Wednesday, January 31, 2007

China, Vista and the power of globalization

It is impressive to see the power of globalisation at work. Within hours of its launch pirate copies of Microsoft's new Vista can be obtained in China for the princely sum of $1.30.

That is some cost saving.

Pirated Windows Vista sold in China

Even as Microsoft's long anticipated operating system, Windows Vista, was launched for home users around the world yesterday, Chinese software pirates were hawking copies on the streets, AFP reported. Counterfeit copies were being sold for US$1.30 each, complete with Microsoft Office and anti-virus software, on the same day of the launch. The pirated Vista was labeled "the official version of the new generation operating system" and came with an identification code to download the software. Sellers said pirated copies of Vista had been available for several weeks before the launch.

Tuesday, January 30, 2007

Renewable Resources, Pollution and Trade in a Small Open Economy: Research Paper

Another good "Globalisation and the environment" paper. Apologies for the academic nature of these posts but it is useful to get an idea of what economists are actually doing sometimes ;-).

The results from this paper seem entirely plausible. Another paper to read.

Renewable Resources, Pollution and Trade in a Small Open Economy
Date: 2006-11
By: Horatiu A. Rus (University of British Columbia)


Industrial pollution can have damaging effects on resource-based productive sectors. International trade creates opportunities for overexploitation of the open-access renewable resources but also for separating the sectors spatially. The paper shows that, depending on the relative damage inflicted by the two industries on the environment, it is possible that the production externality will persist and that specialization in the dirty good may not be the obvious choice from a welfare perspective. Also, the resource exporter does not necessarily have to lose from trade even when specializing incompletely, due to the partially offsetting external effects.

Keywords: Renewable Resources, Pollution, Production Externalities, Environment, International Trade
JEL: Q27 Q22 Q53

Water and Climate Change: Research paper

Although not on my active academic research agenda I suspect this will be an inceasingly "hot topic". It is good to see work being done in this area. Some broader based empirical work would be interesting.

Climate Change and Water Resources – An International Perspective
Date: 2007-01
By: Marianne Keudel

Climate change and its consequences are the focus of many environmental policies in the European Union but also in other countries. Whereas in the US marketable instruments like permit trading have already been implemented since the 1980s, the EU first implemented permit trading for CO2 emissions in 2005. Climate change also influences the availability of water resources; water levels of rivers in the EU are assumed to decrease in the next decades. Decreasing water levels, in turn, heavily influence the quality of these water resources. In some countries the instrument of permit trading is also applied to the regulation of water resources (quantity and quality). This paper gives an overview of existing systems in order to show how such trading systems can create incentives for the efficient use of resources by means of pricing.
Keywords: river basin management, water trading, water quality trading
JEL: Q25 Q53

The Merits of New Pollutants (?)

I have read the abstract to this paper 3 times now as the title drew me in. I must be missing something.....I had better read the whole thing I suppose.

The Merits of New Pollutants and How to Get Them When Patents Are Granted

Grischa Sebastian Perino (

No 426, Working Papers from University of Heidelberg, Department of Economics

Abstract: The performance of market based environmental regulation is affected by patents and vice versa. This interaction is studied for a new type of innovation where new technologies reduce emissions of a specific pollutant but at the same time cause a new type of damage. A robust finding is that the efficiency of permits is affected by monopoly pricing of the patent-holding firm. This result carries over to other types of innovation. Taxes are inefficient if technologies produce perfect substitutes and share all scarce inputs. Moreover, the optimal tax on pollution might be negative.

Keywords: Innovation; Environment; Instrument Choice; Patents; Monopoly Pricing (search for similar items in EconPapers)
JEL-codes: Q55 L5 H23 O3 (search for similar items in EconPapers)

Monday, January 29, 2007

Krugman and Ethanol

Paul Krugman, the famous trade economist who must have inspired a 1000 PhDs including mine on trade and industrial restucturing (with a bit of incresaing returns and new economic geography liberally thrown in) now comments on Ethanol.

This also links to a recent discussion I had with David Maddison about the real costs of Ethanol as an alternative fuel.

As a sceptic is it good to see old Kruggy's take on it. Spot on.

Article is subscription. This is the Gristmill take on it.

Krugman gets to the heart of the (ethanol) matter

The Economist's View article is Paul Krugman: The Sum of All Ears.

Here is a Krugman quote:
Subsidizing ethanol benefits two well-organized groups: corn growers and ethanol producers (especially the corporate giant Archer Daniels Midland). As a result, it's bad policy with bipartisan support. For example, earlier this month legislation calling for a huge increase in ethanol use was introduced by five senators, of whom four, including presidential aspirants Barack Obama and Joseph Biden, were Democrats. In a recent town meeting in Iowa, Hillary Clinton managed to mention ethanol twice, according to The Politico.

Meanwhile, conservation doesn't have anything like the same natural political mojo. Where's the organized, powerful constituency for tougher fuel economy standards, a higher gasoline tax, or a cap-and-trade system on carbon dioxide emissions?

Can anything be done to promote good energy policy? Public education is a necessary first step, which is why Al Gore deserves all the praise he's getting. It would also help to have a president who gets scientific advice from scientists, not oil company executives and novelists.

Full aticle is worth reading.

IPCC and US lobbying - smoke and mirrors?

Hard to know what to make of this Guardian article:

US answer to global warming: smoke and giant space mirrors

For maximum impact the article starts by talking about how the US is asking scientists for last-ditch climate change solutions such as large mirrors in space or throwing up tonnes of reflexive particles into the atmosphere.
Scientists have previously estimated that reflecting less than 1% of sunlight back into space could compensate for the warming generated by all greenhouse gases emitted since the industrial revolution. Possible techniques include putting a giant screen into orbit, thousands of tiny, shiny balloons, or microscopic sulphate droplets pumped into the high atmosphere to mimic the cooling effects of a volcanic eruption. The IPCC draft said such ideas were "speculative, uncosted and with potential unknown side-effects".

What is more interesting though is the part of the article that suggests that the IPCC is being pressured by the US government to change the report because .... well, because they want it to be changed.

The US has also attempted to steer the UN report, prepared by the Intergovernmental Panel on Climate Change (IPCC), away from conclusions that would support a new worldwide climate treaty based on binding targets to reduce emissions - as sought by Tony Blair. It has demanded a draft of the report be changed to emphasise the benefits of voluntary agreements and to include criticisms of the Kyoto Protocol, the existing treaty which the US administration opposes.

The final IPCC report, written by experts from across the world, will underpin international negotiations to devise a new emissions treaty to succeed Kyoto, the first phase of which expires in 2012. World governments were given a draft of the report last year and invited to comment.

It is good to see that at least the US response recognises the possible contribution of Economists. Spot on. I just hope they pick a good sample of economists.
The US submission is based on the views of dozens of government officials and is accompanied by a letter signed by Harlan Watson, senior climate negotiator at the US state department. It complains the IPCC draft report is "Kyoto-centric" and it wants to include the work of economists who have reported "the degree to which the Kyoto framework is found wanting". It takes issue with a statement that "one weakness of the [Kyoto] protocol, however, is its non-ratificiation by some significant greenhouse gas emitters" and asks: "Is this the only weakness worth mentioning? Are there others?"

US response can be found HERE.

Saturday, January 27, 2007

Human Development Trends via Gapminder.

Now accessible through a google subsciption this is an excellent tool for those teching or studying development and/or environmental economics.

This software does a really excellent job of bringing the data to life based on the UNDP 2005 Human Development Report.


Gapminder produce an interactive presentation for the "Human Development Report 2005" by UNDP.

For a preview click HERE.

Friday, January 26, 2007

New 'shocking' IPCC report due

The Intergovernmental Panel on Climate Change (IPCC), intended to provide the scientific consensus on climate change, is due to publish its next report on Feb 2nd. According to the IPPC chairman, R.K. Pachauri, the new report will contain 'shocking' evidence of the link between human activity and climate change but also evidence that climate change is happening faster than previously thought.

The IPCC reports appear only every few years (this one has taken 6 years) and are the result of work by several thousand scientists the world over. The report should therefore be taken very seriously and will be commented upon in this blog in due course.

For a review of the leaked report see our previous post on this subject HERE.

Energy Revolution?

A new report has claimed that it is possible for world CO2 emissions to be cut by 50% over the next 40 years via a wholesale switch away from fossil fuels towards renewables. Despite previous claims that renewables can only meet a minority of our energy needs this report, by the German Aerospace Center, (commissioned by Greenpeace and Europe's Renewable Energy Council) claims that renewables can generate 70% of world electricity by 2050 and 65% of heat demand.

This 'optimistic' scenario contrasts with the business as usual scenario which is, erm, less optimistic with coal use still dominating. Both are illustrated below;

All fine in principle, but where's the political will?

The full report can be found here;

EAERE 2007 paper submission

One week left to submit a paper to the 2007 conference for the European Association of Environmental and Resource Economists in sunny and historical Greece. We hope to be there offsetting our carbon emissions as we go of course.
"You are invited to submit theoretical and applied papers in all areas of economics for presentation at the EAEREÂ’s annual meeting to be held in Thessaloniki, Greece, during June 27-30, 2007."

Keynote speakers (in alphabetical order) this year are:

Mr Stavros Dimas, European Commissioner for the Environment
Professor Paul Ehrlich, Bing Professor of Population Studies, Stanford University
Professor Michael Hoel, University of Oslo, Norway
Professor John List, University of Chicago and NBER, USA

WEBSITE website serves as a complete reference point on all matter related to the meeting. Through the website you can find all relevant information regarding the event, the University, accommodation, the city and leisure activities around the area.

China's Changing Energy Intensity

A new paper on China to read - their results are not surprising. We have done one paper in this area looking at Europe.

Cole, M.A., Elliott, R.J.R. and Shimamoto, K. (2005). A Note on Trends in European Industrial Pollution Intensities: A Divisia Index Approach. Energy Journal, 26, 3.[abstract]

China's Changing Energy Intensity Trend: A Decomposition Analysis
Date: 2006-12
By: Chunbo Ma (Department of Economics, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA)
David I. Stern (Department of Economics, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA)


China experienced a dramatic decline in energy intensity from the onset of economic reform in the late 1970s until 2000, but since then rate of decline slowed and energy intensity actually increased in 2003. Most previous studies found that most of the decline was due to technological change, but disagreed on the role of structural change. To the best of our knowledge, no decomposition study has investigated the role of inter-fuel substitution in the decline in energy intensity or the causes of the rise in energy intensity since 2000. In this paper, we use logarithmic mean Divisia index (LMDI) techniques to decompose changes in energy intensity in the period 1980-2003. We find that: (1) technological change is confirmed as the dominant contributor to the decline in energy intensity; (2) structural change at the industry and sector (sub-industry) level actually increased energy intensity over the period of 1980-2003, although the structural change at the industry level was very different in the 1980s and in the post 1990 period; (3) structural change involving shifts of production between sub-sectors, however, decreased overall energy intensity; (4) the increase in energy intensity since 2000 is explained by negative technological progress; (5) inter-fuel substitution is found to contribute little to the changes in energy intensity.
JEL: Q43

Radio 4 on the Stern Report: The Investigation

The BBC's Radio 4 last night broadcast a programme looking at the debate surrounding the Stern Report.

Our very own David Maddison was interviewed talking about discount rates. Richard Tol and Stern himself also appear.

The programme can be listened to by clicking this link.

The Investigation
BBC Radio 4's new documentary series that gets inside the stories that matter to people and is not afraid to challenge.

Simon Cox looks at the debate over global warming in this country. In October 2006, the Government published The Stern Review on the economics of climate change. But is the report worth the acclaim it got?

The related news story can be found here:

Running the rule over Stern's numbers
Richard Tol is a professor at both Hamburg and Carnegie Mellon Universities, and is one of the world's leading environmental economists.

The Stern Review cites his work 63 times; but that does not mean he agrees with it.

"If a student of mine were to hand in this report as a Masters thesis, perhaps if I were in a good mood I would give him a 'D' for diligence; but more likely I would give him an 'F' for fail.

"There is a whole range of very basic economics mistakes that somebody who claims to be a Professor of Economics simply should not make," he told The Investigation on BBC Radio 4.

Nasty. I may have gone as high as a C or even a B as there is no doubt that some serious work went into the report. Shame about the basic mistakes but these should not detract from the importance of the story.

There will be a Workshop on the Stern Report at the University of Birmingham on the 9th March 2007 with external speakers of the highest quality. Details later but it will be open to academics and non-academics.

IPCC draft report: "catastrophic" is the final verdict.

A draft of the new IPCC report has been obtained by the Observer and reported on in the Guardian.

Global warming: the final verdict
Global warming is destined to have a far more destructive and earlier impact than previously estimated, the most authoritative report yet produced on climate change will warn next week.

A draft copy of the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, obtained by The Observer, shows the frequency of devastating storms - like the ones that battered Britain last week - will increase dramatically. Sea levels will rise over the century by around half a metre; snow will disappear from all but the highest mountains; deserts will spread; oceans become acidic, leading to the destruction of coral reefs and atolls; and deadly heatwaves will become more prevalent.

The impact will be catastrophic, forcing hundreds of millions of people to flee their devastated homelands, particularly in tropical, low-lying areas, while creating waves of immigrants whose movements will strain the economies of even the most affluent countries.

'The really chilling thing about the IPCC report is that it is the work of several thousand climate experts who have widely differing views about how greenhouse gases will have their effect. Some think they will have a major impact, others a lesser role. Each paragraph of this report was therefore argued over and scrutinised intensely. Only points that were considered indisputable survived this process. This is a very conservative document - that's what makes it so scary,' said one senior UK climate expert.

Past assessments by the IPCC have suggested such scenarios are 'likely' to occur this century. Its latest report, based on sophisticated computer models and more detailed observations of snow cover loss, sea level rises and the spread of deserts, is far more robust and confident. Now the panel writes of changes as 'extremely likely' and 'almost certain'.

Now we need someone to write a comprehensive report outlining the economics costs of dealing with climate change - hasn't this just been done?

Tuesday, January 23, 2007

Globalization, displaced workers and "Flexicurity"

After seeing my first paper on "flexicurity" simply titled "Flexicurity", at a recent "Advances in Applied UK Labour Econometrics" workshop here in Birmingham the word seems to crop up everywhere I look.

A comparison of European and US assistance for, for want of a better phrase, "globalization induced labour market adjustment costs", is not only interesting academically and but also politically. The policy issue for the UK government is whether to attempt to follow more closely the Danish "flexicurity" model. I am yet to be convinced by the long term sustainability of the Danish model.

This is from the Economist via Economist's View.

Helping Displaced Workers

On the Danish model:
An alluring Danish model As a result, it may be better to focus on policies which improve job prospects for all workers. In Europe, Denmark has led the way. The Danish system of “flexicurity” appears to offer the best of both worlds: dynamic labour markets and low unemployment coupled with generous support for those who lose their jobs. ...

Employers hire and dismiss people at will. Around a quarter of the workforce is unemployed at some point in any year. But the jobless enjoy generous welfare benefits while they look for work, around 80% of their previous wage on average. To ensure this does not deter people from finding new jobs, the Danes oblige the unemployed to be trained and to look diligently for work. ...

But Denmark's approach has evolved over decades and cannot easily be copied. Besides, it is extremely expensive. ... Denmark ... spends more than 5% of GDP on the unemployed, including almost 2% of GDP on its “active” training and job-search programmes. ...

The conclusion is:
As public fears of globalisation rise, so will the political appeal of these schemes. But they will have less impact than getting other, more basic, policies right. Globalisation underscores the need for a flexible, dynamic labour market and a well-educated, adaptable workforce. And a worker whose health care is not tied to his job will be less worried about trade than one for whom job loss also spells the loss of medical insurance. The tasks of ... reforming health care ... and improving education ... are far more important than any amount of experimentation with wage insurance or retraining schemes. If politicians really want to respond to the worries caused by globalisation, those are still the best places to start.

Trade Liberalisation: Devastating Consquences for Fish?

This is a story that the "anti-globalization" brigade will pounce on. This is a classic globalisation scare story from Greenpeace that, in this case, appears to have some merit.

Aside: My current reading "Why Globalisation Works" by Martin Wolf, is essential reading for all those interested in globalisation issues and makes a convincing and well researched "pro-globalization" case. A bit thin on current hard-core academic reasearch and heavy on the hundreds of other "journalist-written books" for my liking but an excellent and interesting read none the less. A good antidote to the recently read "Globalization and its Discontents" by Joseph Stiglitz.

The answer of course, and covered by Wolf in his book, is to ensure that current legistlation can be enforced and to implement new rules on the sustainablity and management of our fisheries. No easy task when one considers the countries concerned. Weak fishery management policies are too blame but until this is sorted out the Greenpeace conclusions certainly represent a plausible scenario.

Trading Away Our Oceans
This paper shows the real and negative conservation and development impacts of trade liberalization in fish and fishery products, which were included in the catch-all scope of the Doha Round’s Non-Agricultural Market Access (NAMA) negotiations. It shows how further liberalization will speed up the pace of over-fishing, further increase unsustainable aquaculture production, and have generally devastating consequences for fish, the wider marine environment, developing countries and the one billion poor people worldwide who depend on fish as their primary source of protein. The evidence for this from case studies and projections carried out by different organizations is overwhelming.

The combination of tariff reductions and weak fish management and enforcement regimes will inevitably lead to over-fishing and the exhaustion and collapse of many of the world’s wild fish stocks. In the marine environment, trade liberalization will hasten the already significant losses of biological and genetic diversity caused by more than five decades of large-scale industrial over-fishing; while on dry land it will exacerbate poverty and insecurity for the millions of poor people who depend on the wild fishery for their food and livelihoods.

The PDF of this paper is available for download from the Greenpeace link HERE.

The report also includes a nice Adam Smith quote that I will just throw in for good measure:
“The Earth and the fullness of it belongs to every generation, and the preceding one can have no right to bind it up from posterity.” - Adam Smith, 1766 Lecture on Jurisprudence

Hat-tip: Treehugger.

Monday, January 22, 2007

Dam Busters: On the Cost of Repairing US Dams

This post follows a couple of previous posts we did on the economics of dams following a recent working paper about dams in India (forthcoming QJE??).

Climate Change in Africa: Shrinking lakes and the role of dams

Economics of dams in Brazil

The New York Times article below is written in the light of a recent dam collapse in Hawaii and is concerned with the shocking state of dam infrastructure in the US. What about the situation in less developed countries? What was a surprise was just how large the percentage of dams that are privately owned is. A cautionary tale indeed.

Before the Flood

In 2005, the American Society of Civil Engineers gave United States dams a D, a grade that is still justified two years later.

For starters, the nation’s dam stock is rapidly aging. Most dams need major repairs 25 to 50 years after they’re built, and most United States dams are at least 25 years old; some, like the 116-year-old Kaloko, were built more than a century ago.

As dams age, their danger increases. This is a matter of not just advancing decrepitude, but “hazard creep” — the tendency of developers to build directly downstream from dams, in the path of floods that would follow dam failures. The result is that even though Americans now build few dams, more and more dams threaten people’s lives. Chiefly for this reason, the number of dams identified in one estimate as capable of causing death and in need of rehabilitation more than doubled from 1999 to 2006, from around 500 to nearly 1,400. The civil engineers’ 2005 report placed the number of unsafe dams much higher, at more than 3,500.

On top of that, dam safety officials are so overworked that in most states, they don’t come close to carrying out all the inspections required by law. According to the engineers’ society, the average state dam inspector is responsible for 268 dams; in four states the number exceeds 1,200. It is no coincidence that even though Hawaiian law requires dam inspections every five years, Kaloko was never inspected.

Unlike, say, waterways and sanitation plants, a majority of dams — 56 percent of those inventoried — are privately owned, which is one reason dams are among the country’s most dangerous structures. Many private owners can’t afford to repair aging dams; some owners go so far as to resist paying by tying up official repair demands in court or campaigning to weaken state dam safety laws.

Thousands of dams have been abandoned by their owners, and over time, title to them has become obscure — 12 percent of the dams in the Army Corps of Engineers’ inventory have no known owner. As these dams become dilapidated, the states are left with the expensive task of repairing or dismantling them. Privatization advocates, take heed: this is a cautionary tale.

Climate change will also make dams more dangerous by increasing precipitation in many parts of the country, thus undermining the flood assumptions that underlie dam designs. Consider that in October 2005 and last May, two strong but hardly cataclysmic New England rain storms caused the overtopping or breaching of more than 400 dams in three states; a much fiercer storm would compromise far more dams, worsening flooding and potentially endangering thousands of people.

OK, so things have slipped a little. Surely dangerous dam can be repaired quickly and efficiently so as to potentially save many human lives?. What do the economists/engineers say?
The American Society of Civil Engineers estimated in 2005 that repairing dams threatening human life would cost $10.1 billion, while a 2003 study by the Association of Dam Safety Officials placed the cost of repairing all non-federally owned dams in the national inventory at $36.2 billion. In the last session Congress considered legislation to repair dams at a rate of $25 million a year for five years, but even that feeble gesture didn’t make it out of committee.

Sunday, January 21, 2007

New Blogs Entries: Conservation Finance, Eco-Critic and Celsias

Whilst we try to keep the blogroll to a relatively small and select few split into "Environmental Economics" and broader "Green Interest" blogs these three blogs warrant inclusion.

Conservation Finance is not new and I had thought I had linked to this long ago. This has some good articles on Carbon Trading and Derivative trading etc. A good resource for finance students run by Lars Smith.

Examples of recent posts include:

More problems with carbon credits

Finance Student’s Toolkit

Weather derivatives links

Eco-Critic is a new blog filed under green interest.
This blog aims to discuss the political issues associated with global warming and climate change. It seeks to address the problem from a non-ideological perspective, from neither left or right, but from the viewpoint that this issue transcends our petty political divides. Over time the author hopes to expand the scope of the blog to deal with the emergence of eco-critical issues in the humanities.

Celsias is a professional business site with a blog as a sideline with numerous writers. A very slick site. Again, it is primarily "green interest" and not academic. Celsias' opening line is:
Welcome to the world's first online community for households and businesses to get paid for reducing the carbon emissions from their everyday energy usage.

Transboundary Pollution: US toxic gases causing a stink in the UK

It appears the "special" relationship between the US and the UK has reached new highs (or lows). In addition to supporting the majority of US foreign policies in various locations around the globe it seems that we are also in the privileged geographical position to be the recipients of a 1,000 tons of US toxic gases each year.

As with all transboundary pollution problems market solutions can be hard to find and even harder to negotiate. Political lobbying of the current US government is likely to recieve short thrift.

Short of towing the British Isles somewhere else I suspect we have no choice but to keep breathing in US toxic gases. Perhaps we should ask for a contribution to the National Health service?

US toxic gases push British pollution over safety limit
TOXIC gases blown across the Atlantic from America are pushing British cities over the legal limit for air pollution and damaging people's health, an official study shows.

The study, by the Natural Environment Research Council (Nerc), suggests that up to 2,000 tons of ozone, originating in cities such as Chicago, Detroit and New York, are hitting Britain each day.

The American ozone usually boosts British levels by 20%-30%, sometimes rising to 40%, often pushing them beyond the safe limit of 50 parts per billion (ppb) set by the World Health Organisation.

Ozone is one of the most toxic of air pollutants, with even tiny concentrations causing asthma, bronchitis and other respiratory problems.

Scientists blame it for up to 800 of the 2,000 extra deaths caused by the 2003 heatwave, when ozone levels in Britain soared to more than 90ppb.

Successive British governments have tried in vain to cut levels and the Nerc study sought to find the reason. "Our research shows British pollution control measures are not working because a lot of this pollution is coming from America", said Alastair Lewis, professor of atmospheric chemistry at York University.

Washington is already under fire for rejecting efforts to curb carbon dioxide emissions, the main cause of global warming.

The findings on ozone emerged from one of the largest atmospheric chemistry experiments ever staged. The National Centre for Atmospheric Science, part of Nerc, took a leading role with agencies from America and Europe.

The results destroyed a basic assumption of atmospheric science that urban pollutants such as ozone and carbon monoxide do not travel far. In fact, they rise into the upper atmosphere and are blown eastwards at up to 150mph by the jet stream, with Britain and Ireland the first land masses in the way of pollutants arriving from America.

The study, to be published this week in the Journal of Geophysical Research, found 15 US cities contributing to British pollution, including Boston and Washington DC. The researchers calculate that 1,000 tons of carbon monoxide are also swept across the Atlantic towards Britain each day.

Saturday, January 20, 2007

Pollution and Olympics 2008: A showcase or a PR disaster?

A good post on China, the Olympics 2008 and the effects of pollution. There is also a little on how pollution may drag down China's growth and lead to excessive health care costs. Some of the law literature can provide interesting insights for economists.

Will the 2008 Olympics in Beijing Showcase Pollution as Well as World-class Athletes?
Runners coughed and gagged as they limbered up. Thick smog shrouded the Tsing Ma Bridge. Pollution index readings on this morning in February 2006 were at 149, the highest in months. Any reading over 100 is considered unhealthy.

But the 40,000 runners who had signed up to participate in China's largest footrace, the Hong Kong Standard Chartered Marathon, were ready to go, unaware of the tragedy ahead. By the end of the day, Tsang Kam-yin, a 53-year-old three-time marathoner would collapse and die about a third of the way through the event. About 20 runners would be hospitalized, many for respiratory ailments. In Internet postings following the race, runners complained about asthma attacks and hacking fits after crossing the finish line. "Everyone who took part in the marathon was at risk of harm to their health from pollution," Anthony J. Hedley, an official with the department of community medicine at the University of Hong Kong, wrote after the race, chiding the organizers for not taking more precautions.

Clearly things will need to improve before 2008. This is what is being attempted - I have pretty much included all of this section of the article as it all makes fascinating reading.
Transforming Beijing
China is clearly worried about its image. In the Olympic run-up, the government is attempting to transform Beijing into a national model of environmentalism -- a Chinese beacon of "greenism." In a recent interview, Sun Weide, deputy director of the Beijing Organizing Committee for the Games of the XXIX Olympiad, described a Herculean effort by authorities to bring Beijing's air pollution into line with global standards before the Olympic games. The city has relocated, or plans to relocate, more than 100 chemical, steel and pharmaceutical factories outside the city and replace 300,000 polluting taxis and buses with lesser-polluting vehicles. It is seeking to replace coal furnaces with natural gas furnaces and rushing builders to finish construction well before the Olympic games so that dust from the building projects has a chance to settle. Beijing authorities are building four new subway lines, adding many miles of rails and boosting the efficiency of public transportation.

Environmental experts applaud Beijing's efforts and suggest that a cleaner Chinese capital could be the legacy of the 2008 event. But they also note that China needs more than a quick-fix for its broader environmental crisis-in-the-making. They say China's problems stem from a weak legal system, corruption, poverty, two decades of double-digit industrial growth, government policies that put job growth ahead of the environment, and Communist propaganda that over-promoted man's ability to conquer nature.

The effects of pollution can be seen everywhere. Smokestack factories spew toxins and particulates into the air. Rivers teem with sewage. According to Worldwatch Institute's State of the World 2006 report, acidification has spread to 30% of China's cropland. Another study, by the Atlanta-based Georgia Institute of Technology, reports that the range of ozone exposure in agricultural regions in the Yangtze River Delta is enough to reduce yields by 10%.

Environmental officials in Guanxi Province, in southern China, note that 92% of the sewage from the province's cities flows directly into rivers. Installing treatment plants would cost $400 million, a prohibitively large amount in an area where the per capita income is about $1,500 to $2,000 a year.

China is far behind peer countries in air quality standards. According to the World Bank, 16 cities in the world with the worst air pollution are located in China. The country's Ministry of Science and Technology has estimated that 50,000 newborn babies a year die from the effects of air pollution. Tens of thousands of factories in the Pearl River Delta, an area where U.S. retailers like Wal-Mart source products for stores, are blamed for polluting Hong Kong. Some have suggested closing the factories in the days before the Hong Kong marathon as a way to help reduce the pollution.

Other countries aren't insulated from China's environmental problems. Chemical spills have flowed into eastern Russia, contaminating Russian drinking water, and Chinese-borne pollution has been detected on the California coast. Long reliant on coal for power, China's emissions of carbon dioxide, the most important global warming gas, are expected to surpass those of the United States in 2009, according to the International Energy Agency.

Pan Yue, vice minister of China's State Environmental Protection Administration, summed up the problem when he wrote, in a November 2006 commentary republished in the Wall Street Journal, that "China is dangerously near a crisis point" with its environment. A third of China's people drink substandard water and a third breathe badly polluted air, according to Pan. "True, China has made the kind of economic advances in three decades that required 100 years in Western countries. But China has also suffered a century's worth of environmental damage in 30 years."

One culprit is the weak legal system.
Weak Legal System

Eric W. Orts, professor of legal studies and business ethics at Wharton, says that pollution, if left unchecked, will drag down China's economic growth and result in huge healthcare costs. In addition, China's pollution will, over time, erode its competitive position in the global economy. "If you want to be an international player, you have to be a place where executives can come and live and not worry about their kids getting lung cancer."

And who can blame them.
One obstacle to faster environmental improvements is a weak legal system, according to Orts. Without the threat of economic damages from civil lawsuits, pollution controls have a "classic externality problem." There is no outside legal mechanism to punish polluters. "Mao [Zedong] basically killed or reeducated most of the lawyers and judges. There was a whole generation wiped out by the Cultural Revolution....You really didn't worry about contracts or personal property under Mao."

Close links have developed between private business and local governments, which jointly operate enterprises, even though local governments are charged with enforcing environmental and economic regulations. Yet enforcing environmental laws often works against the economic interests of local government. "The system is corrupt and there are no lawyers who can bring a basic lawsuit," Orts notes.

China hasn't embraced grassroots movements or non-profit organizations, such as Greenpeace or the Sierra Club, which have been forces for cleaner environmental movements around the world. The central government cracks down on non-governmental organizations, or NGOs, "because it's not part of their view of how society develops," Orts says.

There are signs of improvement and as quoted in the article:
The analogy that the Chinese offer is that "the nation is a construction site and everything is not tidy," Zhang says.

A good crtique of the Orts article can be found in the China Law Blog
Orts is right to list China's weak legal system as a cause of its environmental problems -- it certainly is not the solution it could be. But, he is both dead wrong and insulting to many fine Chinese lawyers to claim "there are no lawyers [in China] who can bring a basic lawsuit." I personally have worked with a number of Chinese lawyers who not only can bring basic lawsuits, but can bring complex lawsuits as well. And these lawyers are not just confined to Shanghai and Beijing either. I have seen them do it.

Orts is also wrong to believe money will greatly strengthen China's legal system. China's legal system is weak because it lacks independence and because so many of its older judges are poorly educated and not very knowledgeable about the law. Increased legal funding will not create judicial independence, nor will it have much effect on outmoded judges.

Orts' ascribing Beijing's intolerance towards NGOs because of "differing views on how Chinese society should develop" is just strange. Beijing cracks down on NGOs because it is a Communist country and Communist countries do not like rivals. It is strictly an issue of power.

China's legal system is a factor in its environmental problems, but blaming the lawyers and calling for throwing more money at it is not likely to solve anything. China is a one party state and until that one party deems curbing pollution more important than coddling its local bureaucrats, China's environment will continue to worsen.

For more recent news on China and the environment see this recent TIME blog article.

Friday, January 19, 2007

Robert Mendelsohn's Critique of the Stern Review

Robert Mendelsohn, a distingushed Professor of Environmental Economics at Yale University, has just published his long awaited critique of the Stern Review. Mendelsohn writes:

The Stern Report shows, given certain assumptions, that adopting an aggressive near term policy may be better than never doing anything at all. However, the question policy makers should be asking is how aggressive do policies need to be in the short term. Society needs to weigh a number of alternatives besides just stabilising concentrations at 550 ppm... the analysis needs to be based on solid science and economics before hundreds of billions of dollars per year are invested in abatement.

Like several other contributors to the debate Mendelsohn argues that the Stern report overestimates the damages and underestimates the costs of abatement.

For anyone interested Richard Tol, David Maddison, Robert Mendelsohn, Cameron Hepburn and Nick Stern himself will be taking part in a BBC Radio 4 programme at 8pm on Thursday 25th January.

UK Climate Change Prediction: 250,000 PCs Can't be Wrong

The BBC and Oxford University with the help of 250,000 individuals running climate change simulations on their own PCs have come up with a climate change prediction for the UK.

Your PCs forecast climate future
The results suggest the UK could be about 3C warmer than now in 75 years' time, agreeing with other models.

Full details will be revealed at the weekend in a BBC TV programme presented by Sir David Attenborough.

For 2020, the prediction is that temperatures in Britain will be about 1.2C warmer than in the 1970s, chosen as the baseline for this project.

Temperatures are already almost 1C warmer than in the 1970s, so the rise over the next decade or so will be small if the model is right.

In 2050, they will be about 2.5C higher than the 1970s; while by 2080, the figure could be 4C.

The predictions are not exact; and the further from the present day you look, the greater variability there is, so that by 2080 the rise could be as low as 2C or as high as 6C.

Along with higher temperatures the model predicts greater variability in rainfall, with increased risks of floods and of long dry periods.

"These figures basically support the scientific consensus at the moment," observed Dr Faull.

Obviously the results all depend on the calibration of the model that was developed by the Hadley Centre. It will be interesting to compare the results with the up and coming IPCC predictions in early February.

UK Retailers go Green: Cynical Marketing Ploy?

It seems that not a day can go by without one of the large UK retailers announcing that they are going green in some way or other. There is an element of following the crowd sprinkled with a little cynical marketing strategy.

Fundamentally, it could be argued that this is nothing more complicated than multinationals responding to the demands of the consumer. These arguably paltry green offerings will, I am sure they have calculated, result in higher not lower profits and some additional "green brownie points" with consumers.

However, as is often the case, any move in a green direction from retailers with such enormous clout and market power can only be good for the environment. If it comes at the cost of the manipulation of the average consumer then so bit it.

Some of the marketing techniques used via their "green hooks" are ingenious. There are many blog posts on this topic but this latest Reuters post gives a decent summary of recent developments.

Tesco Pledges to Take "Green" Message to the Masses
LONDON - Britain's Tesco pledged to spread an environmentally friendly message to its millions of customers and to set an example by spending over 500 million pounds (US$987 million), cutting prices on energy-efficient products a reducing pollution.

Leahy's comments are the latest "green" initiative from a major British retailer, as the industry comes under pressure from the government to do more to combat pollution and seeks to win over increasingly environmentally-conscious shoppers.

Marks & Spencer said on Monday it would spend 200 million pounds over five years to make sure its packaging and clothing will be biodegradable or compostable and that none of its waste will be dumped in landfill sites.

One of the main thrusts of the Tesco initiative appears to be the halving of the cost of an energy efficient light bulb. We have to start somewhere.

Wednesday, January 17, 2007

Crematorium Location: The Dead that Keep on Killing

Another irresistible news item that has good economic insights related to the age old problem of NIMBYism. It should be simple enough to find a market solution to the problem of where to locate crematoriums. It is also impressive how the collective action of local communities can block the development of perceived "pollution intensive industries"....

One might even suggest that money invested in a public health message to "clean teeth" would have a long term beneficial effect over and above the utility gained from not have to sit in a chair while someone in a white coat attacks you with a drill.

Notoriously, UK citizens are famed for their poor teeth relative to the average US citizen (or is that just a myth) - if true then the problem may be a lot more severe for us in the UK. We deserve to be told.

Communities Fight Crematorium Expansion
RICHMOND, Calif. -- Plans to build new crematoriums are running into resistance around the country over a fear some scientists say is overblown: toxic emissions, especially mercury fumes from incinerating dental fillings.

Silver fillings contain mercury, a substance that can harm brain development in children. Mercury from industrial plants has found its way into rivers, lakes and oceans, tainting many types of seafood.

"You're burning bodies, and the emissions are going up into the air," said community leader Johnny White. "They can put it somewhere else, away from where people live."

The Environmental Protection Agency estimates crematoriums emit 320 pounds of mercury per year, while activists say the real figure could be as high as three tons.

Now for some great 101 Economics - it is all about supply and demand. The supply of dead bodies is outstripping supply of processing space.
Just 6 percent of Americans were cremated in 1975. By 2004, 31 percent -- or 741,000 people -- chose cremation, according to the Cremation Association of North America. California leads the country with 122,000 cremations performed in 2004.

People are choosing cremation because it is less expensive and is perceived as more eco-friendly, since land is not used for burial, industry officials say.

The soaring popularity of cremation is driving demand for more crematoriums. There are currently more than 1,800 in the U.S., and about 200 new ones are built each year.

You couldn't make it up:
The Neptune Society of Northern California ran into unexpectedly fierce opposition in Richmond when it proposed a crematorium that would incinerate more than 3,000 bodies a year within two blocks of a daycare center and children's park. Facing protesters carrying banners reading "Over my dead body," the City Council voted in July to deny the necessary zoning change.

The result is the chilling conclusion:
"When the current generation of baby boomers passes away, we're the ones that are going to put the most mercury in the atmosphere," said John Reindl, a recycling manager in Dane County, Wis., who has researched the issue. "Now's the time when we really need to handle this issue."

Tuesday, January 16, 2007

Some answers to the great "why get a PhD in Economics?" debate

Excellent and amusing reading for those doing or thinking of doing a PhD in Economics. Summarises and provides links to a number of articles on the topic although they are all US oriented.

What about a PhD in Environmental Economics? Same issues apply although you might get to help save (or destroy) the planet after you graduate (...if you graduate).

Why Get an Economics Ph.D?

I like the following line discussing academia as a career:
A non-academic might have major investments in a family, friends who are not colleagues, hobbies, and voluntary organizations. Academics instead tend to have very concentrated emotional portfolios.

Breathing Earth: Life and Death (and CO2) in motion

Interesting website called "Breathing Earth" that provides a map of the world with each country's birth and death rate and time it takes for that country to emit 1000 tonnes of CO2.

The US leads the way with 5.4 seconds, China 9.2 seconds, UK 58 seconds and others such as Malaysia 3.5 minutes and Cameroon 2.5 hours and Lethotho at 11.6 DAYS.

The birth and death rate numbers are also interesting. In the time it took to post this blog entry nearly 3500 people have been born, 1500 have died and 600,000 tonnes have been emitted.

A nice little resource.

Hat-tip: Celsias "It pays to save the world".

6 minutes to midnight: Doomsday ticks ever closer

Can't resist posting on the up coming advancement of the doomsday clock that currently stands at 7 minutes to midnight, where midnight reflects "doomsday".

Given it was at "2 minutes to midnight" in 1953 (name that tune), as the threat of nuclear disaster rescinded, the increased threat of environmental disaster keeps the clock ticking forwards.

Only economics can save us now.

Scientists Prepare to Move Doomsday Clock Forward
WASHINGTON - The keepers of the "Doomsday Clock" plan to move its hands forward next Wednesday to reflect what they call worsening nuclear and climate threats to the world.

The symbolic clock, maintained by the Bulletin of Atomic Scientists, currently is set at seven minutes to midnight, with midnight marking global catastrophe.

The group did not say in which direction the hands would move. But in a news release previewing an event next Wednesday, they said the change was based on "worsening nuclear, climate threats" to the world.

"The major new step reflects growing concerns about a 'Second Nuclear Age' marked by grave threats, including: nuclear ambitions in Iran and North Korea, unsecured nuclear materials in Russia and elsewhere, the continuing 'launch-ready' status of 2,000 of the 25,000 nuclear weapons held by the US and Russia, escalating terrorism, and new pressure from climate change for expanded civilian nuclear power that could increase proliferation risks," the release reads.

The clock was last pushed forward by two minutes to seven minutes to midnight in 2002 amid concerns about the proliferation of nuclear, biological and other weapons and the threat of terrorism.

When it was created by the magazine's staff in 1947, it was initially set at seven minutes to midnight and has moved 17 times since then.

It was as close as two minutes to midnight in 1953 following US and Soviet hydrogen bomb tests, and as far away as 17 minutes to midnight in 1991 after the superpowers reached agreement on a nuclear arms reductions.

Monday, January 15, 2007

Stern Buzz and postscript

A good post from Ecological Economics "A Cross-Disciplinary Conversation".

Stern Report Buzz

A good summary of some recent commentries on the Stern Report.

John Quiggin also has a good review posted recently that includes some of the material from above.

Yet more on Stern (quicklinks and brief summaries)

For David Maddison's view see our previous post:

Maddison on Stern: A critical review

More importantly perhaps is news that Stern has issued a postscript and technical annex with sensitivity analysis - a word economists always like to see when assessing the credibility of empirical work.


Technical Annex

Economics Roundtable also have a special topic section dedicated to the Stern Report.

Sunday, January 14, 2007

Global Warming: Fast Facts Fast

A good link to some fast "facts on global warming" from the National Geographic.

Global Warming Fast Facts

As a taster here are facts 1 and 2.
There is little doubt that the planet is warming. Over the last century the average temperature has climbed about 1 degree Fahrenheit (0.6 of a degree Celsius) around the world.

The spring ice thaw in the Northern Hemisphere occurs 9 days earlier than it did 150 years ago, and the fall freeze now typically starts 10 days later.

The 1990s was the warmest decade since the mid-1800s, when record-keeping started. The hottest years recorded: 1998, 2002, 2003, 2001, and 1997.

• The multinational Arctic Climate Impact Assessment (ACIA) report recently concluded that in Alaska, western Canada, and eastern Russia, average temperatures have increased as much as 4 to 7 degrees Fahrenheit (3 to 4 degrees Celsius) in the past 50 years. The rise is nearly twice the global average. In Barrow, Alaska (the U.S.'s northernmost city) average temperatures are up over 4 degrees Fahrenheit (2.5 to 3 degrees Celsius) in 30 years.

The United Nations' Intergovernmental Panel on Climate Change (IPCC) projects that global temperatures will rise an additional 3 to10 degrees Fahrenheit (1.6 to 5.5 degrees Celsius) by century's end.

Thanks to Eco-critic for the hat-tip. Eco-critic begin:

"This blog aims to discuss the political issues associated with global warming and climate change. It seeks to address the problem from a non-ideological perspective, from neither left or right, but from the viewpoint that this issue transcends our petty political divides. Over time the author hopes to expand the scope of the blog to deal with the emergence of eco-critical issues in the humanities."

Saturday, January 13, 2007

Exxon Watch: funding cuts for CEI and other global warming skeptics

Following a series of posts on this blog about the behaviour of Exxon and its widescale funding of "think tanks", that are invariably global warming skeptics and pro-big oil, comes the news that such funding is to be cut.

For posts on this blog related to the Competitive Enterprise Institute (CEI) and Exxon see below:

Exxon going green? Not exactly, in fact, not at all.

A new year - time for an "energy diet"?

Inconvenient truth released: full truth, half truth or pure hollywood excess?

and my favourite:

Love Global Warming, Hate "Kooky English blogs"

Now we hear from the post-gazette that:

Exxon has stopped funding the Competitive Enterprise Institute, a Washington-based think tank that last year ran television ads saying that carbon dioxide, the main greenhouse gas, is helpful. After funding them previously, Exxon decided in late 2005 not to fund for 2006 CEI and "five or six" other groups active in the global-warming debate, Kenneth Cohen, Exxon's vice president for public affairs, confirmed this week in an interview at Exxon's headquarters in Irving, Texas. He declined to identify the groups beyond CEI; their names are expected to become public in the spring, when Exxon releases its annual list of donations to nonprofit groups.

Myron Ebell, director of CEI's energy and global-warming program, declined to comment about why Exxon didn't fund CEI last year. But he added: "Like any company, they are concerned about both policies and image.

"We're not at the mercy of our funders for what we believe. But we are dependent on them for funding to help promote our programs," he said. "Obviously, we would like to find a lot more funding on energy and global warming than we've had."

With such reduced funding it will interesting to see whether they continue to plough the same lonely furrow.

It would be good to think that the large number of well read (and not so well read) blogs that have questioned/ridiculed Exxon for the support of such groups (notably Treehugger and Gristmill) have made a difference.

If any Exxon executive is reading and would like to support a non-partisan academic blog that searches out the truth through scientific endeavor then look no further than the "Globalisation and the Environment" blog ;-)

Hat-tip: Treehugger

Rotting Alaskan Salmon: "Environmental and Economic Catastrophe"

For any environmental economics blog it is our duty to post on any news report that includes the famous phrase:

" environmental and economic catastrophe."

This time it is fish. When 800,000 pounds of Salmon have to be destroyed due to incompetence it is not surprising that fish stocks and the global environment are under pressure.

Alaska Charges Processer with Letting 400 Tons of Salmon Rot; 'Economic Catastrophe'
ANCHORAGE, Alaska -- A defunct fish processor accused of letting 400 tons of Alaska salmon rot and stiffing the fishermen who sold it has been charged with five misdemeanors for what prosecutors called "an environmental and economic catastrophe."

Troopers also found overfilled storage tanks, processed fish that were only partially frozen, glaze water that was not changed frequently enough, unclean storage bins used to transfer fish, and freezer units that were not cold enough. In the egg house, they found buckets of salmon roe coated in fly larvae.

In Oliver's case, prosecutors estimate 800,000 pounds of salmon were wasted and about 100 employees were unpaid or underpaid for their work.

Friday, January 12, 2007

"Breakneck growth" and "environmental bottlenecks" in China

The BBC report that:

China fails environment targets
The BBC's Dan Griffiths, in Beijing, says much of China's airborne pollution comes from large coal-burning power stations and car exhaust fumes, neither of which can be reduced quickly.

Many factories also ignore the law and pump toxic waste into rivers and lakes.

And with the country still focused on breakneck economic growth, there is little sign that things are going to get better any time soon, our correspondent says.

Another senior officials said the situation was worse than ever.

"2006 has been the most grim year for China's environmental situation," vice-minister Pan Yue was quoted as saying on the Web site of the State Environmental Protection Administration (Sepa).

The International Herald Tribune report the story as:

Report: China has pollution accident almost every two days
BEIJING: There was a pollution accident once almost every two days in China last year, with authorities receiving 600,000 environmental complaints, state media reported Thursday.

The number of complaints was up 30 percent over 2005, a State Environmental Protection Administration official was quoted as saying by the Xinhua News Agency.

Administration Deputy Director Pan Yue was quoted as saying that in addition to the 161 accidents last year, the administration also suspended 163 environment-damaging projects with a total investment of 770 billion yuan (US$96 billion). The projects included the construction of steel and power plants.

Xinhua said environmental pollution caused 511.8 billion yuan (US$64 billion; 49.16 billion) in economic losses in 2004, equal to 3 percent of gross domestic product that year.

Only when the costs start getting into this sort ofrealmm can we expect "economics" to give the environment a helping hand.

I like the quote from the Housten Chronicle:

"The environmental problem has become a key bottleneck for social and economic development," it said.

An unhealthy workforce is clearly going to be bad for growth. Access to clean water would also help one would imagine. The question is how tight is the bottleneck now and how much tighter will it get.

Chinese growth could soon be proverbially "hoisted by its own petard".

(hat-tip Hamlet, act III, scene 4, lines 206 and 207) and the ever thought provoking Gristmill.

Thursday, January 11, 2007

What has Economics ever done for us? (since 1970)

An interesting paper all the more interesting for empirical economists. I suspect this trend will continue as economics evolves. At the same time as the quality of the data and computing power is increasing, the world is running out of original questions for theorists to theorise on (and the math is getting increasingly complex).

Most of the most highly cited papers are by Econometricans. e.g. White, Grnager, Heckman, Dickey and Fuller, Engle, Hausman (you should get the idea by now).

The top Environmental Economics related paper (and pretty much the only one):

73. Box, G. E. P., Tiao, G. C. (1975) Intervention Analysis with Applications to
Economic and Environmental Problems Journal of the American Statistical Association 70(349), 70-79 726 citations.

"What Has Mattered to Economics Since 1970"
NBER Working Paper No. W12526
Author: E. HAN KIM
University of Michigan - Stephen M. Ross School of Business

University of Michigan - Stephen M. Ross School of Business

University of Chicago, Harvard University, National Bureau of Economic Research (NBER), Centre for Economic Policy Research (CEPR), European Corporate
Governance Institute (ECGI)

Full Text:

ABSTRACT: We compile the list of articles published in major refereed economics journals during the last 35 years that have received more than 500 citations. We document major shifts in the mode of contribution and in the importance of different
sub-fields: Theory loses out to empirical work, and micro and macro give way to growth and development in the 1990s. While we do not witness any decline in the primacy of production in the United States over the period, the concentration of institutions within the U.S. hosting and training authors of the highly-cited articles has declined substantially.

Wednesday, January 10, 2007

Exxon going green? Not exactly, in fact, not at all.

Two interesting articles looking at the recent Exxon announcement.

First the Guradian breaks the story.

Oil giant works on its PR
The leadership at ExxonMobil has promised investors that it will "soften" its public image in a bid to rid itself of a reputation for being green campaigners' public enemy number one.

So far, so good. However:
The company told the Guardian it was determined not to change its position, just to explain it better: "Greenhouse gas emissions are one of the factors that contribute to climate change," it said.

"This is an extremely complex issue but even with the scientific uncertainties, the risk (of global warming) is so great that it justifies taking action."

Think Progress have a neat little post on this story (Think Progress are another of these scary American think tanks by the look of it albeit left leaning this time (if that makes sense in a US context))
Think Progress is a project of the American Progress Action Fund. The Center for American Progress Action Fund is a nonpartisan organization. With the blog, CAPAF seeks to provide a forum that advances progressive ideas and policies.

The final paragraph from the article states:
Exxon’s New Position On Global Warming, Same As Its Old Position On Global Warming
Exxon can attempt to soften its language as much as it wants, but its record remains clear. According to a recent report by the Union of Concerned Scientists, Exxon has “funneled nearly $16 million between 1998 and 2005 to a network of 43 advocacy organizations that seek to confuse the public on global warming science.” The big-oil front group the Competitive Enterprise Institute has received $1.6 million from Exxon since 1998, using the funding to distort global warming research and attack any meaningful action to regulate carbon dioxide emissions.

Hat-tip: David Roberts.

Iranian air pollution: death by petrol

Today the BBC reported that nearly 10,000 people had died as a result of air pollution levels in Tehran.

Iran smog 'kills 3,600 in month'
Air pollution is estimated to have killed nearly 10,000 people in Tehran over a one-year period, including 3,600 in a month, Iranian officials say.

Most of the deaths were caused by heart attacks and respiratory illnesses brought on by smog, they said.

The scale of the problem led one senior official to say living in the Iranian capital was like "collective suicide".

Cheap fuel encourages car use in Iran, correspondents say, and many vehicles do not meet global emissions standards.

"It is a very serious and lethal crisis, a collective suicide," the director of Tehran's clean air committee, Mohammad Hadi Heydarzadeh, told an Iranian newspaper.

"A real revolution is needed to resolve this problem."

He said air quality had worsened and was linked to some 3,600 deaths in October. Many of the deaths were caused by heart attacks brought on by the air pollution.

New figures showed a sharp rise in pollution-related deaths in Iran, where 9,900 people died of pollution in the previous Iranian year (March 2005 to March 2006).

The latest assessments were based on World Bank figures which extrapolate mortality rates according to certain levels of pollution.

Planetearth also report on this story "Air Pollution Blamed for Killing Thousands of Iranians"

A couple of points to note:

1. Figures based on World Bank estimates - hmmm.

2. Petrol costs about nine cent per litre - now THAT is cheap fuel. Result - a lot of cars and a lot of driving. Iranians burn up to 70 million litres of gasoline each day apparently. That is A LOT of petrol.

The reasons for the high death rate is therefore clear. Of course, as expected or perhaps in the case of Iran not so expected, Western multinationals are not far behind:

Iran has turned into a regional carmaking hub with foreign firms such as Renault, Peugeot and Hyundai signing production deals in the Islamic Republic.

Of course, this could be seen as good news if Iranians then upgrade to cleaner and more efficient cars produced by Western multinationals where Western emission levels will be adhered to.

Finally, we have been planning an academic paper for some while looking at pollution in Iran and its determinants at the industry or firm level. As you can imagine, data is proving somewhat hard to obtain. It is early days though and we believe Iran is a fascinating country that is crying out for some good environmental analysis.

Tuesday, January 09, 2007

Second Life: real and virtual carbon footprints and Brazilians

On this blog, under the guise of globalisation and the power of multinationals, we have previously posted on the rise and rise of "Second Life"; the virtual world of avtars that has created millionaires, property developers, a housing boom but as yet, no pollution and hence limited demand for environmental economists.

See Globalization and the next dimension: Multinationals enter Second Life .

However, whilst the avtars may walk and flirt their way around Second Life free from air pollution, poisoned water and garbage, in real life it appears that these little cartoons are rather more energy intensive than you might think.

Treehugger today enlightened us with:

Second Life Avatars Consume As Much Electricity As Brazilians

which comments on a post by Nicholas Carr:

Avatars consume as much electricity as Brazilians

The maths is interesting, as are some of the comments.

More narrowly still, the average citizen of Brazil consumes 1,884 kWh, which, given the fact that my avatar estimate was rough and conservative, means that your average Second Life avatar consumes about as much electricity as your average Brazilian.

Which means, in turn, that avatars aren't quite as intangible as they seem. They don't have bodies, but they do leave footprints.

UPDATE: In a comment on this post, Sun's Dave Douglas takes the calculations another step, translating electricity consumption into CO2 emissions. (Carbon dioxide, he notes, "is the most prevalent greenhouse gas from the production of electricity.") He writes: "looking at CO2 production, 1,752 kWH/year per avatar is about 1.17 tons of CO2. That's the equivalent of driving an SUV around 2,300 miles (or a Prius around 4,000)."

For a snapshot of the Second Life economy click HERE.

UK: Champions of Europe

After recent failures at football, cricket, rugby (and most Olympic sports) it's good to know there is one pursuit at which the UK still excels; dumping waste into landfill. It seems we leave our competitors standing when it comes to throwing rubbish into large holes.

Apparently we threw 27 million tonnes of such rubbish into a number of large holes over the last year, whereas countries such as Germany and France only managed a paltry 10 million and 13 million, respectively. They're clearly not putting their backs into it. The reward for such a fine achievement is to be crowned the offical 'dustbin of Europe'. Makes you proud to be British :-)

Monday, January 08, 2007

Global Warming and Discounting

For all the arguments about the Stern report and discounting on here and other blogs and reports, the whole argument can be summed up by this Simpson's clip.

The Simpsons Tackle Global Warming

Hat-tip: Gristmill.

New Year Reading: Democracy, Endangered Species and Uncertainty

Here are three rather eclectic working papers that appear at first glance to be of interest (certainly to me). I hope to get round to reading them this week so I cannot vouch for the quality although the List paper is bound to be interesting almost be definition.

On the Link Between Democracy and Environment
Date: 2006-12
By: Drosdowski, Thomas

Using a considerable number of theoretical and empirical sources, we analyze the relationship between democracy and environment. First, we compare the situation in democracies and non-democracies. Later, we discuss environmental distribution conflicts and the role of economic growth. In addition, we illuminate the way in which democratization influences environmental policies, concentrating on the role of economic inequality. Moreover, we discuss the impact of electoral rules and systems, as well as polluting lobbies. Finally, we consider political alternatives and sum up the main conclusions.
Keywords: democracy, environmental policy, political economy
JEL: D72 Q56 Q58

Is the Endangered Species Act Endangering Species?
Date: 2006-12
By: John A. List
Michael Margolis
Daniel E. Osgood


We develop theory and present a suite of theoretically consistent empirical measures to explore the extent to which market intervention inadvertently alters resource allocation in a sequentialmove principal/agent game. We showcase our approach empirically by exploring the extent to which the U.S. Endangered Species Act has altered land development patterns. We report evidence indicating significant acceleration of development directly after each of several events deemed likely to raise fears among owners of habitat land. Our preferred estimate suggests an overall acceleration of land development by roughly one year. We also find from complementary hedonic regression models that habitat parcels declined in value when the habitat map was published, which is consistent with our estimates of the degree of preemption. These results have clear implications for policymakers, who continue to discuss alternative regulatory frameworks for species preservation. More generally, our modeling strategies can be widely applied -- from any particular economic environment that has a sequential-move nature to the narrower case of the political economy of regulation.
JEL: H23 H41

Uncertainty In Environmental Economics
Date: 2006-12
By: Robert S. Pindyck


In a world of certainty, the design of environmental policy is relatively straightforward, and boils down to maximizing the present value of the flow of social benefits minus costs. But the real world is one of considerable uncertainty -- over the physical and ecological impact of pollution, over the economic costs and benefits of reducing it, and over the discount rates that should be used to compute present values. The implications of uncertainty are complicated by the fact that most environmental policy problems involve highly nonlinear damage functions, important irreversibilities, and long time horizons. Correctly incorporating uncertainty in policy design is therefore one of the more interesting and important research areas in environmental economics. This paper offers no easy formulas or solutions for treating uncertainty -- to my knowledge, none exist. Instead, I try to clarify the ways in which various kinds of uncertainties will affect optimal policy design, and summarize what we know and don't know about the problem.
JEL: D81 L51 Q28

Sunday, January 07, 2007

A new year - time for an "energy diet"?

Whilst not wishing to endorse CEI literature I think the economics behind this article by Marlo Lewis writing for the CEI are worth reading.

Energy Diet for a Starving World?

The argument revolves around the "development/growth and energy use" trade off.
Whilst the West wants the rest of the world to grow (to alleviate poverty) and to provide new consumers for Western goods, the West is also attempting to persuade developing countries to use less energy.

As always the arguments are pushed too far to create a headline but it provides food for thought. What is interesting is that the CEI and others at least appear to admit that climate change is actually happening and are now resorting to the argument that "even if climate change is happening, there is nothing we can do about it in the US so let us carry on as normal".

Carbon dioxide emissions derive from energy use, which derives from, and fuels, economic activity. Controlling atmospheric CO2 levels is not remotely possible unless China, India and other high-growth developing countries restrict use of carbon-based energy.

But demand for fossil energy is growing, especially in developing countries. For example, the U.S. Energy Information Administration projects global energy consumption will rise by 71 percent between 2003 and 2030, with three-quarters of that growth in developing countries. Fossil fuels account for the lion's share of the increase in consumption.

The real inconvenient truth is that nobody knows how to meet current, much less future, global energy needs with low- and non-emitting technologies. Indeed, the only proven "method" for making deep emission cuts is that of the former Soviet Union and Eastern Europe: economic collapse.

Energy poverty is a scourge, shortening the lives and impairing the health of untold millions of people around the globe. An estimated 1.6 billion people lack access to electricity, and some 2.4 billion people still rely on biomass wood, crop waste and dung for cooking and heating. Daily indoor air pollution in energy-poor countries is much dirtier than outdoor air in the world's most polluted cities, and kills about 2.8 million people a year, most of them women and children. Reliance on biomass also takes a heavy toll on forests and wildlife habitat.

There is no known way to meet the developing world's energy needs without increasing use of CO2-emitting fossil fuels. Forcing developing countries to go on an energy diet would condemn them to decades of continuing poverty, backwardness and misery.

"But Lewis," Al Gore might object, "the Kyoto Protocol exempts developing countries from binding emission limitations. It only restricts energy use in rich countries, like the United States." That is correct—for now. But the developing-country exemption is a classic bait-and-switch ploy. Developing countries would not have ratified Kyoto unless it exempted them from carbon controls during the first compliance period (2008-2012). But Kyoto is doomed unless the exemption is repealed, and every insider knows it.

Kyoto supporters consider the treaty just a first step in a series of carbon-suppression agreements, each more stringent and inclusive than its predecessor. Even under favorable scientific assumptions, Kyoto would avert only 7/100ths of 1 degree Celsius of global warming by 2050—too little for scientists to detect. Taking the first step makes sense only if you are prepared to restrict energy use globally.

More critically, most European countries are not on track to meet their current Kyoto targets. They will surely miss the much tougher targets proposed for the second, post-2012 period unless they can buy large quantities of cheap emission permits from outside the European Union. China and India could provide these permits but only if they first agree to limit their carbon emissions. Expect increased European pressure on developing countries via trade penalties and foreign aid bribes -- to limit their emissions.

Even in the United States, high energy prices inflict hardship on low-income households. Millions of families already feel pinched by the high cost of gasoline, natural gas, and home heating oil. A Kyoto-style system would push energy prices even higher. Does the new Congress really want to take credit for pushing U.S. gasoline prices to record highs?

Many members of Congress professed outrage in late 2005 when gasoline prices spiked above $3 a gallon. Many European consumers pay twice as much for gasoline, due to high motor fuel taxes. Yet, despite higher fuel prices, European Union transport sector CO2 emissions increased almost 26 percent during 1990-2004 and are projected under current policies to be 35 percent above 1990 levels in 2010. How much higher than European-level gasoline prices does Al Gore think Americans should have to pay?

Friday, January 05, 2007

Icelandic whaling: kicking them in the Baugurs

As Iceland continues to allow the resumption of whaling, environmental groups are now threatening to boycott businesses owned by Icelandic interests. The main multinational at risk is the Baugur Group that owns many UK and European retail outlets.

Among the principal UK assets owned by the company are the supermarket chain Iceland, Booker wholesaler, Hamleys toy retailer, Woodward foodservice, Goldsmiths jewellery chain and Mappin & Webb retailer of luxury watches and fine jewellery, the fashion chains MK One and Jane Norman, the health products chain Julian Graves, LxB II a property development company, fashion company Mosaic Fashions Ltd and renown UK chain of department stores, House of Fraser.

I suspect an organized boycott and a few pickets outside Baugur owned interests would soon get this decision overturned. It will be interesting to see how much influence big business has in Iceland. I suspect, unlike the US, that it may be less than we think given Icelands top rated performance in the internationally published corruption indices where it is currently number 2 behind Finland (with the UK at 11 and the US at 20 equal with Chile).

Fundamentally therefore it is likely that economics and not reasoned argument will overturn this decision to resume whaling. However, when the Icelandic Foreign Minister Valgerdur Sverrisdottir says that the "international condemnation of whaling had become too emotional" perhaps he/she has a point.

Does catching 39 whales justify the loss of millions in profits for Icelandic firms? I suspect it works both ways and that the government will also see such losses as far outweighing the "scientific gains".

We await news of an organized boycott to see if economics and good hard cash can make the difference.

Interestingly the Baugur Group recently released the following statement stating the following:

Whaling is damaging Icelandic companies operating abroad
Says Johannesson, CEO of Baugur Group.

It is not long since the fisheries were our only source of exports. The Icelandic economy depended entirely on fishing and it was not strange that our position regarding whaling was simple: it was essential.


There is much opposition to whaling around the world today, whether we like it or not. The tourist industry here in Iceland is very fearful of the effects that whaling might have, and according to The Icelandic Travel Industry Association, many bookings made by foreign groups have been cancelled since the government's decision to begin whaling again.

It is not just the tourist industry that is affected. A large number of foreign companies owned by Icelanders have had problems relating to this issue, and many groups have threatened to cease trading with these companies unless whaling is stopped immediately. Whaling is damaging Icelandic companies and probably their continuing growth in the future.

Will big business protests make a difference? Will such statements prevent the boycotts happening? This will be an interesting test of consumer power and the organizational strength of the environmental lobby.

Iceland's Baugur Says Whaling Risks Boycotts

REYKJAVIK - The resumption of commercial whale hunts in Iceland could prompt consumer boycotts of the island nation's companies abroad, Baugur Group, owner of British and Nordic retailers, said on Thursday.

Iceland resumed commercial whaling last October after years of scientific hunts, saying it would allow whalers to catch 30 minke whales and nine endangered fin whales.

It has faced sharp criticism for the step, which snubs a 1986 ban by the International Whaling Commission, culminating in a formal protest in November from 25 nations including the United States and Britain.

"Environmental groups have also threatened to encourage people to stop shopping at Baugur-owned companies," Sindri Sindrason, spokesman for Baugur chief executive Jon Asgeir Johannesson, said.

Owner of UK retailer House of Fraser, Baugur described signs of damage to Icelandic tourism and threats by many groups to stop trading with foreign companies owned by Icelanders. It said this may hurt Iceland's attempts to diversify away from fishing.

It cited Icelandic Travel Industry Association evidence of cancelled foreign bookings since the resumption of the hunts.

"Whaling is damaging Icelandic companies and probably their continuing growth in the future," the release said.

"The fishing industry is and always will be important for Iceland. However, other sectors have been establishing themselves in the international business community with good results," it added.

Icelandic banks, retailers and investment firms have snapped up assets across the Nordic region, in Britain, and further afield in recent years, capitalising on surging growth at home to finance their expansion.

Sindri Sindrason, spokesman for Baugur chief executive Jon Asgeir Johannesson, said on Thursday several companies Baugur had investments in had been asked where they stood on whaling.

Last month, Icelandic Foreign Minister Valgerdur Sverrisdottir told Reuters the commercial whale hunt was not a threat to the environment and said that international condemnation of whaling had become too emotional.

BASF chemical leak: fatal and non-fatal injury

If such accidents can happen in the developed UK you have to wonder how many accidents of this type go unreported around the world. This article links to work we are doing on the wage premium workers recieve for working in industries such as these. Our results suggest that workers do get paid "extra" for working in such conditions and today's news justifies why this result should not come as a surprise.

One Critical after Toxic Chemical Leak

LONDON - One man is critical in hospital and dozens more needed medical treatment after a leak of toxic chemicals from a chemical plant in northern England on Thursday, site operator BASF and emergency services said.

BASF said the seriously injured worker was stable but undergoing treatment at Newcastle's Royal Victoria Infirmary.

Another employee is also in hospital under observation while 14 others were released after treatment following the incident at a plant in Seal Sands near Middlesbrough, northern England.

"Our thoughts and sympathies are with the BASF employees and their families. The condition of our injured colleagues remains our major focus and we will be monitoring their progress closely," said BASF's managing director Torben Berlin Jensen.

A spokeswoman for North East Ambulance Service said 37 people had been treated at the scene for burns, skin irritations and breathing difficulties.

A BASF spokesman said there had been a leak of hexamethlyenediamine, a chemical used in the production of acrylic and nylon fibres and plastics.

The German chemical company said it would launch an investigation into the incident along with the Health and Safety Executive and the Environment Agency.

The affected section of the plant will remain shut down as part of the inquiry.

Tuesday, January 02, 2007

Global Warming: First inhabited island washed away

Certainly not the last post documenting the results of rising sea levels.

The economic costs of forced evacuations and loss of productive land should be clear enough. The magnitude? Who knows but certain to be positive and rising.

Disappearing world: Global warming claims tropical island

For the first time, an inhabited island has disappeared beneath rising seas. Environment Editor Geoffrey Lean reports Published: 24 December 2006, The Independent.

Rising seas, caused by global warming, have for the first time washed an inhabited island off the face of the Earth. The obliteration of Lohachara island, in India's part of the Sundarbans where the Ganges and the Brahmaputra rivers empty into the Bay of Bengal, marks the moment when one of the most apocalyptic predictions of environmentalists and climate scientists has started coming true.


Eight years ago, as exclusively reported in The Independent on Sunday, the first uninhabited islands - in the Pacific atoll nation of Kiribati - vanished beneath the waves. The people of low-lying islands in Vanuatu, also in the Pacific, have been evacuated as a precaution, but the land still juts above the sea. The disappearance of Lohachara, once home to 10,000 people, is unprecedented.


Until now the Carteret Islands off Papua New Guinea were expected to be the first populated ones to disappear, in about eight years' time, but Lohachara has beaten them to the dubious distinction.

Human cost of global warming: Rising seas will soon make 70,000 people homeless.

Refugees from the vanished Lohachara island and the disappearing Ghoramara island have fled to Sagar, but this island has already lost 7,500 acres of land to the sea. In all, a dozen islands, home to 70,000 people, are in danger of being submerged by the rising seas.