Environmental economics reframe pipeline debate

By Matt Collette | Northeastern News | October 10, 2012

A 750-mile pipeline across Canada cuts through First Nation lands and pris­tine envi­ron­ments to bring oil-rich tar sands to a new ter­minal on the Pacific Ocean. The com­pany behind the project, the Cal­gary, Alberta-based Enbridge Inc., argues that the pipeline will create thou­sands of jobs and an influx of cash from the Asian com­pa­nies that will buy and process the tar sands.

But the eco­nomic analysis pre­sented to the Cana­dian gov­ern­ment does not account for the pipeline’s envi­ron­mental impact, including the poten­tial for a spill, said Matthias Ruth, a North­eastern pro­fessor with dual appoint­ments in the Col­lege of Engi­neering and the School of Public Policy and Urban Affairs.

Ruth is at the fore­front of the emerging field of envi­ron­mental eco­nomics, which focuses on devel­oping methods to account for unquan­tifi­able envi­ron­mental con­tri­bu­tions to the economy.

He and his doc­toral stu­dent, Rebecca Gasper, a researcher at World Resources Insti­tute, tes­ti­fied before the Joint Review Panel of Canada’s National Energy Board in Sep­tember. They argued against Enbridge’s eco­nomic analysis, explaining that the oil com­pany over­stated the eco­nomic impact of its project by as many 200 times.

“There are a lot of things for which there is no market, like ecosystem goods and ser­vices — from water reten­tion and purifi­ca­tion to carbon uptake,” Ruth said. “There are a lot of costs that come from dis­turbing these envi­ron­ments that never made it into the eco­nomic analysis.”

Ruth noted that the amount of money First Nation tribes are being paid by pipeline devel­opers does not even begin to mea­sure the project’s impact on the land’s del­i­cate and long undis­turbed eco­log­ical balance.

“We’re only now begin­ning to under­stand what projects like these can do to an envi­ron­ment and the costs that come with that,” Ruth said. “But now that we can mea­sure it, we can include it in eco­nomic analyses.”

The project is sim­ilar to the stalled Key­stone Pipeline, which would deliver crude oil from Canada to loca­tions in the United States for refine­ment and export. Ruth said a sim­ilar envi­ron­mental analysis could be applied to that project, to explore whether the envi­ron­mental dam­ages from a pipeline may out­weigh its eco­nomic ben­e­fits — even when applying top engi­neering standards.

Though Ruth’s tes­ti­mony may not sway the Cana­dian panel, it has already sparked a con­ver­sa­tion with the gen­eral public and in the media, which has started cov­ering the pipeline project from an envi­ron­mental angle.

“It’s a total game-changer,” Ruth said. “It’s becoming clear that by pointing out these typ­i­cally non­market goals, they become part of the national energy dialogue.”

An economics approach to sustainability

By Matt Collette | Northeastern News | September 18, 2012

Matthias Ruth had long been inter­ested in envi­ron­mental issues but found it hard to use his own discipline—economics —as a tool to unite eco­nomic deci­sion making with indus­trial and urban con­straints.   “Econ­o­mists are really good at devel­oping models of things that are traded in mar­kets, but a lot of things we value—like the environment—have no market and no price,” said Ruth, who is joining Northeastern’s fac­ulty this fall as a pro­fessor with joint appoint­ments in the Col­lege of Social Sci­ences and Human­i­ties’ School of Public Policy & Urban Affairs and the Col­lege of Engi­neering.

Ruth quickly found him­self at the fore­front of a new field, eco­log­ical eco­nomics, and dis­cov­ered he would need to move from the devel­op­ment of the­o­ret­ical models that do jus­tice to core prin­ci­ples in eco­nomics, ecology and physics to models useful to deci­sion makers. Much of his work uses real data to help indus­tries reduce their carbon foot­prints while remaining competitive.

But he also inves­ti­gates how cities plan for the next cen­tury because, he says, even if global carbon emis­sions were cut overnight, the earth will suffer the con­se­quences of cli­mate change for at least the next two cen­turies. While much atten­tion is given to emis­sions from the indus­trial and trans­port sector of regional and national economies, com­par­a­tively little research is done on the options for cities to reduce the cli­mate impacts and other envi­ron­mental insults.

“We build infra­struc­ture to last 100 years, but we build it with cri­teria based on the past,” Ruth said. “Cli­mate is going to change—is already changing—the envi­ron­ment in which we live.  We need to plan for the new con­di­tions under which cities must operate.”

Ruth joins North­eastern from the Uni­ver­sity of Mary­land, where he was the Roy F. Weston Chair in Nat­ural Eco­nomics, founding director of the Center for Inte­gra­tive Envi­ron­mental Research, director of the Envi­ron­mental Policy Pro­gram in the School of Policy and founding co-director of the Engi­neering and Public Policy Pro­gram in the A. James Clark School of Engi­neering and the School of Public Policy. He holds a Ph.D. in geog­raphy from the Uni­ver­sity of Illi­nois, Urbana-Champaign and a master’s degree in eco­nomics from the Ruprecht-Karls-Universität Hei­del­berg in Germany.

He hopes to con­tinue his inter­dis­ci­pli­nary approach to sus­tain­ability at North­eastern, working with a broad con­stituency to address cli­mate and sus­tain­ability issues.

“These are prob­lems that cannot be solved by one person in one dis­ci­pline,” Ruth said.

Instead, he plans to engage people from across the uni­ver­sity com­mu­nity to create new and inno­v­a­tive approaches to envi­ron­mental chal­lenges facing urban areas.

“I’m a firm believer that you have to live what you preach,” Ruth said. “Our own campus is a micro­cosm of the city. We must engage stu­dents, fac­ulty, staff and the orga­ni­za­tions in the com­mu­nity around campus to con­tinue Northeastern’s com­mit­ment to sus­tain­ability research and prac­tice, both on campus and across the globe.”