics, sort ofby accident. I started going out
with a young lady in London manyyears ago who later became my
wife, and it turned out sheworked in environmental
consulting, an environmentalcompany, consulting company, and
(01:27):
I got a job there too. And sinceI was an economist, I ended up
doing environmental economics.
So I ended up learning a lotabout environmental economics
through working on the job.
Thing about sustainability isreally about balancing two
things. One is human welfare. Inother words, people, how well
people are living and and theenvironment, or the biosphere,
(01:48):
you're sort of like trying tomanage that relationship. So
when I went to China, forinstance, back in the 1990s
there was still the viewpointthat smoking chimneys were a
sign of prosperity. And I said,this was a good thing. Back here
in the richer countries, therehad been a movement to try and
stop economic growth. It's verymuch a big concern about
(02:09):
stopping economic growth becauseit was damaging the planet. And
back in the 1970s when this viewwas very current over here, the
people living in the not so richcountries, they sort of rebelled
against this idea. They said, soyou know, we were pretty poor,
and you're telling us thatgrowth has got to end. Does that
mean we always have to staypoor? We would like to have the
same opportunities as you? Sothat's where the whole
(02:31):
Sustainable Development ideacame from. And it's a little
more possible to understand itif you've seen it from the
perspective of some of thepoorer countries who wish to
raise the living standard oftheir people than it is from
over here, where we're alreadypretty rich. And so the idea of
ending economic growth and suchlike, it doesn't seem so bad to
us. So that's how it affectedme, also different concerns of
(02:52):
different places. So when Iteach course, when I teach
students about pollution and airpollution and such like, here in
the United States, I always haveto begin with pictures of how it
used to be here, 50 years ago,because that you don't see
pollution in the United States.
You don't the air isn't orangeor, you know, so thick that you
can't see across the street. Youdon't have streams that have
(03:15):
got, like, greasy sheens onthem, full of plastic and
garbage. You don't really seethat very much. You used to. You
don't see it now. So sodifferent parts of the world
have very different view andwhat's meant by sustainability.
So anyway, long answer, short
Vennela Damarla (03:37):
yeah, that's an interesting story. Dr Shelley,
question,yeah. So moving on to next
question, with over 25 years inthe field, how has the role of
environmental economist evolved,particularly with the raise of
climate change awareness?
Dr. Michael Shelly (03:52):
Oh, it's changed a lot. Push going back
to my earlier answer in the 19early 1990s when I first started
getting into this, the concernwas very much about what they
call conventional they callconventional pollutants. That
would be your particulate matterin the air. That would be sulfur
dioxide nitrous dioxides, itwould also be water pollution,
(04:14):
because they were seen as mostimmediate threat. But the
science on climate change hasmoved on, and we now see that as
the bigger threat, that and aloss of biodiversity. They're
now seen as the two big, bigareas.
Vennela Damarla (04:27):
Okay, thank you. Dr Shelley, that was very
insightful to know. So you havementioned a lot about the
projects, ongoing project, howthe climate change is 20 years
back. So what role thatenvironmental economist have. Do
you think that they might play acritical role in this aspects?
Dr. Michael Shelly (04:47):
This idea of an externality. An externality
is where I do something and itharms you in and I don't. Have
to pay a cost for it. So forinstance, if I'm driving a big
diesel truck for an urbanneighborhood, I'm going to be
(05:07):
pushing out particulates, andI'm going to be causing health
problems for people who livealong that road. But I receive,
I have no cons. It's noconsequence to me. I don't have
to pay a bill for it. I don'tget told off for it. I don't get
fined, it's no consequence tome. And one of the things we
find with human behavior is thatif we don't have to face the
consequences of our ownbehavior, we will tend to overdo
(05:32):
the damaging behavior. So one ofthe things the environment
economics gives you is the ideawhere you're imposing a cost on
someone. So it's one thing tosay, Oh, I can't afford to
change something, but then youshould ask the other question,
well, if you're harming people,what do you propose? How do you
propose to reduce the harmyou're causing? And so with
(05:53):
climate change is a classicexample. So we see that say
certain Pacific islands are nowworried that sea level is going
to rise and engulf the entireisland. They have to move away.
We see terrific droughts inother parts of the world. We saw
floods in Pakistan not so longago, which were attributed to
climate change. So we'reimposing costs, enough that we
(06:13):
don't have to bear any of thosecosts. Well, bear much of those
costs, so we just ignore them.
So one thing that theenvironmental economics does is
it allows you to put things onthe other side instead of I have
to justify to you why you haveto cut your pollution. I ask
you, well, how can you justifyharming people? You know, what
are you going to do about it? Sothat's, I think it's probably
(06:34):
one most important idea.
Vennela Damarla (06:38):
Yeah,Thank you so much, Dr Shelley for
simplifying it and then makingus understand what actually
Environmental Economics does andmoving on to next question. At
the Renew Institute, you focuson plastics and tire recycling,
among other topics, what aresome recent advancements or
challenges in this area that youfind particularly impactful?
Dr. Michael Shelly (07:00):
Okay, so we don't do much recycling. Only
about 8% of the plastic inUnited States is recycled, as I
recall, and we don't reallyrecycle tires. So using that
argument about or that idea ofthe externality, we have to ask
the question, What harm does myconsumption of plastics and
(07:23):
tires have on other people? Whatconsequences Am I not paying
for, and are they sufficientlylarge that I should change my
behavior? And that an answerthat varies in different parts
of the world. So in the poorercountries of the world, they
have a problem with trashcollection. So things tend to
(07:44):
get discarded into theenvironment. You know, when you
hear about the all those bits ofplastic floating in the Pacific,
and you hear about the garbagepast a lot that's actually come
from that would be the sort ofthe Asian side of the Pacific,
because they don't haveparticularly good garbage
control. And it gets into therivers and then gets washed out
to sea. United States, we don'thave the problem with the
(08:05):
garbage so much. What we have aproblem with is more than micro
plastics. This is where plastic,some plastics do get released
into the environment, and theyget into small pieces. And we're
finding that animals wereaffected by we're affected by
and we've got bits of plastic.
But as an economist, I didn'tsay, Okay, what's the
substitute? If I'm not going tobuy a plastic bottle of water,
(08:26):
what's the substitute? Well,maybe we get people to renew, to
change their containers, butthen the incentives are all
wrong. What I mean by that isthat the reason we, for
instance, went over from glassto plastic is because glass is
more expensive to produce, soit's cheap to produce plastics,
and we can make plastics verycheap. That's the problem with
(08:47):
plastics. They're also likely toget relatively cheaper, because
as we stop burning oil and gasfor to produce energy for cars
and heat in our homes, and allthe rest of the producers of
those substances are going towant to find another market, and
so they're building big plasticplants at the moment to produce
more plastic they want us toproduce if you use more plastic.
Vennela Damarla (09:08):
So you think banning plastics would make any
difference.
Dr. Michael Shelly (09:13):
Always, certainly make a difference. The
thing is, what would we use as asubstitute? So if we were to use
glass, the glass is very energyintensive material. It's also
heavy, and it would, and sotherefore we'd end up using more
energy. On the other hand, wemight go over to more reusable
containers. So sometimes, likewith Starbucks, I used to have a
reusable cup, and I'd go back,and then they started telling
(09:34):
me, Well, for hygiene reasons,we can't take your cup back. So,
you know, so I could, couldn'tuse the reusable cup. So we
would have to change otherbehaviors as well to make these
changes. Yeah,
Vennela Damarla (09:44):
okay, your research also includes studying
the social burden of poweroutages. Could you elaborate on
this issue and its broaderimplications for sustainability?
Dr. Michael Shelly (09:55):
The thing is that in in the richer countries,
by. Our constant access to poweris just a given. We just expect
it. We built our lives aroundit. So if, for some reason, the
power is cut, the electricity iscut off, it has bad impacts. So
(10:17):
you really don't want that tohappen now, as it's as a utility
or somebody's looking to invest,you have to look at the benefits
of an investment, and sometimessome of those benefits aren't
expressed in market. Prices.
Nowhere. There is no market.
There is no you can't say, oh,this costs them $25 or whatever.
Data isn't there. So what we'vebeen doing is we've been
(10:39):
interviewing people Texas andPuerto Rico, and we've been
asking them about recent power,just recent to them. And so we
would ask them, Well, how did itaffect your ability to do this?
You know, like to cook, yourability to communicate how much
extra money, how much extra timeand such like. And we try to
(11:00):
find out how much harm it doesto people to have their power
cut off. And that can help toguide investment decisions.
There is this idea that thereare certain groups in society
that would be most likelydamaged, and you can easily
identify them. We're findingthat's not so easy to do so, so
you have to basically do asurvey, and you figure out sort
(11:22):
of people who are harmed. And sowe've been finding things like,
it's people with children, it'sbetween five and 17, it's people
who live in rentedaccommodation. That should be a
very big predictor of how muchburden you're going to have.
Vennela Damarla (11:36):
Okay, so how does your work with the ub
carbon pricing group contributeto regional or global climate
change mitigation of efforts.
Okay,
Unknown (11:47):
so putting up.
Economists are very keen onputting the price on carbon
because they're trying tocapture that externality.
They're trying to say, Well, ifyou emit a ton of CO two,
although you may not be aware ofit you're actually causing. Say,
I think the late assessment isabout $130 of damage around the
world for each time you emit. Sothe idea is, if people have to
(12:07):
face the prices for these ifthat's built into the price,
that will change their behavior.
What they'll do is they'llreduce consumption, or reduce
activities produce greenhousegasses or and they might switch.
So for instance, somebody, if weput a higher price on gasoline
to reflect it's the damage it'scausing that might encourage
(12:30):
people to go over to to anelectric car. So that's, that's
the idea. So you'd be wanting todo this. It's, it's hard to do
within an organization, becausewe don't really have prices. If
I if you announce to a certaindepartment that you're going to
now hit them with a bill fortheir energy use, there would be
(12:50):
a lot of resistance, but alsothey would ask the question,
well, what can I do to changeit? So one of the things you
have to do in designing a carbonprice is you have to make sure
the person who's bearing theprice actually has the ability
to change things. So with UB, wedon't, you and I or department
has don't have the ability tochange the heating source. That
(13:11):
has to be bad building bybuilding. So it's more of a UB
level thing. Yes, and and UB isalready moving to reduce its
greenhouse gas emissions byswitching its energy
consumption. So that's good, andso eventually you won't have to
price it, because already COVIDReduce it so that say, yes,
Vennela Damarla (13:30):
yeah. So moving on to next question. You employ
diverse methodologies such aslife cycle assessment and cost
benefit analysis. Could you walkus through how this approaches
inform decision making inenvironmental projects?
Dr. Michael Shelly (13:47):
Okay, I don't do so much of the life
cycle analysis. Obviously. Dothat. I do. I've done the cost
benefit. I teach cost benefit.
Cost Benefit is a way of pullingthe all the information together
in order to make a decision. Sowhat I would typically do when I
was working in consulting was Iwould do the environmental cost
benefit analysis of projects inin places like China and
(14:07):
Morocco. And what my role was,sometimes, I'd have to do the
financial analysis, whichlooking at the costs that
companies actually pay out ofpocket, you know, for energy,
labor and all the rest, and puttogether a balance, balance,
what they call pro forma balancesheets and income statements and
such that it's not really myspecialty, but sometimes how to
(14:27):
do it, but I used it, but it wasmy specialty, was to take into
account these externalities. Soif, for instance, we were going
to build or the AsianDevelopment Bank or the World
Bank was going to build a watertreatment plant that would have
health benefits, right so peoplenow drinking health or clean
water, there will be less casesof illness, maybe fewer deaths.
(14:50):
And we would try and estimate,using literature values, how
many extra cases of or how manycases of illness were prevented,
how many deaths. Were prevented,we put a value on those, and we
would typically use it again,literature values, because
extremely expensive do your ownstudies, and World Bank and
Asian development bank wouldn'tpay the money required to do
(15:11):
that. So you just use valuesfrom the literature. And then we
would build those in. So itwould make projects that improve
public health, through improvingthe environment, would make them
much more attractive. Projectswhere it was like we worked one,
one which was a coke oven inChina, make them much less
attractive because they'd begenerating a lot of pollution.
(15:32):
And sometimes you get thestrange situation where, with
the coke oven, we were going toreplace an old one with a new
one, and the new one were muchless polluting. So there's
actually an environmentalbenefit in the sense of
reduction in harm from moving tothe newer technology. So I would
work that out. Then we'd look atthat over time, you know how it
(15:53):
occur over time? And then wewould discount it, would take
the present value of that andbring it back. That would go
into a report, which the WorldBank and Asian Development Bank
boards would then review. And sowhat would happen with
environmental projects,sometimes is in terms of the
financial side of things, it maynot look like it's very good,
(16:13):
because the cost would begreater than the financial
benefits, but once you added inthe environmental benefits, it
became very beneficial, so Iwould obviously capture those
costs that aren't captured thefinancial analysis, because they
relate to externalities.
Vennela Damarla (16:31):
Okay,can you share an example where valuing
ecosystem services usingwillingness to pay methods led
to actionable insights?
Dr. Michael Shelly (16:40):
Well, yeah, some examples have come to mind.
Just before I joined UB, I wasworking on some projects related
to the impacts of oil spills.
And the way that one went was, Ithink, in an example, some
refuge the refugee beach spillin California in the mid 2010
there an offshore pipelineruptured, as I recall, and oil
(17:04):
came ashore, and people couldn'tuse the beach. So the question
came, well, how muchcompensation should the pipeline
company give to the state ofCalifornia to compensate people
for that lack of access to thenatural resources. The way that
was valued was a survey was doneover the internet of people at
(17:29):
Arsen where they went to inCalifornia. So we'd what they
did was they would click on allthe site they have a map, and
they click on all places theyvisit, say when they visited,
and they were to give someinformation about themselves,
where they lived, and theirincome and such like. And from
that, you could deduce a fewthings. You could deduce how
much it cost them to get to anarea, like in terms of the
(17:51):
travel costs, and in terms ofhow much time they had to give
up, and there's value to time.
So we'd work that out. And thenyou would look at how the
visitation rates were dependedupon both their income and how
far they had to travel and thecharacteristics of these various
(18:11):
areas they went to. So I myparticular job was to get all
the information about thecharacteristics of all these
alternative beach sites forpeople go to in California.
Another I was also involved inhiring a helicopter pilot whose
job was to fly 300 meters out,100 meters up from from the
coastline, and fly along everyday and take pictures. And from
(18:34):
that, we could figure out howmany people were using the
beach. This was, this is a yearor two after spill, some people
back using the beach. So we canget a sense of what the baseline
visitation rate is. We would useall this information in a
statistical model to figure outhow many visits would go to a
site, and how that was affectedby its distance from people, the
(18:55):
characteristics of that site andother sites they might go to.
And then you could put a valueon features of an area, like how
big the beach is, how nice theview is, whether it's got picnic
area, you know, this sort ofthing. And you could figure out,
if I added, if I had a site thatdidn't have, like, a picnic
(19:17):
area, if I added the picnicarea, how many extra visits
would I get? So now you go backand you say, Okay, I've done my
helicopter flight. I figured outhow many people should have been
using the beach on a good day. Iknow nobody was. I figured out
how many trips are lost, andthen looking forward to say,
okay, the beach is now clear andrestored, and it's looking okay.
But you owe me, the pipelinecompany. You owe me or the state
(19:37):
of California for all thosevisits that did not happen. So
you need to do something togenerate more visits to the to
these sites in the future. So wehave figured out from our model
that these amenities at thesesites will generate enough extra
visits to compensate for thevisits that were lost when you
(19:58):
boiled the beach. So. So new,the pipeline company now have to
pay for those you have to payfor the bike path, you have to
pay for the picnic area. Youhave to pay for like, maybe put
more sand on the beach. Andthat's, that's how we use
environment economics to get atpeople's valuation of not only
the natural things, but thethings that we can control, like
the amenities at the site. Andwhat we do is we, what we did
(20:19):
was we made the pipeline, wemade the claim against the
pipeline coming to make themchange some of the
characteristics of sites toincrease number of visits to
offset the loss.
Vennela Damarla (20:28):
Yeah, it was very interesting to know all
this factor come underconsideration when you're
deciding cost benefit analysis.
Okay, moving on to nextquestion, how do you incorporate
habitat equivalency analysis inyour project? And why is this
method particularly useful forenvironmental impact studies?
Unknown (20:49):
Okay, habitat equivalence analysis is
something similar to what I justtalked about. So if there's a
pollution incident of some kind,then one of the first things
that happens as part of anatural resource damage
assessment processes, theecologists will go out and they
will figure out how much damagethere is. They compare what's
there after pollution comparedto what should have been there.
(21:11):
It's called the baseline. Andthey look at the trajectory of
the damage. In other words,would it get better by itself?
Will it not get better byitself? And then there'll be
some remediation, but it might,but there's been a loss of of
those natural resource servicesin a period when it was damaged,
and there might be somecontinuing loss if we can't
completely repair the damage. Soin situations where a state or
(21:32):
federal entity owns the land onbehalf of the American people,
there will be a law or therewas, there will be a case before
the court is going under thenatural resource damage
assessment process. And whatwe'll do then is just like I
talked about how we wouldimprove the beach areas, well,
we will talk about, how can weimprove that area. So I worked
(21:55):
on a on an instance of this inthe Middle East, back in 1990 91
Iraq released oil into theArabian Gulf, Persian Gulf, and
this damaged the beaches inSaudi Arabia and Kuwait. And so
we developed, my company,developed a claim against Iraq
on behalf of these two countriesfor nature preserves. The idea
(22:19):
is we take a pair of pieces ofthe beach that had not
previously been protected. Wewould protect it. We would then
have biologists there to makesure it was stayed in a good
condition. We'd have visitorcenters. We'd have a research
lab and things like this. And wewould say this, you know, we've
improved the service of thearea. We've approved the access
of the people to naturalresource services. And then we
sent the bill through the UnitedNations Compensation Commission
(22:43):
to Iraq, there was a settlement,and Iraq ended up funding these,
these nature preserves, coastalnature preserves,
Vennela Damarla (22:51):
yes, okay, so environmental economist, it's
not just restricted to Justgiving the claims or giving the
cost benefit analysis. It's likeyou take a lot of factor under
considerations in order to givethe cost benefit analysis. Okay,
(23:11):
moving on to next question. Youworked on high profile cases
like assessing natural resourcedamage after the Gulf War. What
lessons did you learn from thisexperience that inform your work
today.
Dr. Michael Shelly (23:22):
Okay, so I've worked on a number of
aspects of that, but one that'smost relevant to UB is that I
was part of the team thatdeveloped a health claim
resulting from the Gulf War from1990 to 91 on behalf of the
Kingdom of Saudi Arabia. Andthis had a UB component. There's
a person called Dr Richard Leefrom UB who was a member,
(23:44):
leading member of the team.
There were two parts of the teamthat work on the health claim.
There was the epidemiologicalquantification team, I think you
would call it. They were. Theirjob was to quantify the number
of cases of illness andmortality arising from the air
pollution from all these from aburning oil wells in Kuwait that
(24:04):
the plume came over SaudiArabia. So that was Dr Richard
Lee, and he was working inconjunction with the Bloomberg,
Bloomberg School of PublicHealth at Johns Hopkins, guy
called Samit John summit ledtheir team, and they organized a
massive surveys Saudi Arabia,household survey, when I went
(24:26):
around and asked people abouttheir health, and asked them
about whether their health hadbeen affected by the smoke
plumes. And so they developedestimates of the additional
number of cases of things likelung problems, heart problems,
etc, etc. I was my team'sevaluation team, and our task
was to put a value on all theseextra cases. And this was not
(24:48):
easy, because Saudi Arabia has apublic health system where they
don't actually charge people. SoDr Lee and his team. Came up
with number of cases, and thenwe multiplied them by the prices
that we had developed, and theclaim that came out to be $18
billion back in 2005
Vennela Damarla (25:08):
that's a really huge amount. And then it seems
like a very complex process,because, and there is a lot of
work that had to be done
Dr. Michael Shelly (25:18):
oh yeah, we, you know, until the last minute.
We didn't we pull it off. I canremember going over to going
over to Saudi Arabia. We wereflying through London. I had one
of my team members, and he saidto his we're going. I said, I
know that you can get this done.
And I said, Well, we've got nowe've got no other plan, so we
better get it done. And we didmuch get done, mostly because of
the hard work of my colleagues.
Vennela Damarla (25:37):
Yeah, it just seems like because here it's
easy because we have insurance,and then there are so many such
resources available where, likeyou said, that's a huge task,
considering there are noinsurance, and then you have to
start everything right from stepone, Yeah. How long
did it take for you to to come
Dr. Michael Shelly (25:53):
and that's what made difficult, because
obviously there were otherpeople involved in this process,
so The Columbia School of PublicHealth was hired by the United
Nations to sort of look at ourclaims. And of course, they had
huge questions about the survey.
And could you actually surveyinto conclusion that, or to make
an estimate of the amount thatpeople then about 10 years, 12
years after the event, and getmeaningful answers? They had a
health economist who was was soI don't know if it's the right
(26:16):
way to value these things. Sothere was a lot of arguing back
and forth, typically in theenvironmental claims, not the
health ones, but theenvironmental claims. What this
process would result in in quitegetting 10 cents on the dollar.
In other words, they get about10 cents for every dollar they
claimed. That was just the wayit seemed to work out.
(26:45):
you have mentioned, $8 billion
Unknown (26:47):
beginning to from beginning to end, it was
probably about seven months.
Vennela Damarla (26:52):
Okay, that's, that's actually very long, yeah.
Moving on to next question. Yourwork spans both natural and
engineered system. What are theunique economic and
environmental trade offs whenworking in these two domains?
Well, every engineering projectlike a wastewater treatment
(27:13):
plant or a water supply or aroad or anything has an
environmental consequence, soyou have to trade off the
benefits and the cost. So youhave to say to yourself, how
much benefit do we get from,say, a wastewater treatment
plant compared to its cost? Andso we have to, we have to look
(27:36):
all these trade offs, and wehave to ask ourselves, once you
take into account the widersocial implications of project?
Is it worthwhile so? And usuallyit is. So I've done this on a
minor scale. When the EPA inthis country looks at changes in
health regulations, you know,especially air pollution, they
will look at the healthbenefits. And health benefits,
(27:58):
by the way, are the largestsingle benefit, when you do it
in dollar terms, benefitcomponent, any cost benefit
analysis, and they're nearlyalways so large with these
things that they more than dwarfthe costs. So when you get so
and one of the things thatalways, I think is wrong is that
whenever say EPA, that says it'sgoing to tighten up regulations
(28:20):
you'll get the industries willcomplain about, oh, we can't
afford the extra cost and this.
So the reporters will ask, youknow, the epi Oh, of the
government, how can you imposethese costs on people? They say
they're going to move theirindustries bubble, but they
really need to ask anotherquestion, which is, of the
people who are doing thepollution, they're going to get
regulated. How can you justifycontinuing things as you're
doing them, when you now knowthe health costs of all your
(28:45):
activities, don't you think thatmaybe you should change your
behavior, right? So you've gotto put the, you've got to put
the put it on the other thought.
You've got to put it on theother party. Yes.
So what advice would you give tostudents or young professionals
aiming to make a meaningfulimpact in the field of
(29:06):
sustainability?
Dr. Michael Shelly (29:09):
Well, first of all, come to you because
we've got a great sustainabilitycourse. I think what you're
going to find once you get outthe university is going to find
that you're going to struggle tocome into people. These things
are important. It's not top ofthe mind priority because we're
not aware of it. It's thatexternality thing again. So
(29:31):
whereas in the 1960s 1970s itwould be no problem getting
someone in America to be to talkabout pollution. Now it's harder
to do so because it's far offand they're not quite sure
they're rolling it and suchthat. So you can have struggle
to get people's attention. Also,you've got to concentrate on
what you need to achieve and whyyou need to achieve it. So
(29:53):
that's where some of this costbenefit analysis, and let's
think about externalities. Sowhat can a company actually
achieve? What can. Do, what'sthe benefit of doing such a such
a thing? And often you're goingto be in a situation where there
isn't a financial benefit to thecompany. So you're gonna have to
persuade people, and then you'regonna have to counter old ideas.
You're not gonna get people.
You're gonna have to deal withthe doomsters, the ones who
(30:14):
think the world is coming to anend, and you're gonna have to
deal with the other people whothink there's no problem. So
you're gonna have to, sort of,you're gonna have to do a role
of educating people to get asense of what you can do and why
you should do it.
Vennela Damarla (30:27):
Well, that's the biggest part what you can do
and what you should do, yeah. Imean, you really have to make
people understand why that isreally important,
Dr. Michael Shelly (30:36):
yeah. And it may not be obvious. That's not
because the sectionality thing,
Vennela Damarla (30:39):
yes. So from an economist point of view. What
are the most significant policyor market changes needed to
accelerate sustainabilitypractices globally?
Dr. Michael Shelly (30:51):
The biggest changes we go on, we look at,
look at, start with climatechange. Biggest thing there is
we need to move away from fossilfuels. We need to do it fast. We
have the technology to do it. Wejust don't want to do it, and so
we have really got to figure outhow to do that. I've been
thinking about this, and I seean analogy between and I sound
(31:14):
strange, but between the need toreduce greenhouse gas emissions
and smoking. The social norm haschanged, and it was no one thing
that did. It was a whole publiceducation effort which people at
UB were involved in. And we needthe same sort of thing with
climate change. It's just not atthe top of people's minds, and
it's more difficult with climatechange, because the harm that
(31:36):
you'd you know, the balance ofthe harm, is much more to other
people than to yourself. So youcan tell the smoker where you
know you're smoking and, youknow, make yourself sick. But
you can also affect otherpeople, but where it's going to
affect them, that's reallydirect, right? But with climate
change, it's not going to havemuch of an impact. You know, if
there's 100% of harm, you'reonly going to get 1% of it.
Everybody else is going to getthe remaining 99% so it's a
(31:57):
harder deal, but we need thatpublic education. We need to
bring it to the point wherepeople ask themselves, oh, you
know what, I'm I'm going to if Ido this, I'm going to end up
emitting more carbon dioxide andother greenhouse gasses, almost
this, this climate change issueis almost like a public health
issue. We need to educate thepublic about the harms of their
(32:19):
behavior. It's behavioral changeis going to be key to this. So I
think there's a synergy therewith the Public Health Health
Department,
Vennela Damarla (32:29):
yes, so you have mentioned that we have to
stop fossil fuels as immediate.
I mean, immediate action has tobe taken. We do have resources.
But you have also mentioned thatyou told nobody is really making
any action to change about it.
Unknown (32:47):
There's action, but it's not sufficient. Okay.
Vennela Damarla (32:51):
Okay, so what do you think we should do more
in order to do reduce that?
Dr. Michael Shelly (32:57):
Well, on a on a personal level, what we can
do, especially in thedemocracies, is we can start to
take this as an issue that wehave to take responsibility for,
and we vote accordingly. So wewouldn't vote for people who
don't intend to take action. Wewould tend to favor the person
who would take action. But that,as I say, requires us to take on
(33:17):
a certain personalresponsibility. So that's the
education part of it, that'sprobably the most important
thing.
Vennela Damarla (33:24):
So yes, that's true. Moving on to our next
question, having worked acrossdiverse geographies and
industries, what motivates youto continue pushing boundaries
in your research and teaching?
Unknown (33:37):
Well, it's curiosity, really. I mean, you just get led
by curiosity and also concernabout issues, as I keep
mentioning, climate change bias.
These are these are these arecosts we're imposing on future
generations, and sometimes it'shard to change our ways to to
reduce those costs, butsometimes it's easy. And I think
we have to bear in mind that wewe don't want to be complacent
(34:00):
about future generations andpass with, like passing the bill
to somebody else, just likesitting down at a restaurant
having a nice meal, and thenpassing the bill to the this to
another person, and just walkingaway. They were sort of, we're
sort of doing that with just thefuture generations. So we're
getting all the benefit and theyget the bill. So we've got to,
so that's what, that's what sortof drives me on I think we've
(34:20):
got to change that. It's it'sproving to be a frustratingly
slow process, because I don'tthink it's as individuals,
enough of us are actually takingthis as a priority or even
something we need to thinkabout. I joke with my friends
that if we worried as much aboutthese issues as we worry about
(34:42):
what we're going to have fordinner tonight, we would have
this solved. Yes.
Vennela Damarla (34:48):
Can you share your thoughts on future of
carbon markets and theirpotential to drive global
decarbonization
Unknown (34:56):
carbon markets where they've traditionally with this
two. Sorts. There's one is whereyou have some big polluters like
power plants, and you get a whatI call a cap and trade program,
which is where the regulatoruses the government will set a
cap a total amount of greenhousegasses that can be emitted in a
year. And typically, whatthey'll do is they'll make that
work. They will. They'll makethis come down over time and
(35:19):
industry when it's going toproduce greenhouse gasses, has
to go and buy an allowance forevery ton, and those allowances
going to be less and less everyyear, because the price, because
the cap is going down, and thegovernment's going to issue
fewer allowances. So whathappens then is the price to
industry of buying thoseallowances goes up, so the price
of pollutant goes up. So that'sone example of car market, and
(35:39):
that's worked quite well asworked well in Europe. They've
got one in California. Issuewith those typically is, is that
the politicians don't wish tomake the price too high. They
get a lot of pushback fromindustry because some people
don't like buying taxes, and sothey've been a little too modest
in their demands. Both theEuropean system seems to be
(36:00):
working. Then the other way youcan get carbon markets is when
you have a situation where onepart of the world has to reduce
its greenhouse gasses. Inanother part of world isn't
under an obligation to do so.
Another industry, perhaps isn'tunder an obligation to do so,
but they do so anyhow, and thenthey get paid to do it. So for
(36:20):
instance, if we had a situationwhere there was a country that
was thinking about a poorcountry that was thinking about
electrifying its system, andthey could buy a coal fired
power plant, or they could putin maybe solar panels and wind,
and more expensive to solarpanels and wind, if they did
that and reduce greenhousegasses, even though I didn't
(36:41):
have to. Maybe someone, aregulated industry from the
richer country might pay forthose reductions, might pay them
some money and then take thebenefit back home, saying, hey,
not only did I reduce my ownpollution here in the United
States, I also reduce pollutionin that country over there, and
I get some I should get somebenefit. I can count that
towards my pollution reduction.
(37:03):
Those are two any the first sortof been working quite well. The
second sort had where it's whereyou might have entities in
different countries, or youmight have one regulated
industry and one not regulatedindustry that has not worked so
well, partly because of concernsabout would the unregulated
entity have reduced itspollution anyhow? And that's hit
(37:25):
a lot of problems.
Vennela Damarla (37:26):
Okay, moving on to final question, if you could
achieve one major milestone inyour career related to
sustainability, what would it beand why?
Dr. Michael Shelly (37:37):
I would say the thing that gave me the most
hope, it sounds weird, is theinflation Reduction Act of 2022
that was a US act thatimplemented, by international
standards, a huge program toshift the United States away
from generating greenhousegasses. I think the target was
(37:59):
to reduce greenhouse gasses by30% by the end of this decade,
and was sort of on course to dothat, and that had some
innovations in there. It wasmuch more of this paying people
to do the right thing, and muchless emphasis on taxes and
quotas and such like. And itseems to be working. So the
United States is going to, isstarting to put together battery
(38:19):
factories for cars and movingespecially on the car side of
things, there's been more plansto do renewable energy and such
always hits barriers. So inrenewable energy, hitting
barriers with with thepermitting system and
environmental assessment system.
So that's creating barriers, andyou get lots of pushback because
(38:39):
this externality thing, what'llhappen is somebody announces,
oh, we're going to put a solarpanel farm just across the road
from where you live. And I don'twant that. That's going to be an
eyesore. Well, people don'tthink of the consequence. Well,
if that wasn't built, then theextra energy would come from a
gas fired power plant somewhereelse. So you're by preventing
(39:00):
this thing your produce, you'regoing to add to greenhouse gas
emissions somewhere else. Sothere's a cost to what you're
doing. And the other way wedon't think about it also is
we're like, well, well, they'vegot a case. I mean, if there's,
there's going to be an ugly,ugly thing just across the
street. And that's imposing. Whydon't we compensate them
somehow. Why don't we maybereduce their property taxes, buy
(39:23):
them a car, do something tocompensate because otherwise
what happens is a small group ofpeople who are going to suffer
relatively small costs will beso motivated they can stop
something that everybody elsewould want to happen. So
sometimes a little bit ofbribery substitution might be
coming handy.
Vennela Damarla (39:44):
Yes, thank you so much. Dr Michael Shelley, any
final concluding thoughts thatyou would like to tell to our
audience?
Dr. Michael Shelly (39:53):
Okay, well, your audience probably going to
be in public health and onlygoing to be an environment, and
that's extremely important, Iwould suggest. That you should,
you should link up with yourlocal economists as well,
because often they can help youto put some some costs on these
things, and that will oftenswing the argument. It's one one
(40:13):
thing people, there is somethingwhen you do economics, you find
that something strange inhappens in people's minds. When
you put $1 or a pound or a rupeesign in front of a number,
somebody that number gets somebigger significance, and perhaps
it should. So it's one thing tosay that, Oh, we will, you know,
if implementing my idea willreduce cases of a disease by
this much, or might we preventthis many deaths that will have
(40:36):
an impact. But if you then tryand monetize that, and you say
it's going to be worth millionsof dollars, or 10s of millions
of some of that as a addedbenefit as well. So it's a good
way to think about things. Andsometimes, what if you're
proposing something where youcan have a health improvement,
which is fairly minor, but it'sgoing to cost an awful lot of
money, well, maybe that's notsuch a good use of society's
resources, because the moneythat's used on that health
(40:59):
program, maybe that could havebeen more useful to use in, say,
an education program or inanother health program. There's
always a cost to these things.
See, you got to look at thecosts and the benefits, and
that's where your local,friendly economist. We have an
economics department here.
That's where they can help.
Vennela Damarla (41:12):
Yeah. Thank you so much. Dr Michael Shelley, for
your time and sharing theknowledge about environmental
economics and then providinginsights about a lot of things.
Thank you so much for your time.
Thank you. Thank you. See you inthe next episode of Buffalo
health cast
Hi. Welcome to Buffalo healthcast. This is
Vennela Damarla, PodcastProducer today we have Dr
Michael Shelley, a seasonedenvironmental economist with
over 25 years of globalexperience. Dr Shelley is a
research assistant professor atUBS renew Institute specializing
in environmental impactanalysis, recycling and the
(00:24):
economics of sustainability. Hiswork has shaped projects ranging
from climate change mitigationto valuing ecosystem services,
and he is passionate aboutpreparing future leader in this
critical field. We are excitedto hear his insight on
environmental economics andsustainability. Thank you so
(00:45):
much. Dr Michael shelly forjoining us today.
Dr. Michael Shelly (00:48):
Well, thank you for hosting me.
Vennela Damarla (00:50):
Thank you so let me start with the first
questions. Can you share whatinspired you to pursue a career
in environmental economics andhow your experience on five
continents shape yourperspective on sustainability.
Unknown (01:06):
Okay, well, to tackle the first one, I ended up in
environmental economics, sort ofby accident. I started going out
with a young lady in London manyyears ago who later became my
wife, and it turned out sheworked in environmental
consulting, an environmentalcompany, consulting company, and
(01:27):
I got a job there too. And sinceI was an economist, I ended up
doing environmental economics.
So I ended up learning a lotabout environmental economics
through working on the job.
Thing about sustainability isreally about balancing two
things. One is human welfare. Inother words, people, how well
people are living and and theenvironment, or the biosphere,
(01:48):
you're sort of like trying tomanage that relationship. So
when I went to China, forinstance, back in the 1990s
there was still the viewpointthat smoking chimneys were a
sign of prosperity. And I said,this was a good thing. Back here
in the richer countries, therehad been a movement to try and
stop economic growth. It's verymuch a big concern about
(02:09):
stopping economic growth becauseit was damaging the planet. And
back in the 1970s when this viewwas very current over here, the
people living in the not so richcountries, they sort of rebelled
against this idea. They said, soyou know, we were pretty poor,
and you're telling us thatgrowth has got to end. Does that
mean we always have to staypoor? We would like to have the
same opportunities as you? Sothat's where the whole
(02:31):
Sustainable Development ideacame from. And it's a little
more possible to understand itif you've seen it from the
perspective of some of thepoorer countries who wish to
raise the living standard oftheir people than it is from
over here, where we're alreadypretty rich. And so the idea of
ending economic growth and suchlike, it doesn't seem so bad to
us. So that's how it affectedme, also different concerns of
(02:52):
different places. So when Iteach course, when I teach
students about pollution and airpollution and such like, here in
the United States, I always haveto begin with pictures of how it
used to be here, 50 years ago,because that you don't see
pollution in the United States.
You don't the air isn't orangeor, you know, so thick that you
can't see across the street. Youdon't have streams that have
(03:15):
got, like, greasy sheens onthem, full of plastic and
garbage. You don't really seethat very much. You used to. You
don't see it now. So sodifferent parts of the world
have very different view andwhat's meant by sustainability.
So anyway, long answer, short
Vennela Damarla (03:37):
yeah, that's an interesting story. Dr Shelley,
question,yeah. So moving on to next
question, with over 25 years inthe field, how has the role of
environmental economist evolved,particularly with the raise of
climate change awareness?
Dr. Michael Shelly (03:52):
Oh, it's changed a lot. Push going back
to my earlier answer in the 19early 1990s when I first started
getting into this, the concernwas very much about what they
call conventional they callconventional pollutants. That
would be your particulate matterin the air. That would be sulfur
dioxide nitrous dioxides, itwould also be water pollution,
(04:14):
because they were seen as mostimmediate threat. But the
science on climate change hasmoved on, and we now see that as
the bigger threat, that and aloss of biodiversity. They're
now seen as the two big, bigareas.
Vennela Damarla (04:27):
Okay, thank you. Dr Shelley, that was very
insightful to know. So you havementioned a lot about the
projects, ongoing project, howthe climate change is 20 years
back. So what role thatenvironmental economist have. Do
you think that they might play acritical role in this aspects?
Dr. Michael Shelly (04:47):
This idea of an externality. An externality
is where I do something and itharms you in and I don't. Have
to pay a cost for it. So forinstance, if I'm driving a big
diesel truck for an urbanneighborhood, I'm going to be
(05:07):
pushing out particulates, andI'm going to be causing health
problems for people who livealong that road. But I receive,
I have no cons. It's noconsequence to me. I don't have
to pay a bill for it. I don'tget told off for it. I don't get
fined, it's no consequence tome. And one of the things we
find with human behavior is thatif we don't have to face the
consequences of our ownbehavior, we will tend to overdo
(05:32):
the damaging behavior. So one ofthe things the environment
economics gives you is the ideawhere you're imposing a cost on
someone. So it's one thing tosay, Oh, I can't afford to
change something, but then youshould ask the other question,
well, if you're harming people,what do you propose? How do you
propose to reduce the harmyou're causing? And so with
(05:53):
climate change is a classicexample. So we see that say
certain Pacific islands are nowworried that sea level is going
to rise and engulf the entireisland. They have to move away.
We see terrific droughts inother parts of the world. We saw
floods in Pakistan not so longago, which were attributed to
climate change. So we'reimposing costs, enough that we
(06:13):
don't have to bear any of thosecosts. Well, bear much of those
costs, so we just ignore them.
So one thing that theenvironmental economics does is
it allows you to put things onthe other side instead of I have
to justify to you why you haveto cut your pollution. I ask
you, well, how can you justifyharming people? You know, what
are you going to do about it? Sothat's, I think it's probably
(06:34):
one most important idea.
Vennela Damarla (06:38):
Yeah,Thank you so much, Dr Shelley for
simplifying it and then makingus understand what actually
Environmental Economics does andmoving on to next question. At
the Renew Institute, you focuson plastics and tire recycling,
among other topics, what aresome recent advancements or
challenges in this area that youfind particularly impactful?
Dr. Michael Shelly (07:00):
Okay, so we don't do much recycling. Only
about 8% of the plastic inUnited States is recycled, as I
recall, and we don't reallyrecycle tires. So using that
argument about or that idea ofthe externality, we have to ask
the question, What harm does myconsumption of plastics and
(07:23):
tires have on other people? Whatconsequences Am I not paying
for, and are they sufficientlylarge that I should change my
behavior? And that an answerthat varies in different parts
of the world. So in the poorercountries of the world, they
have a problem with trashcollection. So things tend to
(07:44):
get discarded into theenvironment. You know, when you
hear about the all those bits ofplastic floating in the Pacific,
and you hear about the garbagepast a lot that's actually come
from that would be the sort ofthe Asian side of the Pacific,
because they don't haveparticularly good garbage
control. And it gets into therivers and then gets washed out
to sea. United States, we don'thave the problem with the
(08:05):
garbage so much. What we have aproblem with is more than micro
plastics. This is where plastic,some plastics do get released
into the environment, and theyget into small pieces. And we're
finding that animals wereaffected by we're affected by
and we've got bits of plastic.
But as an economist, I didn'tsay, Okay, what's the
substitute? If I'm not going tobuy a plastic bottle of water,
(08:26):
what's the substitute? Well,maybe we get people to renew, to
change their containers, butthen the incentives are all
wrong. What I mean by that isthat the reason we, for
instance, went over from glassto plastic is because glass is
more expensive to produce, soit's cheap to produce plastics,
and we can make plastics verycheap. That's the problem with
(08:47):
plastics. They're also likely toget relatively cheaper, because
as we stop burning oil and gasfor to produce energy for cars
and heat in our homes, and allthe rest of the producers of
those substances are going towant to find another market, and
so they're building big plasticplants at the moment to produce
more plastic they want us toproduce if you use more plastic.
Vennela Damarla (09:08):
So you think banning plastics would make any
difference.
Dr. Michael Shelly (09:13):
Always, certainly make a difference. The
thing is, what would we use as asubstitute? So if we were to use
glass, the glass is very energyintensive material. It's also
heavy, and it would, and sotherefore we'd end up using more
energy. On the other hand, wemight go over to more reusable
containers. So sometimes, likewith Starbucks, I used to have a
reusable cup, and I'd go back,and then they started telling
(09:34):
me, Well, for hygiene reasons,we can't take your cup back. So,
you know, so I could, couldn'tuse the reusable cup. So we
would have to change otherbehaviors as well to make these
changes. Yeah,
Vennela Damarla (09:44):
okay, your research also includes studying
the social burden of poweroutages. Could you elaborate on
this issue and its broaderimplications for sustainability?
Dr. Michael Shelly (09:55):
The thing is that in in the richer countries,
by. Our constant access to poweris just a given. We just expect
it. We built our lives aroundit. So if, for some reason, the
power is cut, the electricity iscut off, it has bad impacts. So
(10:17):
you really don't want that tohappen now, as it's as a utility
or somebody's looking to invest,you have to look at the benefits
of an investment, and sometimessome of those benefits aren't
expressed in market. Prices.
Nowhere. There is no market.
There is no you can't say, oh,this costs them $25 or whatever.
Data isn't there. So what we'vebeen doing is we've been
(10:39):
interviewing people Texas andPuerto Rico, and we've been
asking them about recent power,just recent to them. And so we
would ask them, Well, how did itaffect your ability to do this?
You know, like to cook, yourability to communicate how much
extra money, how much extra timeand such like. And we try to
(11:00):
find out how much harm it doesto people to have their power
cut off. And that can help toguide investment decisions.
There is this idea that thereare certain groups in society
that would be most likelydamaged, and you can easily
identify them. We're findingthat's not so easy to do so, so
you have to basically do asurvey, and you figure out sort
(11:22):
of people who are harmed. And sowe've been finding things like,
it's people with children, it'sbetween five and 17, it's people
who live in rentedaccommodation. That should be a
very big predictor of how muchburden you're going to have.
Vennela Damarla (11:36):
Okay, so how does your work with the ub
carbon pricing group contributeto regional or global climate
change mitigation of efforts.
Okay,
Unknown (11:47):
so putting up.
Economists are very keen onputting the price on carbon
because they're trying tocapture that externality.
They're trying to say, Well, ifyou emit a ton of CO two,
although you may not be aware ofit you're actually causing. Say,
I think the late assessment isabout $130 of damage around the
world for each time you emit. Sothe idea is, if people have to
(12:07):
face the prices for these ifthat's built into the price,
that will change their behavior.
What they'll do is they'llreduce consumption, or reduce
activities produce greenhousegasses or and they might switch.
So for instance, somebody, if weput a higher price on gasoline
to reflect it's the damage it'scausing that might encourage
(12:30):
people to go over to to anelectric car. So that's, that's
the idea. So you'd be wanting todo this. It's, it's hard to do
within an organization, becausewe don't really have prices. If
I if you announce to a certaindepartment that you're going to
now hit them with a bill fortheir energy use, there would be
(12:50):
a lot of resistance, but alsothey would ask the question,
well, what can I do to changeit? So one of the things you
have to do in designing a carbonprice is you have to make sure
the person who's bearing theprice actually has the ability
to change things. So with UB, wedon't, you and I or department
has don't have the ability tochange the heating source. That
(13:11):
has to be bad building bybuilding. So it's more of a UB
level thing. Yes, and and UB isalready moving to reduce its
greenhouse gas emissions byswitching its energy
consumption. So that's good, andso eventually you won't have to
price it, because already COVIDReduce it so that say, yes,
Vennela Damarla (13:30):
yeah. So moving on to next question. You employ
diverse methodologies such aslife cycle assessment and cost
benefit analysis. Could you walkus through how this approaches
inform decision making inenvironmental projects?
Dr. Michael Shelly (13:47):
Okay, I don't do so much of the life
cycle analysis. Obviously. Dothat. I do. I've done the cost
benefit. I teach cost benefit.
Cost Benefit is a way of pullingthe all the information together
in order to make a decision. Sowhat I would typically do when I
was working in consulting was Iwould do the environmental cost
benefit analysis of projects inin places like China and
(14:07):
Morocco. And what my role was,sometimes, I'd have to do the
financial analysis, whichlooking at the costs that
companies actually pay out ofpocket, you know, for energy,
labor and all the rest, and puttogether a balance, balance,
what they call pro forma balancesheets and income statements and
such that it's not really myspecialty, but sometimes how to
(14:27):
do it, but I used it, but it wasmy specialty, was to take into
account these externalities. Soif, for instance, we were going
to build or the AsianDevelopment Bank or the World
Bank was going to build a watertreatment plant that would have
health benefits, right so peoplenow drinking health or clean
water, there will be less casesof illness, maybe fewer deaths.
(14:50):
And we would try and estimate,using literature values, how
many extra cases of or how manycases of illness were prevented,
how many deaths. Were prevented,we put a value on those, and we
would typically use it again,literature values, because
extremely expensive do your ownstudies, and World Bank and
Asian development bank wouldn'tpay the money required to do
(15:11):
that. So you just use valuesfrom the literature. And then we
would build those in. So itwould make projects that improve
public health, through improvingthe environment, would make them
much more attractive. Projectswhere it was like we worked one,
one which was a coke oven inChina, make them much less
attractive because they'd begenerating a lot of pollution.
(15:32):
And sometimes you get thestrange situation where, with
the coke oven, we were going toreplace an old one with a new
one, and the new one were muchless polluting. So there's
actually an environmentalbenefit in the sense of
reduction in harm from moving tothe newer technology. So I would
work that out. Then we'd look atthat over time, you know how it
(15:53):
occur over time? And then wewould discount it, would take
the present value of that andbring it back. That would go
into a report, which the WorldBank and Asian Development Bank
boards would then review. And sowhat would happen with
environmental projects,sometimes is in terms of the
financial side of things, it maynot look like it's very good,
(16:13):
because the cost would begreater than the financial
benefits, but once you added inthe environmental benefits, it
became very beneficial, so Iwould obviously capture those
costs that aren't captured thefinancial analysis, because they
relate to externalities.
Vennela Damarla (16:31):
Okay,can you share an example where valuing
ecosystem services usingwillingness to pay methods led
to actionable insights?
Dr. Michael Shelly (16:40):
Well, yeah, some examples have come to mind.
Just before I joined UB, I wasworking on some projects related
to the impacts of oil spills.
And the way that one went was, Ithink, in an example, some
refuge the refugee beach spillin California in the mid 2010
there an offshore pipelineruptured, as I recall, and oil
(17:04):
came ashore, and people couldn'tuse the beach. So the question
came, well, how muchcompensation should the pipeline
company give to the state ofCalifornia to compensate people
for that lack of access to thenatural resources. The way that
was valued was a survey was doneover the internet of people at
(17:29):
Arsen where they went to inCalifornia. So we'd what they
did was they would click on allthe site they have a map, and
they click on all places theyvisit, say when they visited,
and they were to give someinformation about themselves,
where they lived, and theirincome and such like. And from
that, you could deduce a fewthings. You could deduce how
much it cost them to get to anarea, like in terms of the
(17:51):
travel costs, and in terms ofhow much time they had to give
up, and there's value to time.
So we'd work that out. And thenyou would look at how the
visitation rates were dependedupon both their income and how
far they had to travel and thecharacteristics of these various
(18:11):
areas they went to. So I myparticular job was to get all
the information about thecharacteristics of all these
alternative beach sites forpeople go to in California.
Another I was also involved inhiring a helicopter pilot whose
job was to fly 300 meters out,100 meters up from from the
coastline, and fly along everyday and take pictures. And from
(18:34):
that, we could figure out howmany people were using the
beach. This was, this is a yearor two after spill, some people
back using the beach. So we canget a sense of what the baseline
visitation rate is. We would useall this information in a
statistical model to figure outhow many visits would go to a
site, and how that was affectedby its distance from people, the
(18:55):
characteristics of that site andother sites they might go to.
And then you could put a valueon features of an area, like how
big the beach is, how nice theview is, whether it's got picnic
area, you know, this sort ofthing. And you could figure out,
if I added, if I had a site thatdidn't have, like, a picnic
(19:17):
area, if I added the picnicarea, how many extra visits
would I get? So now you go backand you say, Okay, I've done my
helicopter flight. I figured outhow many people should have been
using the beach on a good day. Iknow nobody was. I figured out
how many trips are lost, andthen looking forward to say,
okay, the beach is now clear andrestored, and it's looking okay.
But you owe me, the pipelinecompany. You owe me or the state
(19:37):
of California for all thosevisits that did not happen. So
you need to do something togenerate more visits to the to
these sites in the future. So wehave figured out from our model
that these amenities at thesesites will generate enough extra
visits to compensate for thevisits that were lost when you
(19:58):
boiled the beach. So. So new,the pipeline company now have to
pay for those you have to payfor the bike path, you have to
pay for the picnic area. Youhave to pay for like, maybe put
more sand on the beach. Andthat's, that's how we use
environment economics to get atpeople's valuation of not only
the natural things, but thethings that we can control, like
the amenities at the site. Andwhat we do is we, what we did
(20:19):
was we made the pipeline, wemade the claim against the
pipeline coming to make themchange some of the
characteristics of sites toincrease number of visits to
offset the loss.
Vennela Damarla (20:28):
Yeah, it was very interesting to know all
this factor come underconsideration when you're
deciding cost benefit analysis.
Okay, moving on to nextquestion, how do you incorporate
habitat equivalency analysis inyour project? And why is this
method particularly useful forenvironmental impact studies?
Unknown (20:49):
Okay, habitat equivalence analysis is
something similar to what I justtalked about. So if there's a
pollution incident of some kind,then one of the first things
that happens as part of anatural resource damage
assessment processes, theecologists will go out and they
will figure out how much damagethere is. They compare what's
there after pollution comparedto what should have been there.
(21:11):
It's called the baseline. Andthey look at the trajectory of
the damage. In other words,would it get better by itself?
Will it not get better byitself? And then there'll be
some remediation, but it might,but there's been a loss of of
those natural resource servicesin a period when it was damaged,
and there might be somecontinuing loss if we can't
completely repair the damage. Soin situations where a state or
(21:32):
federal entity owns the land onbehalf of the American people,
there will be a law or therewas, there will be a case before
the court is going under thenatural resource damage
assessment process. And whatwe'll do then is just like I
talked about how we wouldimprove the beach areas, well,
we will talk about, how can weimprove that area. So I worked
(21:55):
on a on an instance of this inthe Middle East, back in 1990 91
Iraq released oil into theArabian Gulf, Persian Gulf, and
this damaged the beaches inSaudi Arabia and Kuwait. And so
we developed, my company,developed a claim against Iraq
on behalf of these two countriesfor nature preserves. The idea
(22:19):
is we take a pair of pieces ofthe beach that had not
previously been protected. Wewould protect it. We would then
have biologists there to makesure it was stayed in a good
condition. We'd have visitorcenters. We'd have a research
lab and things like this. And wewould say this, you know, we've
improved the service of thearea. We've approved the access
of the people to naturalresource services. And then we
sent the bill through the UnitedNations Compensation Commission
(22:43):
to Iraq, there was a settlement,and Iraq ended up funding these,
these nature preserves, coastalnature preserves,
Vennela Damarla (22:51):
yes, okay, so environmental economist, it's
not just restricted to Justgiving the claims or giving the
cost benefit analysis. It's likeyou take a lot of factor under
considerations in order to givethe cost benefit analysis. Okay,
(23:11):
moving on to next question. Youworked on high profile cases
like assessing natural resourcedamage after the Gulf War. What
lessons did you learn from thisexperience that inform your work
today.
Dr. Michael Shelly (23:22):
Okay, so I've worked on a number of
aspects of that, but one that'smost relevant to UB is that I
was part of the team thatdeveloped a health claim
resulting from the Gulf War from1990 to 91 on behalf of the
Kingdom of Saudi Arabia. Andthis had a UB component. There's
a person called Dr Richard Leefrom UB who was a member,
(23:44):
leading member of the team.
There were two parts of the teamthat work on the health claim.
There was the epidemiologicalquantification team, I think you
would call it. They were. Theirjob was to quantify the number
of cases of illness andmortality arising from the air
pollution from all these from aburning oil wells in Kuwait that
(24:04):
the plume came over SaudiArabia. So that was Dr Richard
Lee, and he was working inconjunction with the Bloomberg,
Bloomberg School of PublicHealth at Johns Hopkins, guy
called Samit John summit ledtheir team, and they organized a
massive surveys Saudi Arabia,household survey, when I went
(24:26):
around and asked people abouttheir health, and asked them
about whether their health hadbeen affected by the smoke
plumes. And so they developedestimates of the additional
number of cases of things likelung problems, heart problems,
etc, etc. I was my team'sevaluation team, and our task
was to put a value on all theseextra cases. And this was not
(24:48):
easy, because Saudi Arabia has apublic health system where they
don't actually charge people. SoDr Lee and his team. Came up
with number of cases, and thenwe multiplied them by the prices
that we had developed, and theclaim that came out to be $18
billion back in 2005
Vennela Damarla (25:08):
that's a really huge amount. And then it seems
like a very complex process,because, and there is a lot of
work that had to be done
Dr. Michael Shelly (25:18):
oh yeah, we, you know, until the last minute.
We didn't we pull it off. I canremember going over to going
over to Saudi Arabia. We wereflying through London. I had one
of my team members, and he saidto his we're going. I said, I
know that you can get this done.
And I said, Well, we've got nowe've got no other plan, so we
better get it done. And we didmuch get done, mostly because of
the hard work of my colleagues.
Vennela Damarla (25:37):
Yeah, it just seems like because here it's
easy because we have insurance,and then there are so many such
resources available where, likeyou said, that's a huge task,
considering there are noinsurance, and then you have to
start everything right from stepone, Yeah. How long
did it take for you to to come
Dr. Michael Shelly (25:53):
and that's what made difficult, because
obviously there were otherpeople involved in this process,
so The Columbia School of PublicHealth was hired by the United
Nations to sort of look at ourclaims. And of course, they had
huge questions about the survey.
And could you actually surveyinto conclusion that, or to make
an estimate of the amount thatpeople then about 10 years, 12
years after the event, and getmeaningful answers? They had a
health economist who was was soI don't know if it's the right
(26:16):
way to value these things. Sothere was a lot of arguing back
and forth, typically in theenvironmental claims, not the
health ones, but theenvironmental claims. What this
process would result in in quitegetting 10 cents on the dollar.
In other words, they get about10 cents for every dollar they
claimed. That was just the wayit seemed to work out.
(26:45):
you have mentioned, $8 billion
Unknown (26:47):
beginning to from beginning to end, it was
probably about seven months.
Vennela Damarla (26:52):
Okay, that's, that's actually very long, yeah.
Moving on to next question. Yourwork spans both natural and
engineered system. What are theunique economic and
environmental trade offs whenworking in these two domains?
Well, every engineering projectlike a wastewater treatment
(27:13):
plant or a water supply or aroad or anything has an
environmental consequence, soyou have to trade off the
benefits and the cost. So youhave to say to yourself, how
much benefit do we get from,say, a wastewater treatment
plant compared to its cost? Andso we have to, we have to look
(27:36):
all these trade offs, and wehave to ask ourselves, once you
take into account the widersocial implications of project?
Is it worthwhile so? And usuallyit is. So I've done this on a
minor scale. When the EPA inthis country looks at changes in
health regulations, you know,especially air pollution, they
will look at the healthbenefits. And health benefits,
(27:58):
by the way, are the largestsingle benefit, when you do it
in dollar terms, benefitcomponent, any cost benefit
analysis, and they're nearlyalways so large with these
things that they more than dwarfthe costs. So when you get so
and one of the things thatalways, I think is wrong is that
whenever say EPA, that says it'sgoing to tighten up regulations
(28:20):
you'll get the industries willcomplain about, oh, we can't
afford the extra cost and this.
So the reporters will ask, youknow, the epi Oh, of the
government, how can you imposethese costs on people? They say
they're going to move theirindustries bubble, but they
really need to ask anotherquestion, which is, of the
people who are doing thepollution, they're going to get
regulated. How can you justifycontinuing things as you're
doing them, when you now knowthe health costs of all your
(28:45):
activities, don't you think thatmaybe you should change your
behavior, right? So you've gotto put the, you've got to put
the put it on the other thought.
You've got to put it on theother party. Yes.
So what advice would you give tostudents or young professionals
aiming to make a meaningfulimpact in the field of
(29:06):
sustainability?
Dr. Michael Shelly (29:09):
Well, first of all, come to you because
we've got a great sustainabilitycourse. I think what you're
going to find once you get outthe university is going to find
that you're going to struggle tocome into people. These things
are important. It's not top ofthe mind priority because we're
not aware of it. It's thatexternality thing again. So
(29:31):
whereas in the 1960s 1970s itwould be no problem getting
someone in America to be to talkabout pollution. Now it's harder
to do so because it's far offand they're not quite sure
they're rolling it and suchthat. So you can have struggle
to get people's attention. Also,you've got to concentrate on
what you need to achieve and whyyou need to achieve it. So
(29:53):
that's where some of this costbenefit analysis, and let's
think about externalities. Sowhat can a company actually
achieve? What can. Do, what'sthe benefit of doing such a such
a thing? And often you're goingto be in a situation where there
isn't a financial benefit to thecompany. So you're gonna have to
persuade people, and then you'regonna have to counter old ideas.
You're not gonna get people.
You're gonna have to deal withthe doomsters, the ones who
(30:14):
think the world is coming to anend, and you're gonna have to
deal with the other people whothink there's no problem. So
you're gonna have to, sort of,you're gonna have to do a role
of educating people to get asense of what you can do and why
you should do it.
Vennela Damarla (30:27):
Well, that's the biggest part what you can do
and what you should do, yeah. Imean, you really have to make
people understand why that isreally important,
Dr. Michael Shelly (30:36):
yeah. And it may not be obvious. That's not
because the sectionality thing,
Vennela Damarla (30:39):
yes. So from an economist point of view. What
are the most significant policyor market changes needed to
accelerate sustainabilitypractices globally?
Dr. Michael Shelly (30:51):
The biggest changes we go on, we look at,
look at, start with climatechange. Biggest thing there is
we need to move away from fossilfuels. We need to do it fast. We
have the technology to do it. Wejust don't want to do it, and so
we have really got to figure outhow to do that. I've been
thinking about this, and I seean analogy between and I sound
(31:14):
strange, but between the need toreduce greenhouse gas emissions
and smoking. The social norm haschanged, and it was no one thing
that did. It was a whole publiceducation effort which people at
UB were involved in. And we needthe same sort of thing with
climate change. It's just not atthe top of people's minds, and
it's more difficult with climatechange, because the harm that
(31:36):
you'd you know, the balance ofthe harm, is much more to other
people than to yourself. So youcan tell the smoker where you
know you're smoking and, youknow, make yourself sick. But
you can also affect otherpeople, but where it's going to
affect them, that's reallydirect, right? But with climate
change, it's not going to havemuch of an impact. You know, if
there's 100% of harm, you'reonly going to get 1% of it.
Everybody else is going to getthe remaining 99% so it's a
(31:57):
harder deal, but we need thatpublic education. We need to
bring it to the point wherepeople ask themselves, oh, you
know what, I'm I'm going to if Ido this, I'm going to end up
emitting more carbon dioxide andother greenhouse gasses, almost
this, this climate change issueis almost like a public health
issue. We need to educate thepublic about the harms of their
(32:19):
behavior. It's behavioral changeis going to be key to this. So I
think there's a synergy therewith the Public Health Health
Department,
Vennela Damarla (32:29):
yes, so you have mentioned that we have to
stop fossil fuels as immediate.
I mean, immediate action has tobe taken. We do have resources.
But you have also mentioned thatyou told nobody is really making
any action to change about it.
Unknown (32:47):
There's action, but it's not sufficient. Okay.
Vennela Damarla (32:51):
Okay, so what do you think we should do more
in order to do reduce that?
Dr. Michael Shelly (32:57):
Well, on a on a personal level, what we can
do, especially in thedemocracies, is we can start to
take this as an issue that wehave to take responsibility for,
and we vote accordingly. So wewouldn't vote for people who
don't intend to take action. Wewould tend to favor the person
who would take action. But that,as I say, requires us to take on
(33:17):
a certain personalresponsibility. So that's the
education part of it, that'sprobably the most important
thing.
Vennela Damarla (33:24):
So yes, that's true. Moving on to our next
question, having worked acrossdiverse geographies and
industries, what motivates youto continue pushing boundaries
in your research and teaching?
Unknown (33:37):
Well, it's curiosity, really. I mean, you just get led
by curiosity and also concernabout issues, as I keep
mentioning, climate change bias.
These are these are these arecosts we're imposing on future
generations, and sometimes it'shard to change our ways to to
reduce those costs, butsometimes it's easy. And I think
we have to bear in mind that wewe don't want to be complacent
(34:00):
about future generations andpass with, like passing the bill
to somebody else, just likesitting down at a restaurant
having a nice meal, and thenpassing the bill to the this to
another person, and just walkingaway. They were sort of, we're
sort of doing that with just thefuture generations. So we're
getting all the benefit and theyget the bill. So we've got to,
so that's what, that's what sortof drives me on I think we've
(34:20):
got to change that. It's it'sproving to be a frustratingly
slow process, because I don'tthink it's as individuals,
enough of us are actually takingthis as a priority or even
something we need to thinkabout. I joke with my friends
that if we worried as much aboutthese issues as we worry about
(34:42):
what we're going to have fordinner tonight, we would have
this solved. Yes.
Vennela Damarla (34:48):
Can you share your thoughts on future of
carbon markets and theirpotential to drive global
decarbonization
Unknown (34:56):
carbon markets where they've traditionally with this
two. Sorts. There's one is whereyou have some big polluters like
power plants, and you get a whatI call a cap and trade program,
which is where the regulatoruses the government will set a
cap a total amount of greenhousegasses that can be emitted in a
year. And typically, whatthey'll do is they'll make that
work. They will. They'll makethis come down over time and
(35:19):
industry when it's going toproduce greenhouse gasses, has
to go and buy an allowance forevery ton, and those allowances
going to be less and less everyyear, because the price, because
the cap is going down, and thegovernment's going to issue
fewer allowances. So whathappens then is the price to
industry of buying thoseallowances goes up, so the price
of pollutant goes up. So that'sone example of car market, and
(35:39):
that's worked quite well asworked well in Europe. They've
got one in California. Issuewith those typically is, is that
the politicians don't wish tomake the price too high. They
get a lot of pushback fromindustry because some people
don't like buying taxes, and sothey've been a little too modest
in their demands. Both theEuropean system seems to be
(36:00):
working. Then the other way youcan get carbon markets is when
you have a situation where onepart of the world has to reduce
its greenhouse gasses. Inanother part of world isn't
under an obligation to do so.
Another industry, perhaps isn'tunder an obligation to do so,
but they do so anyhow, and thenthey get paid to do it. So for
(36:20):
instance, if we had a situationwhere there was a country that
was thinking about a poorcountry that was thinking about
electrifying its system, andthey could buy a coal fired
power plant, or they could putin maybe solar panels and wind,
and more expensive to solarpanels and wind, if they did
that and reduce greenhousegasses, even though I didn't
(36:41):
have to. Maybe someone, aregulated industry from the
richer country might pay forthose reductions, might pay them
some money and then take thebenefit back home, saying, hey,
not only did I reduce my ownpollution here in the United
States, I also reduce pollutionin that country over there, and
I get some I should get somebenefit. I can count that
towards my pollution reduction.
(37:03):
Those are two any the first sortof been working quite well. The
second sort had where it's whereyou might have entities in
different countries, or youmight have one regulated
industry and one not regulatedindustry that has not worked so
well, partly because of concernsabout would the unregulated
entity have reduced itspollution anyhow? And that's hit
(37:25):
a lot of problems.
Vennela Damarla (37:26):
Okay, moving on to final question, if you could
achieve one major milestone inyour career related to
sustainability, what would it beand why?
Dr. Michael Shelly (37:37):
I would say the thing that gave me the most
hope, it sounds weird, is theinflation Reduction Act of 2022
that was a US act thatimplemented, by international
standards, a huge program toshift the United States away
from generating greenhousegasses. I think the target was
(37:59):
to reduce greenhouse gasses by30% by the end of this decade,
and was sort of on course to dothat, and that had some
innovations in there. It wasmuch more of this paying people
to do the right thing, and muchless emphasis on taxes and
quotas and such like. And itseems to be working. So the
United States is going to, isstarting to put together battery
(38:19):
factories for cars and movingespecially on the car side of
things, there's been more plansto do renewable energy and such
always hits barriers. So inrenewable energy, hitting
barriers with with thepermitting system and
environmental assessment system.
So that's creating barriers, andyou get lots of pushback because
(38:39):
this externality thing, what'llhappen is somebody announces,
oh, we're going to put a solarpanel farm just across the road
from where you live. And I don'twant that. That's going to be an
eyesore. Well, people don'tthink of the consequence. Well,
if that wasn't built, then theextra energy would come from a
gas fired power plant somewhereelse. So you're by preventing
(39:00):
this thing your produce, you'regoing to add to greenhouse gas
emissions somewhere else. Sothere's a cost to what you're
doing. And the other way wedon't think about it also is
we're like, well, well, they'vegot a case. I mean, if there's,
there's going to be an ugly,ugly thing just across the
street. And that's imposing. Whydon't we compensate them
somehow. Why don't we maybereduce their property taxes, buy
(39:23):
them a car, do something tocompensate because otherwise
what happens is a small group ofpeople who are going to suffer
relatively small costs will beso motivated they can stop
something that everybody elsewould want to happen. So
sometimes a little bit ofbribery substitution might be
coming handy.
Vennela Damarla (39:44):
Yes, thank you so much. Dr Michael Shelley, any
final concluding thoughts thatyou would like to tell to our
audience?
Dr. Michael Shelly (39:53):
Okay, well, your audience probably going to
be in public health and onlygoing to be an environment, and
that's extremely important, Iwould suggest. That you should,
you should link up with yourlocal economists as well,
because often they can help youto put some some costs on these
things, and that will oftenswing the argument. It's one one
(40:13):
thing people, there is somethingwhen you do economics, you find
that something strange inhappens in people's minds. When
you put $1 or a pound or a rupeesign in front of a number,
somebody that number gets somebigger significance, and perhaps
it should. So it's one thing tosay that, Oh, we will, you know,
if implementing my idea willreduce cases of a disease by
this much, or might we preventthis many deaths that will have
(40:36):
an impact. But if you then tryand monetize that, and you say
it's going to be worth millionsof dollars, or 10s of millions
of some of that as a addedbenefit as well. So it's a good
way to think about things. Andsometimes, what if you're
proposing something where youcan have a health improvement,
which is fairly minor, but it'sgoing to cost an awful lot of
money, well, maybe that's notsuch a good use of society's
resources, because the moneythat's used on that health
(40:59):
program, maybe that could havebeen more useful to use in, say,
an education program or inanother health program. There's
always a cost to these things.
See, you got to look at thecosts and the benefits, and
that's where your local,friendly economist. We have an
economics department here.
That's where they can help.
Vennela Damarla (41:12):
Yeah. Thank you so much. Dr Michael Shelley, for
your time and sharing theknowledge about environmental
economics and then providinginsights about a lot of things.
Thank you so much for your time.
Thank you. Thank you. See you inthe next episode of Buffalo
health cast
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