The Economics of Tree Trimming and Disaster Cleanups

In this video,  I discuss the economics of tree trimming, coastal real estate, moral hazard and FEMA and whether the people of South Dakota should be subsidizing coastal living.  I also ask whether Wall Street should remain in flood prone Southern Manhattan.

The complete set of 8 economics videos are now posted here.   I’m recording 3 a week so this set will grow large.  In the description box, I try to sketch the big topics presented in each short talk.  I’m hoping that these videos are a useful teaching tool for environmental economics and urban economics classes.

Author: Matthew E. Kahn

Professor of Economics at UCLA.

38 thoughts on “The Economics of Tree Trimming and Disaster Cleanups”

  1. I suppose I’m old fashioned … I would like very much to read your text. I don’t like to watch videos of somebody telling me something I could be reading, contemplating, rereading, and properly digesting.

    Is your text available?

    1. Ditto. It’s not anything to do with the individuals involved. I just prefer text. I don’t feel as manipulated that way.

  2. Matthew, only a ‘heartless plutocrat’ would suggest handing over more of the responsibility for disaster relief to the states. Get with the RBC line, or it’s the reeducation camps for you.

  3. Better question: Why should the people of coastal areas, also known as BLUE states, keep subsidizing the people who live in places like South Dakota, also known as RED states? Because generally, for every dollar the Red states send in to the Feds, *more* than a dollar comes back, and that extra change is coming from the Blue states, which get *less* than a dollar back for every dollar they send in. To make matters worse, the Blue states are always voting to make things better for everyone and the Red states are always pissing in the pot. So, put away the violins for South Dakota.

    On another but related note, I can’t help but note that when NYC was attacked on 9/11, all across this great land of ours, people from every walk of life were full of feelings of solidarity with the city. Not so much for this time’s assault. Which says to me, it was never about any sympathy for or camraderie with New Yorkers, now was it?

    1. Good argument for leaving the money sent to Washington in the various states and having a much smaller federal government.

      1. Then I wasn’t careful enough with my words because that is the exact opposite of what I believe. I was only trying to show that Matthew’s question, “whether the people of South Dakota should be subsidizing coastal living” was based on a fallacy.

        I might be irritated that Red staters are unappreciative of what the Blue staters do for them, but I don’t begrudge the poor dears the support they need. I’m even cool with feeding the snow-covered cows.

      2. Some economic activity needs to be on the coasts, but the NYSE floor need not be where it is. Some moral hazard considerations apply in this case.

        After all, there is a reason they build the shores so near the ocean; it is because ships can reach harbors without running aground. Stock exchanges, however, can easily be located well inland. It is easier to see moral hazard applying to the latter than to the former.

        Agree with Ohio Mom that 9/11 produced sympathy with New Yorkers which was not repeated with later disasters. Why, it was almost as if New York City was part of the United States for a while. But 9/11 gave us an excuse to hate someone; this is much harder to do with Sandy.

        1. = = = After all, there is a reason they build the shores so near the ocean; it is because ships can reach harbors without running aground. Stock exchanges, however, can easily be located well inland. It is easier to see moral hazard applying to the latter than to the former. = = =

          And when the ultra-cheap gasoline and cheap diesel fuel go away, we’ll be back to primary transportation via rails and water – at which point NYC will _still_ be ideally situated. Although the discussion is a bit silly since NYC is where it is because it is, and moving parts if parts of it were moved elsewhere they would lose their location “at the heart of it all”. Witness all the high-tech firms moving back into NYC, London, and Chicago in the last 10 years because they want to be part of tight networks and their employees want to live somewhere interesting; exurbs weren’t cutting it outside of Silicon Valley.

          Cranky

          C

        2. That’s just silly. To the extent the NYSE has a physical location, it’s going to be in the snazziest part of the country. This is perhaps why the Chicago exchange is atrophying: these Masters Of The Universe want to work in a location appropriate to their self-image and to the massive sums they toy with. There’s no reason intrinsic to its operation that the NYSE couldn’t relocate to Omaha, but the people who work there would never stand for it.

    2. In most cases, for one of two reasons; because they lived in a Blue state, and retired to a Red state, or because they are soldiers and the Blue states really don’t want major military bases.

      1. BRAC commissions specifically designed to be controlled by military not Congress. Army & Air Force used them to retreat to Old Confederacy; Navy only slightly less so. Military then complains about social bias – go figure.

        Cranky

      2. “Blue states really don’t want major military bases.”
        California has many, and has had many over the years. There has been no concerted effort to remove them. (except for wanting to use their prime coastal views for houses.)

        1. Fort Ord especially! Golf and other great amenities near Monterey, Big Sur, etc.
          Keep Army bases in places conducive to crappy living, like Fort Leonard Wood, Misery.

          1. Golf and other great amenities near Monterey, Big Sur, etc.

            I did a bike ride through the southern portion before the place was sold/converted – quite a bit of the oak woodland was preserved in relatively ‘pristine’ shape – few invasives in the understory and the pre-white person structure relatively intact, so that relict portion was preserved. And all of us had to get off and walk our bikes thru one stretch, as the tarantulas were migrating across the road.

          2. If the point is that out in Cali, we actually like bases, then I agree. I would hate to live long enough to see the hashtacular mess that would be made out of a decomm’d base in SoCal, given current planning stupidity. At least now, they sort of count as open space.

      3. This claim about military location has no factual basis and is just plain silly.

        For just a few examples, SF Bay area has huge naval (e.g., Alameda) and Air Force bases. Chicago has the Great Lakes Naval base just to the North of the City. And, S. Cal is chock full of all sorts of secret and semi-secret military bases (e.g., Vandenberg and Edwards Air Force Bases and the Marine Training base in Orange County–as is the D.C. area, Maryland (e.g., Annapolis) and Virgina. Not to mention West Point in NY State.

        1. Alameda, Treasure Island, and the Presideo military bases have been decommissioned, but for economic reasons. Not some antipathy towards the military.

          Likewise, the giant guns on the coastal hills in the Bay Area have also been shut down. Obsolete, not because of ‘wanting’ them shutdown.

    1. Matthew Kahn: ” whether the people of South Dakota should be subsidizing coastal living.”

      Aardvark Cheeselog: “Objection. Assumes facts not in evidence”

      Objection overruled – right-wing economics does get its own facts.

  4. People on the coasts subsidize us out West when major blizzards create the necessity for helicopter drops of hay to keep stranded cattle alive. Why graze cattle in blizzard-prone areas? Because that is where the grass is.

    1. South Dakota has also been known to receive flood assistance from FEMA.

      (Disclaimer: I haven’t watched the video — I would also appreciate text — so I don’t know if this is germane to Kahn’s point.)

  5. Your tree-trimming argument completely neglects the evidence of tree failure in wind events and in this event.

    I’m already done collecting Sandy-tree fotos for a future presentation on gray infrastructure and green infra conflicts, and I can tell you your premise needs much, much work. Much. Work.

    And I agree with others that you should talk about net taxation in states – that will negate your argument, but still.

  6. A couple of things occur to me from listening to some of this mini-lecture (it’s not really a video, it’s audio with a tiny bit of not terribly useful Powerpoint).

    1) It *would* be interesting if someone would study the economics of tree-trimming. Yes, tree-trimming does tend to be very expensive and the trade-offs are not clear. Trees will fall over or lose limbs at a lower rate if they’ve been trimmed but how much lower and how does an increase in the expected severity of storms change the trade-offs? I can tell you from experience that some trees that have been properly maintained will lose large limbs in a big windstorm anyway and some of them will even blow over. Does more severe weather from climate change make tree-trimming even more crucial or does it make it essentially fruitless? If tree-trimming is useful does it make sense for government or utilities to provide economic incentives to homeowners– given that trees that fall on power lines tend to affect large swaths of communities?

    2) Re insurance and moral hazard: I know that “smoking in bed because the house is insured” is a standard example in discussions of moral hazard, but is there any evidence there is any truth in that scenario? It seems to me that the big problem with smoking in bed for most people would be that, whether or not the house is seriously damaged, there’s an excellent chance that the smoker will be. Does any smoker think to himself before lighting up in bed “Well, if I fall asleep with this lit cigarette still burning I may set the bed on fire and end up dead or seriously injured from smoke inhalation or severe burns and maybe even burn down the house but that’s OK because the house is insured?” That seems very unlikely to me and if there is research that says otherwise I’d like to see it.

    Similarly, I have been through a couple of significant natural disasters personally and have been around for the aftermath and cleanup of a couple more. I heard people express the sentiment: “Thank God we had insurance so we will be able to rebuild.” I did not hear anyone say: “Hey, no big deal, we have insurance so we don’t need to do anything to keep the damage from being so great if this happens again.” Natural disasters are very traumatic for people who live through them whether or not they have insurance and the impulse to do what they can to keep people safer and prevent damage in the future is significant, and not, in my experience, lessened by the fact of insurance. In fact, insurance proceeds are often key in enabling people to make those changes. Is that true for local governments also? People in local governments have seen the damage and felt the trauma from disasters first hand. I saw Governor Cuomo on TV talking about Sandy and a major focus of what he said was the necessity of making infrastructure changes to protect from future events of a similar nature.

    3) I do see one aspect of moral hazard that may directly apply to all of this. Large corporations benefit from federal disaster insurance, and they don’t have the same gut understanding of how important it is to prevent damage from disasters as people who have lived through those disasters do. With today’s attitude that corporations have no responsibilities except maximizing returns to shareholders, most of their directors and stockholders will be looking at nothing but the bottom-line results of a disaster. If it’s cheaper in dollars to keep taking advantage of federal insurance rather than doing what they can to prevent future damage, that’s what they will do. Perhaps the biggest moral hazard issue is not in the federal insurance but in allowing the growth of the role that corporations play in the larger economy. If the major point of a corporation is to allow its owners to escape liability for the things the corporation does, isn’t that in its very essence an issue of moral hazard? I’d be interested in what Dr. Kahn has to say about those issues.

    1. … it’s audio with a tiny bit of not terribly useful Powerpoint…

      1) It *would* be interesting if someone would study the economics of tree-trimming. Yes, tree-trimming does tend to be very expensive and the trade-offs are not clear. Trees will fall over or lose limbs at a lower rate if they’ve been trimmed but how much lower and how does an increase in the expected severity of storms change the trade-offs? … If tree-trimming is useful does it make sense for government or utilities to provide economic incentives to homeowners– given that trees that fall on power lines tend to affect large swaths of communities?

      The economics of a couple classes from Tufte or Duarte on creating compelling presentations notwithstanding,

      There are several papers that examine utility pruning and resultant effectiveness. Whether trees on private property will be pruned in a cycle with a several-hundred-dollar expense every time (with the risk of concomitant infection and mortality unquantifiable) is likely similar to other behavioral questions of cost borne in anticipation of small annual risk. As for whether there can be incentives (or disincentives) for regular pruning, you are looking at public amelioration of private risk. Not sure we want to go there (or go where FERC and NERC are heading to avoid tree-transmission/distribution failures).

      Tree failure is a risk. Mitigating failure for a resource that most take for granted is hard, and takes thought, organization and planning. Lessening tree failure risk in a world of increasing severe weather is something we should be talking about, but it is hard in a world where we can’t even maintain our roads, bridges and pipes. Trees are way down the list compared to those.

      :o\

  7. Maybe I’m ocnfused, but I was under the impression that any power line likely to be affected by a tree was generally not the kind that supplies any substantial number of people. Those big lines have rights of way that are scouted by utility employees on a regular basis. (Oh, and there’s another side of this, which is that people in areas with trees tend to like same, so the incentives you’d need to convince homeowners to trim — in areas where the utility company’s easement doesn’t give it the automatic right to trim wherever it damn pleases — would have to include the large capital losses to property value.)

    On the rest, any time we consider locating some vital facility — and really, the stock exchange is not that vital, or at least shouldn’t be — in some place away from disaster, we either have to relocate all the people who need access to that facility (which would make Brasilia or Dubai look like a minor undertaking) or else provide disaster-proof communications between the new facility and places where people actually want to live. Seems like a lot of makework.

    1. I was under the impression that any power line likely to be affected by a tree was generally not the kind that supplies any substantial number of people. Those big lines have rights of way that are scouted by utility employees on a regular basis.

      The big blackout in 2003 in the northeast? One tree in Ohio. FERC and NERC have rewritten the rules and recently there are huge fines for failure to manage vegetation. Also, too, California and PG&E.

    2. = = = Maybe I’m ocnfused, but I was under the impression that any power line likely to be affected by a tree was generally not the kind that supplies any substantial number of people. Those big lines have rights of way that are scouted by utility employees on a regular basis. = = =

      Generally that’s true. Transmission lines (the big ones, 100,000 volts and above) are regulated by the Federal Energy Regulatory Commission (FERC) and FERC rules governing “vegetation management” were tightened severely after the 2003 Northeast Blackout (many factors in that event, but proximate cause of grid collapse was a short-circuit to a tree). And generally you are right that the trees that fall on the smaller 2300 and 12,000 volt lines don’t affect that many people. However there are also intermediate distribution lines (34kV mostly) that serve a fair number of people and can be affected by privately-owned trees. In some political jurisdictions electric service providers have the right to trim those with or without property owner permission, in others they don’t. I think Mr. Kahn is discussing trimming around these intermediate distribution lines (greater than 12kV and less than 100kV).

      Cranky

      Our municipal utility does trim near local distribution lines that run down public streets, but they don’t trim specific trees if the homeowner objects. Their theory is to spend the money fixing if needed after an event instead of fighting in court beforehand (and some electric service providers do spend a lot of money fighting tree-related cases in court).

      1. Cranky and myself did not correspond in the above reply, nor is one a sockpuppet for the other. ;o)

        1. I suspect we’ve both spent too much time reading FERC commission decisions and NERC reliability standards drafts.

          Cranky

      2. In my experience, municipal tree trimming is aimed almost exclusively at keeping branches that are still attached to a tree from impinging on the power lines–maybe with the occasional removal of a larger branch right above the power line. This is possibly useful in ordinary circumstances but is useless when high winds can break off almost any branch and fling it onto a power line or topple an entire tree onto the power lines. Dr. Kahn referred to people being killed by trees in storms.
        Those tress aren’t necessarily even near power lines. The kind of pruning that might mitigate those things involves the entire tree and, at least in my neighborhood, is done only by homeowners.

  8. Should the taxpayers of SD have to pay for FEMA activity on the coasts?

    Yes.

    SD has tornadoes. They get help from FEMA when that happens.

    In the video you make a point of the fact that climate change has increased the dangers in coastal areas. Have the taxpayers of SD not contributed as much, per capita, to climate change as everyone else? Indeed, is it possible that rural/suburban residents have contributed more than urban dwellers, owing to larger residences and greater automobile use? I do not mention conservative political attitudes that have slowed or prevented even a small response to climate change. Well, that’s not true. I just did, didn’t I?

    1. This gets to the heart of a question I keep asking libertarian acquaintances, at least the ones that are willing to admit that global warming exists. Rising sea levels and increased disastrous weather events cause damage to property and even loss of property in the most literal sense. Doesn’t this constitute a tort inflicted upon property owners by all of those who contribute greenhouse gases? Shouldn’t the United States and everyone else be facing a massive class action suit by Bangladeshis and others whose land is vanishing?

      I never get a coherent answer out of them.

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