Adam Smith Had Nothing to Say on CSR

A nice little piece on Adam Smith's Lost Legacy talking about corporate social responsibility and Smith.

In the article Gavin Kennedy refutes any suggestion that the writings of Smith provide ammunition against CSR.

Corporate Social responsibility (CSR) is a modern proposition. Much of it arising from the problems associated with pollution, or with extractive methods that do not account for the environmental damage a firm’s operations cause to a locality.

Two responses already exist, or can be put under the ambit of laws, namely that polluters pay and that extraction processes must include the cost of restoring the land or sea to the situation before the process commenced. If ‘clean up’ costs make an operation unprofitable, then it should not commence, until technology resolves the clean up requirement.

But CSR that goes beyond these type of requirements, to requiring a firm to engage in social expenditures that do not arise from its operations, when not voluntarily offered, and are really an additional ‘tax’ on its revenues, in addition to the taxes on employee incomes, on local taxes for local amenities provided by local taxpayers, and on its profit taxes and other charges, are problematical. They are also the subject of current debate.

Global Warming - the most media hyped environmental issue of all time?

Enough of the good news stories. On the 26th of September Senator James Inhofe gave a lengthy speech on the media's reporting of global warming. This speech is a quite astonishing example of what the world is up against. However, the speech does need to be read and considered although with Senators like this I suspect we may be doomed after all.

Pdf of the speech with slides

Some quotes:

Recently, advocates of alarmism have grown increasingly desperate to try to convince thepublic that global warming is the greatest moral issue of our generation. Just last week,the vice president of London’s Royal Society sent a chilling letter to the media encouraging them to stifle the voices of scientists skeptical of climate alarmism.

During the past year, the American people have been served up an unprecedented parade of environmental alarmism by the media and entertainment industry, which link every possible weather event to global warming. The year 2006 saw many major organs of the media dismiss any pretense of balance and objectivity on climate change coverage and instead crossed squarely into global warming advocacy.

Perhaps there is good reason why the media has finally decided to write about climate change. On the "Hockey Stick" graph:

This graph purported to show that temperatures in the Northern Hemisphere remained relatively stable over 900 years, then spiked upward in the 20th century presumably due to human activity. Mann, who also co-publishes a global warming propaganda blog reportedly set up with the help of an environmental group, had his “Hockey Stick” come under severe scrutiny.

The “hockey stick” was completely and thoroughly broken once and for all in 2006. Several years ago, two Canadian researchers tore apart the statistical foundation for the hockey stick. In 2006, both the National Academy of Sciences and an independent researcher further refuted the foundation of the “hockey stick.”
http://epw.senate.gov/pressitem.cfm?party=rep&id=257697.

What chance do we have?

Second, what the climate alarmists and their advocates in the media have continued to ignore is the fact that the Little Ice Age, which resulted in harsh winters which froze New York Harbor and caused untold deaths, ended about 1850. So trying to prove man-made global warming by comparing the well-known fact that today's temperatures are warmer than during the Little Ice Age is akin to comparing summer to winter to show a catastrophic temperature trend.

So there is no man made effect then?

In addition, something that the media almost never addresses are the holes in the theory that C02 has been the driving force in global warming. Alarmists fail to adequately explain why temperatures began warming at the end of the Little Ice Age in about 1850, long before man-made CO2 emissions could have impacted the climate. Then about 1940, just as man-made CO2 emissions rose sharply, the temperatures began a decline that lasted until the 1970’s, prompting the media and many scientists to fear a coming ice age. Let me repeat, temperatures got colder after C02 emissions exploded. If C02 is the driving force of global climate change, why do so many in the media ignore the many skeptical scientists who cite these rather obvious inconvenient truths?

This is from a Senator in the US government remember.

My skeptical views on man- made catastrophic global warming have only strengthened as new science comes in. There have been recent findings in peer-reviewed literature over the last few years showing that the Antarctic is getting colder and the ice is growing and a new study in Geophysical Research Letters found that the sun was responsible for 50% of 20th century warming. Recently, many scientists, including a leading member of the Russian Academy of Sciences, predicted long-term global cooling may be on the horizon due to a projected decrease in the sun’s output.

There is more. Inlcuded in the speech is a reference of letter written by 60 scientists (letter). In it they state:

“‘Climate change is real’ is a meaningless phrase used repeatedly by activists to convince the public that a climate catastrophe is looming and humanity is the cause. Neither of these fears is justified. Global climate changes occur all the time due to natural causes and the human impact still remains impossible to distinguish from this natural ‘noise.’”

When asked if by the media "what if you were wrong?" Senator Inhofe replies:

My answer is blunt. The history of the modern environmental movement is chock full of predictions of doom that never came true. We have all heard the dire predictions about the threat of overpopulation, resource scarcity, mass starvation, and the projected death of our oceans. None of these predictions came true, yet it never stopped the doomsayers from continuing to predict a dire environmental future. The more the eco-doomsayers’ predictions fail, the more the eco-doomsayers predict. These failed predictions are just one reason I respect the serious scientists out there today debunking the latest scaremongering on climate change. Scientists like MIT’s Richard Lindzen, former Colorado State climatologist Roger Pielke, Sr., the University of Alabama’s Roy Spencer and John Christy, Virginia State Climatologist Patrick Michaels, Colorado State University’s William Gray, atmospheric physicist S. Fred Singer, Willie Soon of the Harvard-Smithsonian Center for Astrophysics, Oregon State climatologist George Taylor and astrophysicist Sallie Baliunas, to name a few.

So Senator Inhofe can rest easy. No wonder Bush is happy to do nothing - on Kyoto:

Many of the nations that ratified Kyoto are now realizing what I have been saying all along: The Kyoto Protocol is a lot of economic pain for no climate gain.

More "economics":

While greenhouse gas limiting proposals may cost the industrialized West trillions of dollars, it is the effect on the developing world’s poor that is being lost in this debate.

The Kyoto Protocol’s post 2012 agenda which mandates that the developing world be subjected to restrictions on greenhouse gases could have the potential to severely restrict development in regions of the world like Africa, Asia and South America -- where some of the Earth’s most energy-deprived people currently reside.

Expanding basic necessities like running water and electricity in the developing world are seen by many in the green movement as a threat to the planet’s health that must be avoided. Energy poverty equals a life of back-breaking poverty and premature death.

There is then a long rant against the media that has some merit looking at scare stories of ice ages from 1930's articles etc. On Al Gore's recent film "an inconvenient truth":

I am almost at a loss as to how to begin to address the series of errors, misleading science and unfounded speculation that appear in the former Vice President’s film.

The problems with Al Gore's film can be summarised as:

• He promoted the now debunked “hockey stick” temperature chart in an attempt to proveman’s overwhelming impact on the climate.
•He attempted to minimize the significance of Medieval Warm period and the Little Ice Age.
•He insisted on a link between increased hurricane activity and global warming that mostsciences believe does not exist.
•He asserted that today’s Arctic is experiencing unprecedented warmth while ignoring that temperatures in the 1930’s were as warm or warmer.
•He claimed the Antarctic was warming and losing ice but failed to note, that is only true of a small region and the vast bulk has been cooling and gaining ice.
•He hyped unfounded fears that Greenland’s ice is in danger of disappearing. He erroneously claimed that ice cap on Mt. Kilimanjaro is disappearing due to global warming, even while the region cools and researchers blame the ice loss on local land-use practices.
•He made assertions of massive future sea level rise that is way out side of any supposed scientific “consensus” and is not supported in even the most alarmist literature.
•He incorrectly implied that a Peruvian glacier's retreat is due to global warming, while ignoring the fact that the region has been cooling since the 1930s and other glaciers in South America are advancing.
•He blamed global warming for water loss in Africa's Lake Chad, despite NASA scientists concluding that local population and grazing factors are the more likely culprits.
•He inaccurately claimed polar bears are drowning in significant numbers due to melting ice when in fact they are thriving.
•He completely failed to inform viewers that the 48 scientists who accused President Bush of distorting science were part of a political advocacy group set up to support Democrat Presidential candidate John Kerry in 2004.

The conclusion:

Breaking the cycles of media hysteria will not be easy since hysteria sells -- it’s very profitable. But I want to challenge the news media to reverse course and report on the objective science of climate change, to stop ignoring legitimate voices this scientific debate and to stop acting as a vehicle for unsubstantiated hype.

It is good to have debate and all economists should encourage discussion of the scientific and economic issues. However, this article should make it very clear that statistics can be made to say pretty much anything. Who should the public believe? The only worry is that if the US government is full of like minded Senators the US is not going to move very fast in cutting emissions of Greenhouse gases. Comments welcome.

Maybe the planet is not doomed after all?

As dismal scientists, posting "good news" stories doesn't come easy but this is an excellent example of activism at work - it may even make the most hardened economist smile (and we get to see if the technology works). :-)

From the original Greenpeace blog.

Coal and Global Warming - the China effect

In today's Reuters news article (see link below) a "top economist" points out that coal will remain the biggest threat to the environment in the 21st century. This is an interesting article relating the price of coal and its possible increase in use. However, what this article fails to mention is the enormous increase in the use of coal in China.

The following 2 articles give us a good overview of the China problem. The Business Week article also gives an excellent insight into the level of corruption in China regarding the enforcement of environmental regulations.


http://www.planetark.com/dailynewsstory.cfm/newsid/38316/story.htm

OSLO - Cheap coal will be the main enemy in a fight against global warming in the 21st century because high oil prices are likely to encourage a shift to coal before wind or solar power, a top economist said on Thursday.

Coal emits far more greenhouse gases, blamed by most scientists for a rise in world temperatures, per unit of energy when burnt in power plants or factories than oil or natural gas.

"The most important environmental problem in the 21st century is coal, or you could say coal is the most important enemy," Ottmar Edenhofer, chief economist at the Potsdam Institute for Climate Impact Research in Germany, told Reuters.

Business Week (August 2005)
http://www.businessweek.com/magazine/content/05_34/b3948520.htm

China is at best at a standstill in its fight against environmental degradation. For all its efforts, China's unrestrained growth makes it one of the world's worst polluters. Most of the nation is still reeling from the devastation wrought by three decades of communist industrial development and the subsequent 25 years of quasi-capitalism. In 2025, China will consume 14.2% of the world's energy, compared with 9.8% in 2001. Because most of China's electricity comes from power plants that burn high-sulphur coal but lack effective emissions controls, acid rain falls on one-third of the country. And 70% of its lakes and rivers are heavily polluted, largely because more than 80% of China's sewage flows untreated into waterways. Six of the world's 10 most-polluted cities are in China, according to the World Bank, which estimates that pollution costs China more than $54 billion a year in environmental damage and health problems.

BBC (March 2005)
http://news.bbc.co.uk/1/hi/programmes/newsnight/4330469.stm

Supplying that energy comes at a cost. On the day we arrived in China, 214 miners lost their lives in a gas explosion. The safety figures suggest corners are being cut to maximise supply. Officially, 6,000 were killed in China's coal mines just last year - that's 20 a day. Methane explosions are the main culprit. But it's not just a safety hazard - methane's also a greenhouse gas, 20 times as damaging as carbon dioxide.

6,000 were killed in China's coal mines just last yearMost of the accidents happen in China's small, private mines where high production figures count for more than people's lives.

Girl Economist also has an interesting anecdotal China coal post from the 20th September.

Bush, CO2 and job losses - same excuses

One of the main themes of the "globalisation and the environment" debate is the link between environmental regulations and jobs.

We recently completed a UK study that showed that there was little or no relationship between environmental regulations and job losses. This merely reinforces a couple of US studies examining the same question. The literature review of our paper gives more information.

Although there may of course be job losses related to specific industries the net job losses may be very low for numerous reasons. For example, new "green" jobs will be created and also high skilled, high tech job created related to the Porter or innovation hypothesis. Secondly, as we also show in our previous papers looking at the pollution haven hypothesis, heavy polluters and also capital intensive and therefore largely imobile. It is not so easy, even with increased regualtions, for these massive industries and large energy users to just up sticks and move to a developing country.

So today, we hear that Bush has no plans for CO2 legislation See this article. I have just picked out three paragraphs that give the gist of the story. Always good to see the "White House" spokesman turning up. Instead of job losses it really all relates to the third paragraph. What is so wrong with big decisions?

NEW YORK - The Bush administration has no plans to ease its opposition to national limits on greenhouse gas output despite talk that a change may be under consideration, a White House spokeswoman said on Thursday.

"The president has said continually said that one of reasons he doesn't like a mandated cap is because it has the potential to move jobs overseas and hurt the economy," said Kristin Hellmer, spokeswoman for James Connaughton, the chairman of the White House Council on Environmental Quality.

A national cap on emissions would mean heavy industries in the United States, the world's top emitter of greenhouse gases, might have to make big decisions, like investing in alternative energy or clean-burning natural gas.

The issue for economists is to get out there are do a comprehensive US study that can provide some numbers that either supports or refutes Bush's claim.

Branson to save planet again - another day, another press launch

Branson is at it again. This time he has a real idea that seems to make perfect sense on paper (or in front of the world's press). The intransigence of the airline industry is however legendary. Will Branson's energy and public profile be enough? This blog will be watching closely and will of course attempt to report on progress long after the hype and the journalists have gone. Here are three of the more pertinent paragraphs from the article to give you some flavour of the new idea.

Virgin Group chairman British billionaire Richard Branson proposed a plan Wednesday to cut aviation emissions at busy airports, starting at London's Gatwick Airport.

He proposed "starting grids" be set up at major airports which would allow a plane to be towed from its stand by a small tug closer to the runway before takeoff, reducing the time engines are running.

Using starting gates, rather than the current practice of keeping a plane's engines running from push-back to take-off, would cut fuel consumption and on-the-ground carbon emissions for Virgin Atlantic aircraft by more than 50 percent at London's Heathrow Airport and almost 90 percent at New York's John F. Kennedy airport, Branson said earlier.

http://www.planetark.com/dailynewsstory.cfm/newsid/38287/story.htm

Economists on Climate Change - good press/bad press?

Whenever "climate change" and "economists" are included in the same sentence the general belief is that economists are likely to put a price on saving the planet and that that cost is likely to be prohibitive.

This article, that puts across the views of some "top" economists, does nothing to dispel the reputation of economists as being generally cold and heartless.

The issue here is not strictly about what economists say in their lengthy reports but how their statements are reported. This article is a classic example.

It is worth reading this ENN article in full. In my opinion it is poorly written but is a good example of how economists get "reported".

The first question they ask is:

Will the spending needed to prevent global warming cost the world more than just sitting back, or even enjoying the possible financial benefits of a hotter planet?

Exactly for whom and for how long these financial benefits will accrue is another question - Western governments and multinationals by any chance?

This quote is from Richard Tol, Senior Research Officer at Ireland's Economic and Social Research Institute.

"(My damage estimate) does hide some things that some people will get very upset about," Tol said. "From an economic perspective small island states are so tiny and people are moving out of there anyway."

As an example Tol estimates the welfare loss of the Maldives submerging at three times the inhabitants' annual salaries, in addition to the 100 percent loss of the country's GDP.

Citizens are happy to value the preservation of the global ecosystem at a cost of 50 euros per person per year, Tol says, but added he does not factor in the risk of rapid sea level rise.

Richard Tol is one of the leading experts in this field - I wonder if the quotes used in this article do him justice.

Then we have Robert Mendelsohn, professor at the Yale School of Forestry and Environmental Studies who argues that negative costs may still be less than the benefits.

"He sees a net global warming bonus in the near-term, as higher farming yields in northern countries offsets damage elsewhere, especially in Africa."

Not so good if you live in Africa - one suspects he should consider the effect on Europe of mass migration, increase in aid payments and the increased chance of civil unrest in Africa.

As an aside:

"He added that he does not cost species extinctions and health effects, and only crudely measures the cost of island inundations."

Sigh. Another example where simple quotes may not do the academic justice in the eyes of the general public.

The article concludes:

"Britain's Stern [Nicolas Stern - UK scientist] will present his findings to ministers in Mexico next week, a month before countries start talks -- expected to last years -- on a successor to take the Kyoto protocol beyond 2012."

This report will make interesting reading but environmental economists need to be careful to get their ideas across in a way that does not reinforce the generally negative view the public has of economists.

"Lear Jet Liberals" and an interesting US perspective on Kyoto and Europe

It is rare to read an article with so many quotable lines in it. The article in question is written by Debra Saunders from the Real Clear Politics website.

If it were not so amusing you could be forgiven for thinking that we are in fact "all doomed". It does however raise some good points that deserve a little attention.

Whilst the whole article is a "must read" I feel I must quote a few of the more salient points as they touch on a few of the thoughts I had on the flight over from the UK to the recent World Congress of Environmental Economists in Kyoto, Japan.

Limousine liberals, move over. You've been out-glammed by Lear Jet liberals who burn beaucoup fossil fuels in the sky as they soar across the globe fighting global warming.

Last week, they flew to their Mecca, the Clinton Global Initiative conference in New York. For the left-leaning and loaded, this is the meet that has it all -- the mega-rich paying to be seen caring about poor people and the environment, while posing for photos with former President Clinton.

After seeing the hundreds on environmental economists that had flown thousands of miles to present 30 minute papers to generally bored looking participants in Kyoto I must admit similar thoughts crossed my mind except for the mega-rich bit and the fact we probably (surely) all spent 15 hours in economy - bang goes the chances of getting a paper accepted next time. There was no Bill Clinton but the Prince of Japan (with the cool tash) was there for a while.

On the Kyoto agreement:

And forget that Kyoto has the depth of a cowboy movie set. The storefronts look like a general store and saloon, but when actors walk through the door, there's nothing there. The overwhelming majority of industrialized nations that signed onto Kyoto amidst much fanfare haven't cut their greenhouse gases.

In June, the United Nations reported that only two Western European signatories -- Britain and Sweden -- are on target to meet their greenhouse-gas reduction targets, which call for a worldwide reduction of 5 percent below 1990 levels in 2012.

Hurray for us. The defence for Bush?

Spain is spewing more than 40 percent above its 1990 levels. Canada is 30 percent over. By comparison, Dubya's America looks good -- emitting 16 percent more greenhouse gases than in 1990.

That's alright then. 16% increase can't be that bad can it?

What Debra said about Branson's offer (see previous post):

The big news of the CGI was an announcement by Sir Richard Branson, founder of Virgin Atlantic Airways, that he would donate $3 billion over 10 years -- his personal profits from his airline and train businesses -- to global warming research. That's more money than I'll ever see, or spend on R&D, so bully for Branson. Still, it should be noted that Branson said some of the money will go back to his own corporations' research. That's not quite charity.

Fair comment but as stated below, better than a kick in the contrails.

Finally some amusing comments on us Europeans (this must be golf related surely).

Besides, Branson hails from a country where some enviros believe flying is worse than a mega-SUV. The bishop of London recently referred to flying abroad on holiday as "a symptom of sin."

Europeans are acutely aware of the effect flying has on one's carbon footprint. Flying is the fastest growing source of greenhouse gases in the United Kingdom. As the Guardian reported, greenhouse gas emissions from flying more than doubled from 1990 to 2004, to 5.5 percent of the United Kingdom's emissions. It would not surprise me if someday Great Britain legislates a limit on short flights -- say, London to Edinburgh or Paris, trips you can make in a car or train about as fast as flying. That would be bad news for Virgin Express.

Is this saying that the UK actually has a good reputation for "greeness"? Perhaps the message is getting through?

Cleaner air for all Americans - at what price?

In a follow up to the previous post, it is interesting to note that on Thusday the US government approved new air pollution standards promising "cleaner air for all Americans".

Of course as one might have guessed:

"health and environmental groups said the revised rules are too weak to protect against lung disease and other pollution-related ailments."

while

"groups that represents U.S. electric power companies -- one key source of the particle pollution addressed by the standards - said the new rules were too stringent."

What is interesting is how the "economics" are treated which links back to our previous posts on the value of statistical life.

For example, on the benefits:

"The new standards will reduce premature deaths, heart attacks and hospital stays for people with heart and lung disease and bring health benefits valued at between $20 billion and $160 billion a year, Johnson said. "

whilst on the costs:

"Stanko said complying with the new standards would cost an estimated $20 billion to $60 billion a year. He said his group was considering possible legal appeal of EPA's decision.".

The related economic analysis is fairly standard Environmental Economics 101 with co-ordination problems amongst those who might benefit whereas the "losers" are far more able to coordinate their "lobbying". It will be interesting to see how any appeal progresses. It can only be a matter of time before the "costs" are related to "job losses" in an attempt to gain public support for the appeal.

A final point to note for those with ongoing heart and lung problems, don't hold your breath....

"States must meet these new standards by 2015, with a possible extension to 2020."

Brief exposure to dirty air may raise stroke risk

Within the broad "globalisation and environment" literature a body of work continues to analyse OECD pollution patterns despite the fact that pollution levels are falling in many such countries. Particular attention has been paid to the distribution of pollution across counties (US) or countries (EU) and whether emissions are converging or diverging. We have recently written a convergence paper here.

One motivation employed by us and others (e.g. Millimet and Maasoumi "Robust Inference Concerning Recent Trends in U.S. Environmental Quality,” Journal of Applied Econometrics 2005) is that there exists a "threshold" type effect where increasing concentrations have a non-linear effect on health.

The following planetark article therefore makes interesting reading:

http://www.planetark.com/dailynewsstory.cfm/newsid/38239/story.htm

NEW YORK - The risk of death due to stroke is associated with exposure to high concentrations of air pollution about 2 hours before death, Japanese investigators report.

Because this risk appears to be independent of 24-hour particulate matter levels, they suggest that air quality standards be based on hourly data, as well as 24-hour levels. Particulate matter, or PM, is the term used to describe the tiny particles emitted by automobiles, especially diesel vehicles.

Dr. Shin Yamazaki, an epidemiologist at Kyoto University, and associates collected data from the 13 largest cities in Japan regarding concentrations of suspended particulate matter 7 m diameters or higher (PM7), ambient temperature, plus other components of air pollution, from January 1990 to December 1994.

Amazon deforestation and soya prices - supply and demand

An interesting link to a study published online in Proceedings of the National Academy of Science using data from NASA's Moderate Resolution Imaging Spectroradiometer (MODIS) on the Terra and Aqua satellites and information from field observations. Sounds like hard work to me.

In this paper the authors examined cropland expansion in Mato Grosso (the Brazilian state with the highest deforestation and soybean production rates). They found that more than 20 percent of the state's forests were converted to cropland in 2003.

Studying Impacts of Amazon Deforestation

Now for the economics -

In addition to mapping the change in land use type over Mato Grosso between 2001 and 2004, the researchers compared these changes with shifts in agricultural prices in the region. The study found a strong correlation between the amount of land deforested and the average annual soybean price. As soybean prices rose in 2003, the conversion from forest to cropland increased, while the amount of land converted to pasture declined.

"In 2005, soybean prices fell by more than 25 percent and some areas of Mato Grosso showed a decrease in large deforestation events, although the central agricultural zone continued to clear forests," said Morton. "But, deforestation rates could return to the high levels seen in 2003 as soybean and other crop prices begin to rebound in international markets."

This result will be no surprise to an economist of course. The authors also mention that deforestion and land use is also related to the price of other products such as beef and timber.

Of more concern to the "climate change" debate is the following quote:

Converting forests to cropland also has a more pronounced ecological and climate impact than other land conversions because it involves the complete removal of land biomass, including tree trunks, stumps and woody roots. "The carbon once contained in the living material and soil is released into the air from multiple fires during the clearing process, causing atmospheric carbon dioxide concentrations, a primary greenhouse gas, to increase," said co-author Ruth DeFries, University of Maryland. Of all land uses and types, croplands are also one of the least efficient at absorbing carbon from the air.

It might be interesting to look behind this data and find out whether multinational organizations are behind this land clearance. One may not have to look to far to find the hand of US and western multinationals searching for a source of cheap food.

Corruption and the Environment II

Hot on the heels of yesterday's post on the link between pollution and local officials (corruption) in China comes and ENN article about the launch of the "Institute of Public and Environmental Affairs" in China.

http://www.enn.com/today.html?id=11288&ref=rss

BEIJING — China needs to break ties between polluting industries and local officials if it is to succeed in cleaning up its badly tainted water supplies, the founder of a new environmental group said Tuesday.

The government also has to spend more on environmental enforcement and improve public accountability, said Ma Jun, director of the Institute of Public and Environmental Affairs.

A report last month by China's parliament accused local officials of failing to enforce standards for fear of hurting industry. It said emissions of sulfur dioxide -- the chemical that causes acid rain -- are rising at a time when the government is promising to cut pollution.

"If we can't even enforce our environmental standards on the industrial polluters, how can we enforce them on our sewage plants who have close ties to authorities?" Ma said at a talk for foreign correspondents.

"There's a need to break interest links because ... those who benefit are included in the government structure. They can make decisions, but those who are affected -- the communities, the public -- are not effectively involved in this."

This article provides additional motivation for some research that is currently on going with a PhD student of ours at Birmingham.

Style and Comments

Apologies - we have just realised we had comment moderation without knowing what it did. Comments are now easier to add.

We have also changed the template as the font became too large in Minima and we did not know how to change it back after some excessive messing about with the code :-)

Pollution and Fatality Rates

A recent article in Epidemiology arrives at the following conclusion:

Women who live within 50 meters of busy roads face an increased risk of dying from a heart attack, stroke or other cardiopulmonary cause, according to a new study.
Exposure to particulate matter -- the tiny particles emitted by automobiles, especially diesel vehicles -- is probably the cause for their increased mortality, Dr. H.-Erich Wichmann, director of the Institute of Epidemiology of the GSF-National Research Center for Environment and Health in Neuherberg, Germany, told Reuters Health.

http://www.planetark.com/dailynewsstory

The key word in the above paragraph is "probably". As economists we would like to think that the authors controlled for all the other factors that can affect mortality.

It is likely that women who live close to busy main roads share other characteristics. Does the study control for income? Certainly in the UK the better off tend to live away from busy roads. What else is income correlated with? The propensity to smoke cigarettes, the quality of diet, whether your partner smokes etc. All these factors need to be controlled for if we are to believe these results. However, at face value we should perhaps not be surprised by the findings.

In a related piece of work I am presenting a paper at the European Association of Labour Economists (EALE) conference in Prague this week:

Cole, M.A., Elliott, R.J.R. and Lindley, J. (2006). Dirty Money: Is there a Wage Premium for Working in a Pollution Intensive Industry. [Abstract]

Our results show that there is a small wage premium for employees working in dirty industries. Talking of which, I had better start preparation on my talk.

Link to the EALE programme where there are a few Value of Statistical Life papers in addition to our own (see previous post on this topic for more information).

Corruption and the Environment

In the economic literature a number of papers have recently emerged examining the relationship between corruption and the environment. We have written a couple of papers in this area as has Per Fredriksson.

More recent work considers the impact of corruption on the environment in China. A reader kindly e-mailed a link to the following news article from China that sheds some light on the impact of local government on regulation enforcement.

http://english.sepa.gov.cn/

Pan Yue: Major Environmental Accidents in Gansu and Hunan Related to Local Administration Omission and Critisized Officers Liable Severely 2006-09-14

Government watchdogs responsible for recent pollution incidents in Gansu and Hunan provinces should be severely punished, a high-ranking state environmental official said Thursday.

The emergencies have been brought under control, and investigations into their causes have concluded, said Pan Yue, deputy director of the State Environmental Protection Administration.

"The incidents were both caused by negligence and malpractice by the local governments and environmental departments - and severely harmed the health of the people," he said, adding that the business enterprises involved were also to blame.

The government organizations ignored people's health in favor of economic growth and protected the enterprises, Pan said.

"The officials responsible should be punished severely," he said.

In Huixian County in northwest China's Gansu Province, lead poisoning resulted in the hospitalization of about 250 children under age 14.

Adults usually recover from mildly elevated lead levels, but children can suffer permanent impairment of their intelligence. People who survive toxic lead levels are likely to suffer some permanent brain damage, authorities said.

Investigations revealed that the Huixian County Non-Ferrous Metal Smeltering Co Ltd was the source of the pollution. The former state-run plant was privatized in 1996 and produced about 5,000 tons of lead a year.

The plant failed to pass an environmental assessment after an upgrade in 2004, and its waste disposal equipment did not meet national standards.

The factory continued to operate secretly after being told to cease production earlier this year.

"The local government and environmental department must be held responsible for this long-term pollution," Pan said.

The other serious pollution incident was caused by two factories in Hunan County's Yueyang County that released wastewater contaminated with high concentrations of an arsenic compound into the Xinqiang River. Tap water supplies to 80,000 people were tainted with the poisonous substance.

The releases could not have happened without the approval of local authorities, Pan said. The plants have since been shut down and their owners detained for questioning.

(China Daily 2006-09-15)

Dancing with Giants: The rise of China and India and their environmental impact

The World Bank have recently published a research document "Dancing with Giants" that examines how the rapid economic growth of these countries impacts on other countries.

Dancing with Giants

The document considers the standard economic "globalization" topics such as international trade, FDI, industrialisation and capital flows.

Chapter 5 of this document however, considers the environmental impact that these countries have both globally and locally.

Energy and Emissions: Local and Global Effects of the Rise of China and India.

The key questions that the chapter seeks to address are as follows:

1. What is likely to be the demand for energy—particularly oil and coal—under a businessas-
usual (BAU) scenario in China and India in 2020 and up to 2050?

2. What are likely to be the associated levels of emissions that could have damaging
consequences at the local level (such as particulate matter), regional level (such as ozone,
sulfur and acid rain), and the global level (CO2 in particular)?

3. What strategic domestic interventions in the development of the energy producing and
energy using sectors might make a significant difference in the energy path relative to a
business as usual scenario?

The article includes some good background graphs and tables and some decent analysis covering all of the main issues. An excellent set of references to papers in well known economic journals is provided at the back if further information is required.

African Farms and the Green Revolution

An interesting article from the National Geographic showing how the US may be willing to plough millions of $'s of charitable funds to help African farmers when perhaps all they need is to be able to compete with Western farmers on a level playing field. The recent Doha round failure says it all.

http://news.nationalgeographic.com/news/2006/09/060915-green-africa.html

Two major U.S. philanthropic groups will spend $150 million (U.S.) over the next five years to bring a "green revolution" to Africa's small farms.

The Bill and Melinda Gates Foundation and the Rockefeller Foundation last week announced that they will contribute $100 million and $50 million respectively to help Africa's rural farmers boost food production.

Working together as the Alliance for a Green Revolution in Africa, the foundations are seeking to develop and secure access to higher-yield, drought-resistant seed varieties that will grow in Africa's nutritionally spent soil.

So far, so good. However, when one considers the US and the West's stance at the recent Doha round negotiations that failed due, in part, to the West's instance on maintaining high tariffs on argicultural products it is clear that more could be done.

Others point to broader economic problems.

"I guess not even Bill Gates can do much about the Organization for Economic Cooperation and Development's agricultural and trade policies, which systematically sabotage the efforts of African farmers to produce more and better food," said Gran Djurfeldt, an agriculture expert at Sweden's Lund University.

Q & A with Bhagwati on Globalization

Jagdish Bhagwati (Columbia) is probably the best known economist looking at the broader topic of the "economics of globalization".

On 13th September Bhagwati was involved in a brief Q&A with Daniel Altman of "Managing Globalization". See http://blogs.iht.com/tribtalk/business/globalization/?p=138

In this article Corporate Social Responsibility (CSR) gets a mention in the last two questions. The penultimate question asks:

Q. An interesting aspect of being part of the global supply chain is the pressure exerted by foreign buyers on local suppliers in India and Pakistan to conform with international standards, e.g. labour codes of conduct; minimum wages; effluent treatment plants.

A. For local suppliers, the failure to adhere to international standards implies that lead buyers will not place potentially lucrative orders. On the one hand, the pressure on local firms in India and Pakistan to upgrade to international standards is positive, especially if foreign buyers are able to monitor labour conditions in factories, a responsibility that local governments tend not to fulfill in these countries. On the other hand, upgrading requires costly investments such as effluent treatment plants which all firms cannot easily afford.

This answer relates to a series of papers that Matt Cole and myself are trying to get underway/finish (see the ETSG presentation post) looking at "environmental spillovers" via the standard measures of backward and forward linkages. Data remains the largest obstacle to rapid progress in this area.

I am currently reading Bhagwati's Free Trade Today book. He has published many other books on this issue (many more academic than the one above including International Trade textbooks) - see the link below for other Bhagwati texts. His more popularist books provide a good overview of the free trade / pro-globalisation argument. His most recent book "In defence of globalisation" does what is says on the tin.

Jagdish Bhagwati

Is California dreaming? The gamble to cut greenhouse gases

The NY times have published an excellent 5 page article with some good economic analysis on the decision of California to impose strict regulations on emissions on suppliers outside its borders. The article asks whether such a policy is visonary or deluded.

The answer touches on a Porter hypothesis type argument we have mentioned in a number of previous posts.

New York Times 15th September

Is California dreaming? Can its multifaceted approach become a toolkit for other states? Will investors make the state the incubator for clean-energy technologies that will reduce its energy bills and buoy its economy? Or will all this turn California into a stagnating economic island of ever-rising electricity prices and ever-rolling blackouts?

Another interesting quote from the article links directly to our other favoutite topic - the pollution haven hypothesis (where little evidence has been found). Of course this does not prevent the usual quotes to be trotted out:

Allan Zaremberg, president of the state Chamber of Commerce, predicted that businesses would flee to unregulated areas and continue to emit climate-changing gases.

The good balance of the article was helped of course by talking about an economic study by Roland-Hoslt (UC Berkley) linking to Porter again:

Professor Roland-Holst argued that the new law would add $60 billion and 17,000 jobs — in fields like alternative energy — to the California economy by 2020 by attracting new investment.

It will be interesting to watch the California gamble as it develops. I suspect it will be more visonary than delusional.

Environmental regulations as trade barriers?

Today's ENN article titled "World Needs Clearer Rules To Avert Trade Rows" touches on a topic that environmental economists have been looking at for a while.

World Needs Clearer Rules To Avert Trade Rows
September 15, 2006 — By Alister Doyle, Reuters
OSLO — The world needs clearer rules to judge when trade curbs on environmental or health grounds are justified or are simply protectionist, a U.N. study said on Thursday.

Trans-Atlantic trade tensions could worsen without a common understanding of a "precautionary principle" in environmental law that is often invoked to allow trade barriers such as the European Union ban on U.S. genetically modified food, it said. "The seriousness of these disputes and the importance of the technology threaten great damage to international cooperation and law," said A.H. Zakri, director of the U.N. University's Japan-based Institute for Advanced Studies.

Countries sometimes use a "precautionary principle" to justify measures to prevent serious or irreversible harm even if the feared damage is not certain to happen. But the principle has no accepted definition worldwide.

In their 2003 article in the Canadian Journal of Economics paper Josh Ederington and Jenny Minier discuss whether international trade agreements should be extended to include environmental policy. This has spurred a number of papers in this area and indeed we have cited this paper many times. Here is the abstract:

Should international trade agreements be extended to include negotiations over environmental policy? The answer depends on whether countries distort levels of environmental regulations as a secondary means of providing protection to domestic industries; our results suggest that they do. Previous studies of this relationship have treated the level of environmental regulation as exogenous, and found a negligible correlation between environmental regulation and trade flows. In contrast, we find that, when the level of environmental regulation is modelled as an endogenous variable, its estimated effect on trade flows is significantly higher than previously reported.

Ederington and Minier

One Planet, Many People - Excellent Teaching Tool

A link to this website was emailed to me - thanks. This appears to be an excellent resource for anyone teaching or studying Environmental courses (economic or otherwise).

The site includes images, powerpoint slides, interactive maps, a news section and much more.

Check this out. I have also added it to the sidebar.

http://www.na.unep.net/OnePlanetManyPeople/index.php

One Planet, Many People: Atlas of Our Changing Environment provides a comprehensive, visual presentation of scientifically verifiable information about changes in the global environment, shown through state-of-the-art remote sensing technology. A collection of 405 Powerpoint slides divided into Regional and Thematic sets covering 11 contemporary and dynamic themes - Introduction to the Planet, People and Planet, Atmosphere, Coastal Areas, Urban Areas, Water and Lakes, Forests, Cropland, Grassland, Tundra and Polar Areas and Extreme Events - and 6 geographical regions - Africa, Asia and the Pacific, Europe, Latin America, North America and Polar Regions - can now be downloaded free of charge.

Drought-Prone Beijing Must Cap Population Growth

Another take on my previous "Chinese Technology" post - this time Beijing needs to curb its population growth or face a shortage of water.

http://www.enn.com/today.html?id=11254&ref=rss

The city's population had grown from 13.7 million to 15.4 million in the past five years, but should be capped at 16 million in 2010 and 20 million in 2020, the Beijing News said, citing a Beijing Municipal Development and Reform Commission report.

Annual population growth would have to be kept to 200,000 to guarantee adequate drinking water, the daily reported. Drought in 44 percent of the municipality had further strained water supplies to the city proper, the China Daily reported, despite above-average summer rainfall this year.

"The parched capital had largely escaped the worst drought in 50 years that hit some areas," the paper quoted Tang Guang, a meteorological bureau official, as saying.

Ads and Amazon: Blog policy

This is just a quick post to clarify the advertising presence on this blog.

As a general rule we believe advertising to be rather distasteful and not to be encouraged. However, we believe that Amazon links are excellent tools for the blogger to allow the reader to get more information on a related book or topic of discussion.

For example, clicking on the Lomborg link from a couple of posts ago would take the clicker to a description of the text as well as reviews (critical and otherwise) and links to related texts in the area that may be of interest.

Therefore, to add what we believe to be useful content to this site, in our sidebar we currently have three Amazon ad listings with books listed under the following headings:

1. Globalization and the Environment
2. Environmental Economics
3. Economics of Globalization

We intend to add another listing for Undergraduate text books for Envionmental Economics courses to allow students to source set texts at often a fraction of the "new" cost via the second hand market that Amazon provides. Again, this will be provided to add content to this site.

US and UK search boxes are also included. At the moment the ad listings are to Amazon.com. For UK or EU readers I think clicking and then changing the .com to your own country setting (e.g. .co.uk) brings up the local prices etc.

As you can imagine, assuming a high percentage of our readers (if there are any) are likely to be students or other academics/economists, we hold out very little hope of making any money from this exercise. The latter will usually attempt to blag a free textbook from the publishers whenever possible and in my experience it is hard enough to get our hardup students to buy even the most important set text let alone interesting but only related texts.

Our expectation is that any pennies or cents that do filter through will be used to buy a cup of coffee once every six months (maybe one each in a good period).

The only other ads we include are some google adwords at the bottom of the blog to help define the bottom of the blog as much as anything but also to provide additional content (there is some useful material actually).

Finally, we include a link to a PDF-EXCEL converter which is an excellent, tested tool, that we use and recommend (and is FREE to all academics and students so no more pennies/cents there).

Ecotopia - the natural world in peril and full glory

According to the NY times in reference to a new "environmental" art exhibition:

“Ecotopia,” the edifying, entertaining and ecologically aware exhibition that opened last night at the International Center of Photography, means to get your attention.

Here is a link to the NY times article. "Ecotopia". Also included is an interesting multimedia walk through.

“Ecotopia” might be described as “An Inconvenient Truth” in exhibition form. It is a tale of beauty and devastation told by nearly 40 photojournalists and artists. Their viewpoints vary, as do their subjects and forms, but you rarely escape a sense of nature’s vast, incalculable richness or of photography’s ability to do it justice. There may be no greater meeting of subject and medium.

For environmental degradation the following exhibits appear to be spot on:

For tragedy, a small gallery offers continuous projections of the often unforgettable images made by several intrepid photojournalists. Their subjects include the black market in endangered species (Patrick Brown); the Inupiat people of Alaska, among the first victims of global warming (Gilles Mingasson); attempts to exact remediation from ChevronTexaco for waste disposal practices in the Ecuadorean Amazon (Lou Dematteis and Kayana Szymczak); the devastation of Katrina (Vincent Laforet, whose photographs were taken on assignment for The New York Times); and protests against logging in roadless American forests (Christopher LaMarca).

Perhaps I have solved my "undergraduate image" problem from two posts ago. If only I could get all my students to New York.

China's Water Woes Could Make it World Tech Leader

In an article dated the 13th September 2006 water "experts" are discussing the serious water problems in China in terms of a "Porter hypothesis" type effect where increases in environmental regulations or simple environmental necessity result in technological improvements that could leapfrog China into a technological leadership position.

http://www.planetark.com/avantgo/dailynewsstory.cfm?newsid=38068

More than two-fifths of cities, and tens of millions of rural dwellers pump used water directly into rivers, which risks damaging the heath of downstream users and the ecosystems of lakes where the water ends up.

Beijing plans to spend more than 330 billion yuan (US$41.5 billion) by 2010 to provide sewage treatment plants to all cities. If it invests in next-generation plants that effectively reprocess water, it could tackle waste and water scarcity while boosting its own economy.

"China, if it is going to remedy pollution, has to put in wastewater treatment. But that process constitutes an opportunity, because it can leapfrog to the latest technology," Paul Reiter, Executive Director of the International Water Association, told Reuters at a conference his group organised.

The bottom line is the old economic favourite of "scarcity".

China has around one fifth of the world's population but only seven percent of its water supply.

The country is investing billions in a project to transfer water from the river systems of the south to the arid north, but the scarcity of its resources means that ultimately China will have to focus on more efficient management.

For one of the original academic papers on the Porter Hypothesis see:

M. Porter and C. van der Linde, (1995), "Toward a new conception of the environment-competitiveness relationship", Journal of Economic Perspectives 9(4), Vol. 97 pp. 118.

Images for "Environmental Economics"?

It is the time of year when I consider changes/updates to the content of my undergraduate course in "Environmental Economics".

Last year I spent the first 10 minutes of the course showing a series of dated images of environmental degradation, pollution damage, smoke stacks, hurricane damage, oil spills and similar images in an attempt to provide some context to the question of why studying environmental economics is a worthwhile pursuit for an undergraduate economist.

The images are however of rather poor quality. One source that I have come across recently is from planetark.com - I have added a new link to "green issues" on the sidebar.

For those concerned that such material should have no place in a University lecture you can be sure that there will be no shortage of equations to grapple with from lecture 2 onwards :-)

The most expensive thing we can do is nothing - enter the economists

It is impressive what economists can achieve sometimes (or appear to achieve, at least).

Recent posts on environmental blogs and in national newspapers have talked about California's recent "trail blazing" stance on climate change. For example, from the Independent.

Setting trends: State that has blazed an environmental trail
By Rupert Cornwell in Washington
Published: 01 September 2006
Today California, tomorrow America, and the day after tomorrow, the world. So it has been in matters ranging from fashion and music to high tech and healthcare. But nowhere has the state's role as trendsetter par excellence been as great as in the field of the environment.

The deal announced between Governor Arnold Schwarzenegger and the California legislature, ordering a reduction of greenhouse gas emissions to 1990 levels in the state by the year 2020, is but the latest in more than half a century of trailblazing measures that have frequently become the national, and on occasion the international, norm.

If we go back just a few weeks we get this open letter from 60 (sixty) economists from California addressed to Governor Schwarzenegger including no less than 3 nobel laureates. Surely not a coincidence? Perhaps they are listening? The current shortage of nobel prize winners (in any subject) in the UK may make a similar letter from this country less likely.

The text of the letter is as follows:

August 2006
Dear Governor Schwarzenegger and California Legislators,

AS CALIFORNIA ECONOMISTS with expertise in energy and environmental policy,we believe that the State of California should move quickly to control global warming gases.

California’s economy is vulnerable to climate impacts, including changes in water availability, agricultural productivity, electricity demand, health stresses, environmental hazards, and sea level. Action to reduce emissions will lower the costs of adjusting to climate-related disruptions and serve as public insurance against more dramatic damages that can be expected when opportunities to adapt are limited.

While global climate change poses significant risks to the California economy, we believe that well-designed strategies to limit global warming gases can reduce emissions substantially at low or no cost to the state, and could yield economic (as well as climate) benefits.

Well-designed strategies can stimulate innovation and efficiency, which could help the state become a technological leader in the global marketplace.

Global warming gases will be best managed through a combination of policy approaches. Emissions caps combined with a range of regulatory and market-based implementation mechanisms offer a particularly potent strategy because they provide clear incentives for changes in business practices and the development of new technologies. Such an approach assures that economic forces are directed to finding the most efficient means of reducing emissions.

We urge you to accelerate climate action policies that will demonstrate political leadership and create economic opportunities in California. The most expensive thing we can do is nothing.

Open letter on climate change

Pollution and violent protest in China

What makes this associated press article interesting is the link between public protest, health and industrial location. After 10 years of being poisoned the polluting plant has now, eventually, been shut down. I suppose this can be considered Kuznets at work - as China grows and wealth increases there is a stronger demand for a cleaner environment. Moreover, Chinese environmental instutitions seems to be growing bigger teeth and beginning to use them.

There is a well developed academic literature looking at some of these issues for developed and developing countries examining the effect of formal and informal regulations. We are currently looking at a US ZIP code level study using TRI data to investigate how the location of polluting plants is influenced by community characteristics. We hope to have preliminary results soon.


http://www.enn.com/today.html?id=11235

ENN FULL STORY
Smelting Plant Blamed for Poisoning Hundreds in China Reported Many Times

September 12, 2006 — By Associated Press
BEIJING — A smelting plant in western China that poisoned hundreds of villagers by dumping lead into the air and water was repeatedly reported to local officials during its 10 years of operation, state media said Tuesday.

"They paid no attention," the official China Daily newspaper quoted local farmer Zhou Yongjie as saying.

A local environmental protection official, Yang Hua, told the paper the Huixian County Non-Ferrous Metal Smelting Plant had been ordered to stop discharging pollutants, but it continued to do so in secret. Yang did not say when the order was issued.

At least 877 villagers from Xinsi and Moba in Gansu province have tested positive for excessive amounts of lead in their blood since authorities began investigating in August, the official China Daily newspaper said. Among those poisoned were some 334 children under the age of 14, it said. No deaths have been reported.

Authorities said the Huixian County Non-Ferrous Metal Smelting Plant has been shut down and is being dismantled.

"It must be relocated to a place far from residential areas and water sources," said Ren Longjiang, a State Environmental Protection Administration official was quoted as saying.

Excessive amounts of lead can damage the nervous and reproductive systems and cause high blood pressure and anemia. Lead poisoning is characterized by a blue line around the gums and in severe cases can cause convulsions, coma and death.

The poisonings added to a string of recent pollution disasters in China that have prompted violent protests in some areas.

Source: Associated Press

The Heat is on: Climate Change Survey

In the Economist this week there is an excellent survey of climate change. Although there are the usual nods to Lovelock's The Revenge of Gaia and Lomborg's The Skeptical Environmentalist it is still well researched as one would expect from the Economist.

One of the more pertinent paragraphs related to climate change, other than the usual display of interesting facts and figures, is included below:

Ignorance and fear have spawned an industry. Governments, international bureaucracies and universities are employing many thousands of clever people to work out what is going on. Foundations are pouring money into research. Big corporations now all have high-level climate-change advisers with teams of clever young things scurrying around to find out what the scientists are thinking and what the politicians are planning to do.

http://www.economist.com/surveys/displayStory.cfm?story_id=7852924

As environmental economists we must at least try and ensure that the politicians are making informed decisions and that "what politicians are planning to do" considers an economic perspective whenever possible. A related debate is touched upon in a couple of interesting posts (and subsequent comments) in the Environmental Economics blog of John Whitehead and Tim Haab.

9/11 Pollution "Could Cause More Deaths Than Attack"

Given today's date I thought it would be of interest to re-post an article written in 2004 in the Independent Newspaper here in the UK. A link and a copy of the article are provided below.

Published on Sunday, September 12, 2004 by the lndependent/UK
9/11 Pollution 'Could Cause More Deaths Than Attack'
by Geoffrey Lean

Up to 400,000 New Yorkers breathed in the most toxic polluting cloud ever recorded after the twin towers were brought down three years ago, but no proper effort has been made to find out how their health has been affected, according to an official report.

The US government study provides the latest evidence of a systematic cover-up of the health toll from pollution after the 9/11 disaster, which doctors fear will cause more deaths than the attacks themselves.

The Bush administration suppressed evidence of increasing danger and officially announced that the air around the felled buildings was "safe to breathe". Another report reveals that it has since failed at least a dozen times to correct its assurances, even when it became clear that people were becoming sick.

The official report - sent to Congress last week by the US Government accountability Office - says that between 250,000 and 400,000 people in lower Manhattan were exposed to the pollution on 11 September 2001. But it shows that the government has yet to make a comprehensive effort to study the effects on their health. And it reveals that there is no systematic effort to adequately monitor the well-being of those affected, give them physical examinations or provide treatment. Scientific studies have shown that the cloud of pulverized debris from the skyscrapers was uniquely dangerous. The US government's own figures show that it contained the highest levels of deadly dioxins ever recorded - about 1,500 times normal levels. Unprecedented levels of acids, sulphur, fine particles, heavy metals and other dangerous materials were also measured.

Asbestos was found at 27 times acceptable levels, and scientists found about 400 organic alkanes, phthalates and polyaromatic hydrocarbons - many suspected of causing cancer and other long-term diseases.

The site at Ground Zero went on smoldering, becoming what scientists describe as a "chemical factory", creating new dangerous substances.

http://www.commondreams.org/headlines04/0912-01.htm

ETSG 2006 environmental papers

I am now back from the European Trade Study Group conference in Vienna. Over 250 papers were presented, both theoretical and empirical, on all area international trade with about 10 or so papers with a direct environment link.

For example, there were sessions on: Competition Policy; Culture and Trade; Empirical aspects of trade; Environment and Trade; Openness and Economic Growth; Exchange Rates; Outsourcing; Preferential Trade Agreements; Tax Competition; Inequality; Migration; Theory of the Firm.

Our reseach agenda is to take many of the topics listed above and to examine environmental aspects of each. The link between most of the above and their impact/influence on the environment is relatively clear. Hopefully, we will get around to discussing these "international aspects of environmental economics" in future posts (and papers).

Two empirical papers from the conference that are of interest to the Globalisation and Environment debate are:

The Impact of Trade on the Environment by Helen Naughton (University of Oregon)

and

Is Trade Bad for the Environment? Decomposing world-wide SO2 emissions 1990-2000 by Jean-Marie Grether (Neuchatel), Nicole Mathys (Lausanne) and Jamie de Melo (Geneva).


The conference was also notable for the significant number of "grandfathers" and "fathers" of international trade who, with their younger colleagues, frequented the many excellent drinking establishments of Vienna until the very early hours of the morning(s). A tradition of all the previous 7 ETSG conferences that I have attended and one that I am sure will continue into the future.

China Drought Raises Pollution Risk

An interesting article from Pacific Environment (31st Aug 2006) on how the current drought in China will mean less energy from Hydroelectric and hence the more (dirty) coal that will need to be used.

http://www.pacificenvironment.org/article.php?id=1899

Ebel said that shortages of water may now be China’s most pressing resource problem.

“Because you need water for every aspect of life. And if you don’t have it, you’ve got a real issue on your hands.”

Daniela Salaverry, China program associate at Pacific Environment, a nongovernmental organization based in San Francisco, said that China’s dependence on rainfall for hydropower and its willingness to pour huge investments into coal will mean greater problems with pollution in dry years.

China was already having trouble meeting its goals for reducing emissions, Salaverry said.“What’s happening in China right now is that the momentum that’s been pushing them forward—whether it’s GDP growth or industrial development or exporting resources and materials—that demand is continuing to grow.”

Coal will “continue to be China’s go-to [fuel] for energy output,” Salaverry said.

Value of a Statistical Life - age effects

The Value of Statisitcial Life literature is extensive but the fundamental issue of how economists value life is still controversial.

A recent paper by Joe Aldy and Kip Viscusi continue the controversy by looking at age and cohort effects.

The issue here is whether older (and indeed younger) individuals should have lower VSLs. As you can imagine a proposal to use such a measure by the EPA in the US was soon dropped after pressure from the "grey lobby". More discussion can be found in the paper linked below.

In time we hope to add some recent UK figures to the debate.

See the link and abstract below.

http://www.rff.org/Documents/RFF-DP-06-19.pdf

Adjusting the Value of a Statistical Life for Age and Cohort Effects

Joseph E. Aldy and W. Kip Viscusi April 2006 RFF Discussion Paper 06-19

To resolve the theoretical ambiguity in the effect of age on the value of statistical life (VSL), this article uses a novel, age-dependent fatal risk measure to estimate age-specific hedonic wage regressions. VSL exhibits an inverted-U shaped relationship with age. In the year 2000 cross-section, workers’ VSL rises from $3.2 million (ages 18–24), to $9.9 million (35–44), and declines to $3.8 million (55–62). Controlling for birth-year cohort effects in a minimum distance estimator yields a peak VSL of $7.8 million at age 46 and flattens the VSL-age relationship. The value of statistical life-year also follows an inverted-U shape with age.

JEL Classification: J17, I12
Keywords: value of statistical life, job risks, hedonic wage regression, VSLY

PDF to EXCEL - excellent research tool

We have recently started some work investigating Value of Statistical Life estimates for the UK (a topic I am sure we will return to as it provides many points of discussion - the US EPA for example, use VSL estimates for cost-benefit analysis of regulations etc.)

However, the data for some of the early years came in PDF format. To be usable data needs to be in Excel or STATA. When I did this it took many hours to covert the data (effectively long hand - text select and copy does not really work that well).

Only now do I discover this excellent package that is FREE for a year to academic users and students (just email them). I think it costs for anyone else.

If you ever need to convert PDF data to EXCEL see below for a description and link - given its use (it would have saved me hours) we have even stuck a link in the sidebar.

----------------------------------------------------------
PDF2XL

PDF2XL is a world leading data conversion tool, enabling business users to extract data from tables in PDF documents to Excel. With PDF2XL, business users can extract data themselves, fasts and easy, from any PDF file into their personal computing environment. PDF2XL handles any PDF file format, whether generated by application, reporting software, or scanned files.
Using PDF2XL, with just a click on the mouse, business users can export selected data to Excel, without loosing the formatting and table structure in the PDF, immediately ready for their work.

ETSG 2006 Conference in 7-9th September Vienna

I am just finishing off a presentation to give at the European Trade Study Group conference in Vienna. This conference is the largest gathering of international trade economists with over 200 papers being presented.

There is usually a couple of sessions on trade/FDI and the environment and this year we are to present our paper on "Multinationals and Environmental Spillovers: The Role of Ownership, Training and Experience" (Cole/Elliott/Stobl) .

This is part of a new research agenda to investigate the behaviour of Multinationals in developing countries. The link between multinationals and the anti-globalisation movement tends to focus on the "exploitation" angle - we investigate whether there is also a positive environmental effect.

Abstract:

In this paper we extend the debate on the environmental implications of multinational corporations in developing countries by examining a new mechanism through which foreign influence can affect the environmental performance of firms. We focus on the extent to which key workers who have had previous training or experience in a multinational company transfer and utilise their knowledge gained to the benefit of the local environment. To this end we use detailed firm-level data on manufacturing firms in Ghana. Our econometric results suggest that the foreign training of a firm’s decisions maker does reduce fuel use, particularly so in foreign owned firms. Foreign ownership per se does not influence fuel use or total energy use but is found to increase electricity use, perhaps the cleanest form of energy used by Ghanaian firms.

For the full conference programme and URLs to all the papers see:

http://www.etsg.org/ETSG2006/ETSG2006Programme.htm

Green Cities - recently published

The blog by Matthew Kahn was one of the first I came across when searching for one of his papers "The Geography of U.S Pollution Intensive Trade: Evidence from 1958-1994” in Regional Science and Urban Economics (2003).

This book is one I must read and the author discusses his motivation for writing this book on his blog. http://greeneconomics.blogspot.com/

For more details see the Amazon link below.

Global Warming - Facts and Figures

A couple of interesting figures from the BBC - check the source at the bottom of each figure. The original set of five figures can be found below.

http://news.bbc.co.uk/1/hi/in_depth/sci_tech/2004/climate_change/default.stm

Relatively short time period (from 1100 is available above).

An interesting figure looking at ice thickness.

Of course, all figures should be questioned. The article below gives a broad overview of some of the discussion related to the so called "hockey" stick chart of global warming. As ever, good science is the key.

http://news.bbc.co.uk/1/hi/sci/tech/3569604.stm

Proliferation of Green Blogs - at what cost?

A recent article by Richard Ladle poses an interesting question and argues that the large and increasing number of environmental related blogs are making it harder to sort fact from fiction.

Of course there is the irony of writing about this on a 1 week old blog.

http://news.bbc.co.uk/1/hi/sci/tech/5099764.stm

Blagging in the blogosphere

VIEWPOINT Richard Ladle
"Blogs are revolutionising the way millions of people around the world keep in touch with environmental issues, but at what cost? Richard Ladle, in this week's Green Room, says the growing popularity of web-based journals is making it harder to sort fact from fiction."

Later on Richard Ladle goes on to say:

"Scientific information and "expert" opinions are literally just a mouse-click away. However, unlike the traditional news media, the internet has no gatekeepers, no reviewers, and no authority to help you distinguish good science from the bad, environmental fact from environmental fiction."

When talking more specifically about environmental issues he
writes:

"Misrepresentation of environmental science on the internet is widespread and weblogs are by no means a special case. From deforestation rates in the Amazon to climate change statistics, nothing is necessarily how it appears."

"Furthermore, unlike most traditional forms of media that have gatekeepers, people whose job it is validate facts, check copy, exert some sort of quality control; the defining characteristic of the blogosphere is its lack of regulation. "

As academics we are acutely aware of the problems with broad statements on the environment. Matt Cole for example wrote a broadly critical review piece in 2003 for the Economic Journal on the Bjorn Lomborg book.

http://www.economics.bham.ac.uk/cole/globalisation/lomborgEJ.pdf

Richard Ladle then goes on to say:

"Poor reporting of environmental science may also have a disproportionate effect on children who are increasingly turning the internet as their preferred source of information and who are least able to judge thevalidity of claims or the legitimacy of one blog over another. "

"So how should we be responding to the challenges andopportunities presented by the blogosphere?"

"One way to deal with misrepresentation in blogs is to increase the weight of informed opinions in the blogosphere. An influx of scientifically informed opinion and accurate information would also help combat and correct misrepresentations in the traditional news media and draw publicattention to important new research findings."

The aim of this blog is to hopefully add to those blogs that are based on firm scientific foundations with, in theory, informed opinions.

As Ladle himself writes - readers of "environmental blogs" should:

• Check the data - strong scientific arguments are based on information from recognised sources that is available for public scrutiny, while weak or spurious arguments are often backed up with data from secondary sources or often no data at all.
• Take note of the language - arguments couched in hyperbolic language may be masking a lack of understanding or sound information.

The majority of the blogs I have read are excellent and well informed (links on the sidebar). Hopefully this will continue.

Rich Nations' Greenhouse Gases Up

We have done some work on the determinants of UK emissions of all pollutants (not just Greenhouse gases) (JEEM 2005) - it is an interesting topic and we are working on something similar for China at the moment.

Motivation for our ongoing reasearch is touched upon in a paragraph from the article below:

"And the data do not include emissions in the Third World -- not covered by Kyoto. Fast-growing China and India were the world's second and fifth biggest sources of greenhouse gases in 2000, according to U.N. data."

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Rich Nations' Greenhouse Gases Up, Despite KyotoSeptember 01, 2006 — By Alister Doyle, Reuters

http://www.enn.com/today.html?id=11175

OSLO — Industrialised nations' emissions of greenhouse gases edged up to the highest level in more than a decade in 2004 despite curbs meant to fight global warming, data compiled by Reuters showed on Thursday. The figures, based on national submissions to the U.N. Climate Secretariat in Bonn, indicate many countries will have to do more to meet 2012 goals set by the U.N.'s Kyoto Protocol for cutting emissions of gases from fossil fuels.

Emissions from 40 industrial nations climbed 1.6 percent overall to 17.8 billion tonnes of carbon dioxide -- mainly from power plants, factories and cars -- in 2004 from in 2003 even though oil prices were surging. "We're not on track to solve climate change by any stretch of the imagination," said Alex Haxeltine, an expert at the University of East Anglia in England. Governments were doing little to plan for cuts in emissions beyond Kyoto, he added.

Most of the 2004 rise was caused by a 1.7 percent gain in emissions in the United States, the world's biggest source of greenhouse gases, to a record 7.07 billion tonnes. Emissions in the European Union and Canada also rose while Japan's dipped. Most industrialised nations except the United States and Australia have ratified Kyoto, which obliges an overall cut in emissions of at least 5.2 percent below 1990 levels by 2008-12 with a shift to cleaner energies such as wind and solar power.

Kyoto is meant as a tiny first step by rich nations to slow global warming that many scientists say could spur more heatwaves, droughts, floods, more powerful storms and swamp coastal areas by melting ice sheets in Antarctica and Greenland. The 2004 data, most of it previously published by governments but not yet verified by U.N. experts, indicate that emissions are creeping up after a fall since 1990 largely caused by the collapse of Soviet-era smokestack industries. Overall emissions were 4.6 percent below 1990 levels in 2004, according to the data. Last October, the U.N. Climate Secretariat had said 2003 emissions were 5.9 percent below 1990.

Top scientist fears for climate

An interesting climate change article with a link to BBC news.

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One of America's top scientists has said that the world has already entered a state of dangerous climate change.
In his first broadcast interview as president of the American Association for the Advancement of Science, John Holdren told the BBC that the climate was changing much faster than predicted.
"We are not talking anymore about what climate models say might happen in the future.
"We are experiencing dangerous human disruption of the global climate and we're going to experience more," Professor Holdren said.
He emphasised the seriousness of the melting Greenland ice cap, saying that without drastic action the world would experience more heatwaves, wild fires and floods.
He added that if the current pace of change continued, a catastrophic sea level rise of 4m (13ft) this century was within the realm of possibility; much higher than previous forecasts.
To put this in perspective, Professor Holdren pointed out that the melting of the Greenland ice cap, alone, could increase world-wide sea levels by 7m (23ft), swamping many cities.

http://news.bbc.co.uk/1/hi/sci/tech/5303574.stm