Optimal Design of Permit Markets with an Ex Ante Pollution Target, August 2006

In this paper, we examine the design of permit trading programs when the objective is to minimize the cost of achieving an ex ante pollution target, that is, one that is defined in expectation rather than an ex post deterministic value. We consider two potential sources of uncertainty, the presence of either of which can make our model appropriate: incomplete information on abatement costs and uncertain delivery coefficients. In such a setting, we find three distinct features that depart from the well-established results on permit trading: (1) the regulator’s information on firms’ abatement costs can matter; (2) the optimal permit cap is not necessarily equal to the ex ante pollution target; and (3) the optimal trading ratio is not necessarily equal to the delivery coefficient even when it is known with certainty. Intuitively, since the regulator is only required to meet a pollution target on average, she can set the trading ratio and total permit cap such that there will be more pollution when abatement costs are high and less pollution when abatement costs are low. Information on firms’ abatement costs is important in order for the regulator to induce the optimal alignment between pollution level and abatement costs.

Emerging Biofuels: Outlook of Effects on U.S. Grain, Oilseed, and Livestock Markets, 2007

Projections of U.S. ethanol production and its impacts on planted acreage, crop prices, livestock production and prices, trade, and retail food costs are presented under the assumption that current tax credits and trade policies are maintained. The projections were made using a multi-product, multi-country deterministic partial equilibrium model. The impacts of higher oil prices, a drought combined with an ethanol mandate, and removal of land from the Conservation Reserve Program (CRP) relative to baseline projections are also presented. The results indicate that expanded U.S. ethanol production will cause long-run crop prices to increase. In response to higher feed costs, livestock farmgate prices will increase enough to cover the feed cost increases. Retail meat, egg, and dairy prices will also increase. If oil prices are permanently $10-per-barrel higher than assumed in the baseline projections, U.S. ethanol will expand significantly. The magnitude of the expansion will depend on the future makeup of the U.S. automobile fleet. If sufficient demand for E-85 from flex-fuel vehicles is available, corn-based ethanol production is projected to increase to over 30 billion gallons per year with the higher oil prices. The direct effect of higher feed costs is that U.S. food prices would increase by a minimum of 1.1% over baseline levels. Results of a model of a 1988-type drought combined with a large mandate for continued ethanol production show sharply higher crop prices, a drop in livestock production, and higher food prices. Corn exports would drop significantly, and feed costs would rise. Wheat feed use would rise sharply. Taking additional land out of the CRP would lower crop prices in the short run. But because long-run corn prices are determined by ethanol prices and not by corn acreage, the long-run impacts on commodity prices and food prices of a smaller CRP are modest. Cellulosic ethanol from switchgrass and biodiesel from soybeans do not become economically viable in the Corn Belt under any of the scenarios. This is so because high energy costs that increase the prices of biodiesel and switchgrass ethanol also increase the price of cornbased ethanol. So long as producers can choose between soybeans for biodiesel, switchgrass for ethanol, and corn for ethanol, they will choose to grow corn. Cellulosic ethanol from corn stover does not enter into any scenario because of the high cost of collecting and transporting corn stover over the large distances required to supply a commercial-sized ethanol facility.

Development of a Computer Controlled Underbody Plow: TR412, Final Report, January 2006

Underbody plows can be very useful tools in winter maintenance, especially when compacted snow or hard ice must be removed from the roadway. By the application of significant down-force, and the use of an appropriate cutting edge angle, compacted snow and ice can be removed very effectively by such plows, with much greater efficiency than any other tool under those circumstances. However, the successful operation of an underbody plow requires considerable skill. If too little down pressure is applied to the plow, then it will not cut the ice or compacted snow. However, if too much force is applied, then either the cutting edge may gouge the road surface, causing significant damage often to both the road surface and the plow, or the plow may ride up on the cutting edge so that it is no longer controllable by the operator. Spinning of the truck in such situations is easily accomplished. Further, excessive down force will result in rapid wear of the cutting edge. Given this need for a high level of operator skill, the operation of an underbody plow is a candidate for automation. In order to successfully automate the operation of an underbody plow, a control system must be developed that follows a set of rules that represent appropriate operation of such a plow. These rules have been developed, based upon earlier work in which operational underbody plows were instrumented to determine the loading upon them (both vertical and horizontal) and the angle at which the blade was operating.These rules have been successfully coded into two different computer programs, both using the MatLab® software. In the first program, various load and angle inputs are analyzed to determine when, whether, and how they violate the rules of operation. This program is essentially deterministic in nature. In the second program, the Simulink® package in the MatLab® software system was used to implement these rules using fuzzy logic. Fuzzy logic essentially replaces a fixed and constant rule with one that varies in such a way as to improve operational control. The development of the fuzzy logic in this simulation was achieved simply by using appropriate routines in the computer software, rather than being developed directly. The results of the computer testing and simulation indicate that a fully automated, computer controlled underbody plow is indeed possible. The issue of whether the next steps toward full automation should be taken (and by whom) has also been considered, and the possibility of some sort of joint venture between a Department of Transportation and a vendor has been suggested.

Innovative Solutions for Slope Stability Reinforcement and Characterization: Vol. II, TR-489, 2005

Soil slope instability concerning highway infrastructure is an ongoing problem in Iowa, as slope failures endanger public safety and continue to result in costly repair work. While in the past extensive research has been conducted on slope stability investigations and analysis, this current research study consists of field investigations addressing both the characterization and reinforcement of such slope failures. While Volume I summarizes the research methods and findings of this study, Volume II provides procedural details for incorporating an infrequently-used testing technique, borehole shear tests, into practice. Fifteen slopes along Iowa highways were investigated, including thirteen slides (failed slopes), one unfailed slope, and one proposed embankment slope (the Sugar Creek Project). The slopes are mainly comprised of either clay shale or glacial till, and are generally gentle and of small scale, with slope angle ranging from 11 deg to 23 deg and height ranging from 6 to 23 m. Extensive field investigations and laboratory tests were performed for each slope. Field investigations included survey of slope geometry, borehole drilling, soil sampling, in-situ Borehole Shear Testing (BST) and ground water table measurement. Laboratory investigations mainly comprised of ring shear tests, soil basic property tests (grain size analysis and Atterberg limits test), mineralogy analyses, soil classifications, and natural water contents and density measurements on the representative soil samples from each slope. Extensive direct shear tests and a few triaxial compression tests and unconfined compression tests were also performed on undisturbed soil samples for the Sugar Creek Project. Based on the results of field and lab investigations, slope stability analysis was performed on each of the slopes to determine the possible factors resulting in the slope failures or to evaluate the potential slope instabilities using limit equilibrium methods. Deterministic slope analyses were performed for all the slopes. Probabilistic slope analysis and sensitivity study were also performed for the slope of the Sugar Creek Project. Results indicate that while the in-situ test rapidly provides effective shear strength parameters of soils, some training may be required for effective and appropriate use of the BST. Also, it is primarily intended to test cohesive soils and can produce erroneous results in gravelly soils. Additionally, the quality of boreholes affects test results, and disturbance to borehole walls should be minimized before test performance. A final limitation of widespread borehole shear testing may be its limited availability, as only about four to six test devices are currently being used in Iowa. Based on the data gathered in the field testing, reinforcement investigations are continued in Volume III.