Grant McDermott bio photo

Grant McDermott

Assistant Professor
Dept. of Economics
University of Oregon

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Research

Fields: Environmental and natural resource economics. Applied econometrics and data science. Uncertainty and Bayesian learning.

Interests: Energy markets and climate change. Water management. Fisheries policy. The impact of environmental quality on market outcomes.

Working papers

“Sceptic priors and climate policy.”

How much evidence would it take to convince climate sceptics that they are wrong about global warming? I explore this question within a Bayesian framework. I consider a group of stylised sceptics and examine how these individuals update their beliefs in the face of current and continuing climate change. I find that available evidence in the form of instrumental climate data already tends to overwhelm all but the most extreme priors. The resulting posterior distributions of climate sensitivity correspond closely to existing estimates from the scientific literature. The updated beliefs of most sceptics are thus consistent with a carbon price that is substantially greater than zero. However, belief convergence is a non-linear function of prior strength, so that it become increasingly difficult to convince the marginal sceptic. I conclude by discussing the general conditions for consensus formation under Bayesian learning, its relevance to our current policy impasse, and offer some remarks about finding common ground in the future. (Link to paper. Link to code.)

“Hydro power. Market might.”

A central tenant of economic theory is that market power induces deadweight loss to society as dominant firms restrict output. However, evidence of such restrictive behaviour by real-world firms is notoriously difficult to establish. This paper provides direct evidence of Norwegian electricity firms withholding production as they gain prominence in local markets. The research design exploits exogenous variation in the formation of local electricity markets due to binding transmission constraints. The ubiquity of hydropower generation in these markets further allows me to abstract from empirical complications associated with marginal cost estimation and variations in the fuel supply mix. Combining these features with a novel data set of hydropower reservoirs, plants and electricity flows — encompassing 90 percent of the system capacity — I show that an increase in local market power causes firms to withhold production during periods with relatively inelastic demand. A larger takeaway is that even our most advanced markets may be susceptible to price manipulation and welfare losses under relatively common conditions. (New version available soon.)

Selected works in progress

“The value of bulk information in the age of search engines.” With Christopher J. Costello and Michael B. Ward.

Publications

“The Blue Paradox: Preemptive Overfishing in Marine Reserves.” With Kyle C. Meng, Gavin G. McDonald and Christopher J. Costello. Forthcoming, Proceedings of the National Academy of Sciences.

“Protecting marine mammals, turtles and birds by rebuilding global fisheries.” With Matthew G. Burgess and others. Published in Science, 359 (6381) 1255–31258, 2018. (Link to paper. Link to code. Blog post and media coverage here.)

“Five rules for pragmatic blue growth.” With Matthew G. Burgess and others. Published in Marine Policy, 87 (2018) 331–339, 2018. (Link to paper.)

“Resolving disputes over ocean calamities.” With Matthew G. Burgess. Published in BioScience, 65(12), 1115-1116, 2015. (Link to paper.)

“Electricity prices, river temperatures and cooling water scarcity.” With Øivind A. Nilsen. Published in Land Economics, 90(1), 131-148, 2014. (Link to paper. Ungated version here. Blog post and media coverage here.)

Report chapters

“South Africa Compliance Analysis.” With James Morrissey and Davina Mendelsohn, in “Governing Global Climate Change: St Petersburg Compliance Report for the ‘G8 Plus Five’ Countries”, Maria Banda and Joanna Langille (eds.), G8 Final Compliance Report 2007, Oxford: G8 Research Group Oxford, 1 June 2007. xiii + 190 pp. (Link to report.)

“The Current Status of the EPWP (Infrastructure) in the Western Cape.” With Anna McCord, Kim Adonis and Lisa van Dongen. Prepared for the Western Cape Provincial Treasury & Department of Transport And Public Works CAPE. Public Works Research Project, SALDRU, UCT, 24 March 2006. (Link to report.)