Monday, April 14, 2014

Rethinking China’s Future Path [Globalist]

Good summary of the environmental issues that China needs to confront in the next decade by Richard Phillips in the Globalist.  As the article points out, the current leadership is aware of these problems and is acting.  There is still a large gap between coming up with a strategy and their being any noticeable effect.  The sheer scale effect with overwhelm any technique or composition effect for many years but not through lack of trying.

Interesting points covered.

1. Productivity is being negatively affected by environmental pollution.  An under-researched area IMO.

2. Pollution of agricultural land and the implications - something I am looking to work on.

3. Water economics in China - this will (and already is) a major issue and likely to become more important.

4. Corruption - looked at in a previous tweet from earlier today.]

5. Governance at the firm level - ongoing research into this issue and some good papers coming out on this topic.  I will try and post on this issue if I get time.

Rethinking China’s Future Path  [Globalist]

"The Chinese economy in its current form may not be sustainable.
 Economic commentators around the world are sounding alarms with increasing frequency about the outlook for the Chinese economy. Looking beyond these economic bellwethers, however, one finds a simple reality: The Chinese economy in its current form may not be unsustainable. 
 China’s problems are fundamental. The very factors that have led to the country’s dynamic growth over the past two decades may well constitute China’s chief challenge in the future. Why? Because these sources of growth cannot be sustained.

To be sure, different economic models may forecast a range of possibilities for China. When one views China’s problems through the prism of sustainability, one gets not only several valuable insights but also a possible way forward for Chinese leadership.

Sustainability is generally defined as embracing three core criteria of performance: environmental, social and governance practices.

Each of these sub-headings is considered in turn.  The bold heading are live links if you go to the original article.  I post the article here in full as I think it is a nice summary of the current situation.  It is easier to read in the full article but this is so I can refer back to this material.

" Environmental calamity

China’s current environmental practices pose a hazard to its citizens and to the world as a whole. If China continues to put growth ahead of sound environmental practice, it will face significant dislocations at home as well as broad-based antipathy abroad.

According to a recent report published by China’s Ministry of Environmental Protection entitled “Soil Pollution and Physical Health,” approximately one-sixth of China’s agricultural land is contaminated with heavy metals and pesticides.

The integration into China’s food supply of contaminated agricultural products grown on these lands poses a public health threat of immense proportion. This is likely to manifest itself in above normal incidence of birth defects, cancers and neurological disorders.
By the same token, Chinas air ranks among the most polluted in the world.

All-enveloping smog conditions that periodically blanket China’s major cities, including Beijing and Shanghai, pose a public health menace, while also diminishing productivity, as commerce periodically grinds to a halt for days on end.
Recently, Premier Li Keqiang called for a “war against pollution.” He said it was “nature’s red-light warning against inefficient and blind development.”
On the global level, China’s carbon footprint now exceeds that of the United States by a wide margin. China now accounts for a staggering 23.5% of global CO2 emissions. That is even in excess of its global population share.

To make matters worse, China’s CO2 emissions continued to rise, even as the United States’ CO2 emissions declined for several years during the economic crisis and slow recovery.

Other factors play a role as well. Consider the impending water crisis. A general undersupply of potable water (7% of global fresh water versus 20% of the population) is exacerbated by rampant ongoing industrial pollution. This demonstrates clearly that China cannot sustain the development path it has taken over the past several decades with respect to the environment.

Social injustice

But the problems of sustainability are not confined to the environment. They extend to the various metrics that in the aggregate form a country’s social profile.

Bribery and corruption have been pervasive in China’s development process. China ranked 80th among 177 countries in Transparency International’s 2013 Corruption Perceptions Index.

With a score of 40 on a scale of 0-100, it ranked lower than Brazil, South Africa, Turkey and Saudi Arabia. One needs to look toward the corrupt economies of the Central Asian “Stans” and Sub-Saharan Africa to find bigger offenders.

Bribery and corruption on the scale of China’s undermines the rule of law and impedes fair competition. It also contributes to instability and human rights abuses among China’s less privileged citizens.

Similarly, labor abuse has also been endemic to China’s development process, although China has recently taken steps to strengthen its labor laws. Investigative reports from organizations such as China Labor chronicle an ongoing tale of hopelessness and misery for millions of Chinese workers.

Shoddy labor practices are not only breeding discontent within the Chinese workforce. They also create significant supply chain risk for companies based in developed markets that manufacture in China.

Companies that might be affected include major names such as Apple, Samsung, Toyota, Siemens and Mattel. This already long list of companies facing supply chain issues continues to grow.

Poor governance practices

Finally, China’s overall governance framework – the third pillar in the ESG sustainability process — ranks among the worst in the world.

On the corporate level, the average corporate governance rating for Chinese companies, according to Thomson Reuters Corporate Responsibility Ratings, is a meager 41.9. This places Chinese companies in the bottom third among the nearly 5,000 companies rated worldwide.

Disclosure by Chinese companies is among the worst of any major economy. Risk controls are at best ad hoc and, in most cases, shaped by convenience. Government meddling and political cronyism are pervasive.

As a result, Chinese companies harbor risks and inconsistencies that are not always visible to the naked eye. Over time they may take a toll on China’s ability to sustain an efficient capital market.

Furthermore, hidden flaws in China’s financial and corporate sectors, which have been obscured by China’s development boom, are likely to surface unexpectedly in a slowdown. Count on many land mines currently buried in the corporate landscape to explode then.

ESG: The solution, not the problem

China’s government is well aware of these problems. And its leadership is well aware that, to sustain its impressive economic growth of the past two decades, it will have to adapt. Although the cost of adapting is uncertain, all indications are that the sums involved will be massive.

Change – radical change – is essential for China to maintain stability and expand its prosperity in the years ahead. China’s leaders have shown great wisdom in steering China through its development phase.

Now, leadership might apply that same wisdom by avoiding the temptation to engage in reactive micromanagement of transient economic issues as a solution to the country’s myriad problems.

Instead, Chinese leadership might find it more effective to focus on the longer-term issue of sustainability by establishing a process for the structural reform of its environmental, social and governance policies."

Thursday, April 03, 2014

Climate Change: Collective action and tipping points

For all the IPCC rhetoric IMO tipping points are crucial and misunderstood.  Currently reading:

On the Sensitivity of Collective Action to Uncertainty About Climate Tipping Points" Free Download

CESifo Working Paper Series No. 4643

SCOTT BARRETT, Columbia University - School of International & Public Affairs (SIPA)


ASTRID DANNENBERG, Göteborg University

Previous research shows that collective action to avoid a catastrophic threshold, such as a climate “tipping point,” is unaffected by uncertainty about the impact of crossing the threshold but that collective action collapses if the location of the threshold is uncertain. Theory suggests that behavior should differ dramatically either side of a dividing line for threshold uncertainty. Inside the dividing line, where uncertainty is small, collective action should succeed. Outside the dividing line, where uncertainty is large, collective action should fail. We test this prediction in the experimental lab. Our results strongly support the prediction: behavior is highly sensitive to uncertainty around the dividing line.
Scott Barrett is always worth reading on this topic.  Linking environmental economics with lab experiments is something I want to look at trying myself. 

Thursday, March 27, 2014

7 million deaths annually linked to air pollution

World Health Organisation present the facts.  Some good statistics (to help motivate research in this area).  City level data on air pollution is useful and this weblink has a number of excellent data sources and technical information for researchers to use.

7 million deaths annually linked to air pollution [WHO]

In new estimates released, WHO reports that in 2012 around 7 million people died - one in eight of total global deaths – as a result of air pollution exposure. This finding more than doubles previous estimates and confirms that air pollution is now the world’s largest single environmental health risk. Reducing air pollution could save millions of lives.

 3.7 million deaths attributable to ambient air pollution

 4.3 million deathsattributable to household air pollution

 7 million deathscaused by air pollution in 2012, covering both household and ambient air pollution
Other reports:

Air Pollution Kills 7 Million People Every Year, World Health Organization Report Finds [Huffington Post]

Pollution is the world’s biggest killer: Dirty air has overtaken heart disease, diet and even smoking-related deaths as the biggest preventable killer [Daily Mail]


Tuesday, March 18, 2014

"Merchants of eco-doom who peddle their vision of apocalypse to a secular choir"

For some reason I like this small piece on eco-doomsters.  As a dismal scientist, the peak-everything-doomsday literature is an interesting genre that economists have a natural affinity with.

I have posted the article here as it is worth reading in the full.  Link provided.  The title of this blog post is one of the better quotes. 

The first Ehrlich quote is impressive.  What does the collapse of civilisation actually mean?  I would like a definition before I can apply the odds but it sounds pretty unpleasant.

It probably is too late for some future equilibriums but the key is to arrive at the best possible alternative - but best for who?  How many generations into the future are we discounting?

There is a chance of a sustainable future for civilisation but there is a lot of work to do to get there.

The Merchants of Doom

 "Paul Ehrlich and Ann Ehrlich, two long-time prominent voices in the environmental community, often speculate about the future of humanity. They recently shared this anecdote:
A few years ago we had a disagreement with our friend Jim Brown, a leading ecologist.  We told him we thought there was about a 10 percent chance of avoiding a collapse of civilization but, because of concern for our grandchildren and great grandchildren, we were willing to struggle to make it 11 percent.  He said his estimate of the chance of avoiding collapse was only 1 percent, but he was working to make it 1.1 percent.  Sadly, recent trends and events make us think Jim might have been optimistic.  Perhaps now it’s time to talk about preparing for some form of collapse soon, hopefully to make a relatively soft “landing.”
If you want to know why the Ehrlichs think it’s essentially game over for civilization, read their 2013 paper published in the Proceedings of the Royal Society. Their diagnosis:
The human predicament is driven by overpopulation, overconsumption of natural resources and the use of unnecessarily environmentally damaging technologies and socio-economic-political arrangements to service Homo sapiens’ aggregate consumption.
Translation: Too many damn people on the earth, driving cars, buying too much crap, all made possible by a globalized, industrialized, capitalistic system. Or something like that. Unsurprisingly, the Ehrlichs don’t agree with those who paint a sunnier view of humanity’s current trajectory. (What might a model sustainable society look like? Paul Ehrlich recently pointed to Australia’s Aboriginal culture.)

Now I’m not the only one to observe that the environmental community, as a whole, has a bleak view of the future.

But is the near-future collapse of civilization virtually guaranteed, as the Ehrlichs seem to think? Is there no reversing this collision course? Here’s what UK environmentalist Jonathan Porritt said last week in an interview:
A lot of people in my community of sustainability professionals have basically come to the conclusion it’s too late.
This strikes me as a self-defeating outlook, as I hinted the other day. It lends itself to the fatalism that has already infected environmental discourse, as I have previously discussed:
If you are a regular consumer of environmental news and commentary, you are familiar with the narrative of humanity’s downfall.
In the current issue of The New York Review Of Books, the novelist Zadie Smith is conflicted about this eco-doomsday narrative. On the one hand, she is bothered that most people aren’t taking seriously “the visions of apocalypse conjured by climate scientists and movie directors,” which she refers to as “the coming emergency.” But she also seems to get the futility of this storyline:
Sometimes the global, repetitive nature of this elegy is so exhaustively sad—and so divorced from any attempts at meaningful action—that you can’t fail to detect in the elegists a fatalist liberal consciousness that has, when you get right down to it, as much of a perverse desire for the apocalypse as the evangelicals we supposedly scorn.
Indeed, the merchants of eco-doom who peddle their vision of apocalypse to a secular choir are just as self-rightous and scornful of humanity as the fundamentalist preachers who hawk their hellfire and brimstone sermons. And like the most warped fundamentalists who exploit tragedy, the merchants of eco-doom also cynically seize on current events. On this score, nobody rivals Nafeez Ahmed (the UK Left’s faux-scholarly equivalent to Glenn Beck), who has an unquenchable appetite for peak-everything porn. (For commentary on his latest connect-the-collapse dots, see this post.)

Not all greens have a fetish for doomsday scenarios. Some are are trying to chart a more empowering vision for environmentalism. Porritt belongs to this group. He has a new book that appears hopeful about the future.

If only more environmentalists could snap out of their endless mourning for the planet and offer the rest of us something to look forward to other than imminent eco-collapse."

Friday, March 07, 2014

Economist does "who hit the climate pause button"

Well balanced article on the "pause" used by climate change deniers as proof that there is nothing to worry about.  The economist's thinking matches my own.  The pause is not only temporary but could bounce back with a vengeance.

Who pressed the pause button? [The economist]


"The solar cycle is already turning. And aerosol cooling is likely to be reined in by China’s anti-pollution laws. Most of the circumstances that have put the planet’s temperature rise on “pause” look temporary. Like the Terminator, global warming will be back."

Thursday, March 06, 2014

China's "War on Pollution"

No surprises to readers of this blog. Reuters reports.  What is interesting is how they equate the war on pollution with the ongoing war on poverty.  These two issues are not mutually exclusive.  The war on pollution might lead to an increase in poverty if not handled carefully.

Energy demand is growing rapidly.  Costs are rising. China has a lot of coal.  There is no simple solution.  A green stimulus plan will help but it all costs money that could be spend elsewhere.

Water pollution is a growing problem that will only get worse.

China has correctly pin-pointed a number of challenges including enforcement.  The environmental economists at Birmingham are doing work on a number of these topics.  At least two of my extended essay undergraduate students have written good essays on this topic this year.

I have included the full article.

China to 'declare war' on pollution, premier says [Reuters]

(Reuters) - China is to "declare war" on pollution, Premier Li Keqiang said on Wednesday at the opening of the annual meeting of parliament, with the government unveiling detailed measures to tackle what has become a hot-button social issue.

It is not uncommon for air pollution in parts of China to breach levels considered by some experts to be hazardous. That has drawn much public ire and is a worry for the government, which fears any discontent that might compromise stability.

"We will resolutely declare war against pollution as we declared war against poverty," Li told the almost 3,000 delegates to the country's largely rubber-stamp legislature in a wide-ranging address carried live on state television.

Curbing pollution has become a key part of efforts to upgrade the economy, shift the focus away from heavy industry and tackle the perennial problem of overcapacity, with Li describing smog as "nature's red-light warning against inefficient and blind development".

"This is an acknowledgement at the highest level that there is a crisis," said Craig Hart, expert on Chinese environmental policy and associate professor at China's Renmin University.

"Their approach is going to have to be pro-economy. I think they will pump money into upgrading plants. This could be another green stimulus although it is not being packaged that way."

China has published a series of policies and plans aimed at addressing environmental problems but it has long struggled to bring big polluting industries and growth-obsessed local governments to heel.

Li said efforts would focus first on reducing hazardous particulate matter known as PM 2.5 and PM 10 and would also be aimed at eliminating outdated energy producers and industrial plants, the source of much air pollution.

China will cut outdated steel production capacity by a total of 27 million tonnes this year, slash cement production by 42 million tonnes, and also shut down 50,000 small coal-fired furnaces across the country, Li said.

The 27 million tonnes of steel, equivalent to Italy's production capacity, amounts to less than 2.5 percent of China's total, and industry officials have warned that plants with another 30 million tonnes of annual output went into construction last year.

The targeted cement closures amount to less than 2 percent of last year's total production.

The battle against pollution will also be waged via reforms in energy pricing to boost non-fossil fuel power. Li promised change in "the way energy is consumed and produced" through the development of nuclear and renewables, the deployment of smart power transmission grids, and the promotion of green and low-carbon technology.

The National Development and Reform Commission (NDRC), the country's economic planner, said in its report that new guidelines would be issued on relocating key industries away from urban centers to help tackle smog.

NOT JUST SMOG

China does not just suffer from smog, which has once again this winter enveloped large parts of the heavily populated east, and will this year also aim to tackle severe water and soil pollution.

The NDRC said it would also take action this year to tackle agricultural pollution, including the contamination of farmland by heavy metals, with 3.33 million hectares (8 million acres) believed to be too polluted to grow crops.

Last month, the government said it would spend 2 trillion yuan ($330 billion) on tackling pollution of scarce water resources.

Li said China would also aim to convert 333,300 hectares of marginal farmland to forest and grassland and would continue to fight desertification and recover wetlands.

The NDRC said China would seek to ensure that polluters pay by establishing a new mechanism to compensate victims of environmental damage and by holding local officials accountable.

Parliament is also mulling amendments to environmental protection legislation that will grant new powers to fine and punish offenders.

In a separate report on Wednesday, the Ministry of Finance said China would spend 21.1 billion yuan on energy conservation and environmental protection in 2014, up 7.1 percent on 2013. It said 64.9 billion yuan would be allocated to agriculture, forestry and water conservation, up 8.6 percent.

(Reporting by Michael Martina, Li Hui, David Stanway and Stian Reklev; Writing by Ben Blanchard and David Stanway; Editing by Raju Gopalakrishnan and Robert Birsel)

Friday, February 28, 2014

E-waste in pictures

A classic "globalisation and the environment" story - how trade in e-waste from the West creates jobs but destroys lives in developing countries. 

One quote from one picture "Boys and young men smash devices to get to the metals, especially copper. Injuries, such as burns, untreated wounds, eye damage, lung and back problems, go hand in hand with chronic nausea, anorexia, debilitating headaches and respiratory problems. Most workers die from cancer in their 20s"

 I have included just two pictures from the article below.

Agbogbloshie: the world's largest e-waste dump – in pictures [Guardian]

 Old monitors are used to build bridges.

 Cows with open wounds graze on the site.


Do the middle aged pollute the most? Research paper.

CO2 increases with the share of 35-49 year old citizens.  Perhaps not surprising.  They work more, drive more and consume more than other age groups.  Policy prescription? Sensitive to different age ranges?  What happens if OECD only? Is this finding just a reflection of the typical industrial structure of countries with this age profile? Conclusion - I need to read the paper properly.





STEVEN LUGAUER, University of Notre Dame

RICHARD A. JENSEN,
University of Notre Dame - Department of Economics, University of Notre Dame - Department of Economics and Econometrics

CLAYTON SADLER,
University of Notre Dame - Department of Economics

We estimate the age distribution's impact on carbon dioxide emissions from 1990 to 2006 by exploiting demographic variation in a panel of 46 countries. To eliminate potential bias from endogeneity or omitted variables, we instrument for the age distribution in a country's current population with lagged birth rates, and the regressions control for total population, total output, and country and year fixed effects. Carbon dioxide emissions increase with the share of the population aged 35 to 49 years, and this result is statistically significant and quantitatively large.

Research paper: "An Economic Theory of Workaholics and Alcoholics"




Does this apply to academic economists? - least productive are alcoholics and the most productive workaholics?  Interaction term?  Read on for the abstract of the paper.



Economic Inquiry, Vol. 52, Issue 2, pp. 896-899, 2014

AARON FINKLE, Willamette University

DONGSOO SHIN,
Santa Clara University - Leavey School of Business


This paper considers the role of alcohol in agency problems in order to provide an economic rationale for alcoholics and workaholics. In our model, alcohol reduces productivity, but also can make imbibers blurt private information. We show that in the optimal contract, low-productivity workers are compelled to over-indulge in alcohol, while high-productivity workers overproduce output. Thus, workers are made into “alcoholics” and “workaholics” depending on their productivity. We conclude that excessive drinking (working) may be the result, not the cause, of low (high) productivity of workers.


Monday, February 24, 2014

WorldBank Infographic: What Climate Change Means for Africa and Asia

Good summary of the possible impact of climate change on these two vulnerable regions.

Infographic: What Climate Change Means for Africa and Asia [WorldBank]


Saturday, February 22, 2014

International trade in dead bodies

Cadavers are big business.   Have a guess at the price in 2004?
 
Estimates from the NYT article seem to be around $2,000 per cadaver but the numbers appear to be disputed.


"Imports of the weird" [Piers]

"Imported cadavers and human remains sparked quite a discussion in the office. A key part of most medical curricula, Gross Anatomy requires that students work on real human remains - and a good number of those cadavers enter the United States from abroad - in our records the supply seems to come mostly from the Caribbean."

See also this article from the New York Times: "The Logistics of the Cadaver Supply Business."

Wednesday, February 19, 2014

Paper: "Coal, Smoke, and Death: Bituminous Coal and American Home Heating"


Any environmental paper with the word "death" in it has to be blogged about.  Given the increasing use of coal around the world especially in China this has important implications.

"Coal, Smoke, and Death: Bituminous Coal and American Home Heating"


ALAN I. BARRECA, Tulane University

KAREN CLAY,
Carnegie Mellon University - H. John Heinz III School of Public Policy and Management

JOEL A,. TARR,
World Bank

Air pollution was severe in many urban areas of the United States in the first half of the twentieth century, in part due to the burning of bituminous coal for heat. We estimate the effects of this bituminous coal consumption on mortality rates in the U.S. during the mid 20th century. Coal consumption varied considerably during the 20th century due to coal-labor strikes, wartime oil and gas restrictions, and the expansion of gas pipelines, among other reasons. To mitigate the influence of confounding factors, we use a triple-differences identification strategy that relies on variation in coal consumption at the state-year-season level. It exploits the fact that coal consumption for heating was highest in the winter and uses within-state changes in mortality in non-winter months as an additional control group. Our estimates suggest that reductions in the use of bituminous coal for heating between 1945 and 1960 decreased winter all-age mortality by 1.25 percent and winter infant mortality by 3.27 percent, saving 1,923 all age lives per winter month and 310 infant lives per winter month. Our estimates are likely to be a lower bound, since they primarily capture short-run relationships between coal and mortality.