Interview: Maine's State Economist & Deputy Director of State Planning

Fairly recently, I had an opportunity to interact with Mr. Michael LeVert; Maine's State Economist and Ms. Sue Inches; Deputy Director of Maine's State Planning Office. To me, Maine has always been an interesting state because of its foresightedness in making renewable energy part of its future. It was one of the first few states that started diversifying its energy portfolio to encompass renewable sources long before it became fashionable to do so. Today, Maine continues to make strides in diversifying its energy portfolio by finding new ways to incentivise and attract developers and renewable/alternative energy generators. What is particularly surprising to me is how dedicated the movement is; from the Governor of Maine down to those involved with policy development. In interacting with Ms. Inches and Mr. LeVert, I had an opportunity to gain an insight into the matter on a personal level, and was also introduced to a more comprehensive cost-benefit analysis method that could be used to make the case for renewable energy clearer.

About Sue Inches: Sue is the Deputy Director of the State Planning Office. In that capacity, she works on legislative policy on a wide range of issues including energy, land use, natural resources, and building and energy codes.

About Michael LeVert: Michael is Maine's State Economist. He served as staff economist on the Governor's Council on Maine's Quality of Place and the University of Maine's Center for Research on Sustainable Forest's “Keeping Maine's Forests as Forests” study group. Michael manages the Economics and Demographics team and sits on the State's Revenue Forecasting Committee.

Question 1: How high on the list of competing economic priorities is the development of alternative/renewable energy for the State of Maine?

Sue Inches: This is a very high priority for the Governor. Grant programs at both the Public Utilities Commission and the Maine Technology Institute are available to help communities and businesses develop alternative energy technologies.

Question 2: Many states have been ambitiously attracting companies to locate or expand operations within their borders through various policies. What should I know about Maine if I were a business owner (small/large scale) participating in the alternative energy/renewable energy sector and looking to expand or relocate?

Sue Inches: Maine has an entrepreneurial workforce that includes expertise in machine work, and construction which applies directly to alternative and renewable energy . Maine also has a terrific quality of life, and some business incentives available.

Question 3: To what extent do energy efficiency/conservation efforts help to reduce long term energy demand for the State and how may those savings be utilized?

Sue Inches: Energy efficiency and conservation is a high priority and in addition to our regular programs, there are now federal stimulus funds to weatherize low income homes. The savings are realized by the homeowner because their heating costs are reduced. Maine Housing has also developed a database to capture data on energy and carbon saved. Their plan calls for selling the carbon savings on the voluntary market when that market becomes available. The resulting funds will be used to weatherize more homes. See the Maine State Housing Authority website for more info.

Question 4: What are non-market valuations and how might they factor into making the case for alternative/renewable energy?

Michael LeVert: Non-market valuation is a method to estimate the value of goods and services that are not traded in markets or that have prices that don’t fully reflect their economic value. For example, the economic value of, say, a cleaner, healthier ecosystem can’t be assessed by looking at market prices because there is no mechanism for which people can pay for this service. But of course a healthier environment has enormous economic value. Moreover, people are willing to pay for this service.
Non-market valuation is a collection of sophisticated and well-established techniques, usually survey based, to determine what people would be “willing-to-pay” if a market did exist. Sometimes the value that society places on these types of goods and services can be inferred from other markets – for example, the cost incurred to travel to Baxter State Park can be used to proxy the value people place on this resource above and beyond simply the gate fees; just as the premium paid to purchase a house near conservation land is an estimate of the value of living near open space. Other times, hypothetical markets must be created to infer the economic value of non-market goods and services.
Anytime a cost-benefit analysis is done, it’s essential that all costs and benefits are accounted for, including non-market ones. This is particularly relevant when making the case for investing in renewable or alternative forms of energy. Comparing alternative sources of energy to traditional ones, for example crude oil, goes beyond just price per kilowatt hour. The effects of energy production on the air we breathe, the water we drink, on our climate in general, and on our quality of life should be included too. Many of these things don’t have markets and are therefore challenging to estimate. Non-market valuation, by examining these aspects of energy production and use, has the potential to play a vital role in making informed decisions about the types of energy we use.
The tendency of people to incorporate non-market values in their consumption decisions is growing. Just look at the number of hybrid car owners. The premium paid for a hybrid coupled with today’s relatively cheap ($2 gallon) gas is indication that hybrid buyers are willing to look beyond the market price when choosing which vehicle to buy.

Question 5: Based on your personal experience, what is one energy saving/conservation tip you could offer to readers?

Sue Inches: Close your chimney flue and woodstove air intakes when not in use. A chimney sucks heat right out of your house. Its like an open window except worse because convection draws the warm up and out of your house. If you stand on the roof with your face looking down the chimney, you’ll feel a draft like a giant hair dryer.