Monday, July 30, 2007

US-China relations: Paulson Eyes Debate Shift to Environment

For Europe and the rest of the world it must seem strange that the US has now decided to bring the environment into the picture as a way of "reducing tensions". Those NGOs and governments that have spent years attempting to get the US government to get its own house in order cannot fail to see the irony of the US now (indirectly) lecturing China on its environmental record.

Paulson's argument is that there is so much tension relating to the trade negotiations why not start with something that concerns both countries - the environment. The idea is that there is "less" tension surrounding this subject. I can see that situation changing quite rapidly.

The fact that neither country signed up to Kyoto does, I suppose, give them some common ground. China's defence as always will be:

1. China's per capita CO2 emissions are way way below those of the US.
2. Any climate change happening now was a result of Western industrialisation and not the current Chinese growth.
3. Why should China not be allowed to grow as the West did?
4. A good percentage of China's pollution is a result of producing goods to sell in the West - meaning the West has effectively exported its pollution to China either directly (via foreign Multinational) or indirectly.

In China, Paulson Eyes Debate Shift to Environment [PlantetArk]
XINING - US Treasury Secretary Henry Paulson on Sunday acknowledged high trade tensions with China and said he would start a four-day visit by focusing on an issue with more common ground: the environment.

Aiming to keep his strategic economic dialogue with China on track amid controversies over Chinese product and food safety and currency legislation gaining momentum in the US Congress, Paulson will visit Qinghai lake in western China on Monday before meeting President Hu Jintao and Vice Premier Wu Yi on Tuesday and Wednesday.
The lake and surrounding glacial watershed are threatened by global warming and encroaching desert, with Paulson saying the area was a strong symbol of the need for US-China cooperation on environmental issues.

"There is much more tension in the trade area, so this is an important area where there is less tension and I think it's a good place to start this trip," Paulson told reporters on his plane on the way to China.

He said he would again press Hu and other top officials for faster appreciation of China's yuan currency and other reforms, such as moves to rebalance the Chinese economy away from exports and toward more domestic consumption and to increase foreign access to China's financial services sector.

Paulson's visit comes as US lawmakers, frustrated with slow progress in reducing US trade deficits with China, are advancing legislation aimed at pressuring Beijing to allow open markets to set the yuan's value.

The US Senate Finance Committee last week passed a bill that would allow companies to seek anti-dumping duties against products from countries that have "fundamentally misaligned" currencies and eventually intervention by the Federal Reserve.

Many US lawmakers and manufacturers believe the yuan is deliberately undervalued by 25 to 40 percent, keeping Chinese products cheap in US consumer markets. Sen. Charles Grassley of Iowa, a Republican, said the bill would end the Bush administration's "pussyfooting" over the currency issue.


Paulson sought to rebut criticism that the strategic dialogue with China, launched in December 2006 to link top officials, had achieved little so far, citing a more than 9 percent appreciation in the yuan against the dollar since July 2005 and increased access to China for US airlines.

"We are getting results through this process we wouldn't have achieved without it," he said.

But he reiterated that the Chinese needed to allow the yuan to appreciate more quickly and said tensions over trade and currencies were likely to continue, adding that the dialogue "wouldn't make the problems go away."

Chinese officials "may not be pleased" about the US currency legislation but should not be surprised after receiving warnings from lawmakers since the last dialogue meeting in May, Paulson said.

Environmental and energy issues were among the most productive areas of the May meeting. The two sides agreed to further talks on eliminating tariffs on environmental goods and services and announced clean coal technology projects.

China's booming economy has put a severe strain on its environment, with air and water pollution reaching critical levels in heavily populated areas and sparking protests.

China is expected to soon overtake the United States as the world's largest source of greenhouse gas emissions.

Neither country has signed the Kyoto protocols for reducing carbon emissions, although US President George W. Bush is trying to form his own coalition of the 15 largest carbon emitters among industrialized and developing countries.

Paulson said "air and water don't know national boundaries" and added that he believes Hu wants to address China's environmental problems.

In Qinghai province, Paulson saw an opportunity to keep the dialogue going on the environmental front in the hopes of solidifying his relationship with Chinese officials.

"Do I think that working together on the environment is going to make it easier to work together on the currency and other things? Not necessarily," Paulson said.

"What's important to making progress on all of them is building the relationships, the trust that lets us manage our discussions, a respectful and a mature and a professional manner to keep the relationship on an even keel."

Paulson said the Qinghai lake region illustrated the problems of greenhouse gas emissions and climate change because rising temperatures are causing the lake to shrink and glaciers to melt, which could threaten the source of several major rivers in Asia.

Story by David Lawder

Sunday, July 29, 2007

Climate Change and Migration

An excellent post that brings together two of my research interests from Grist.

This post contains some good links that I need to read (this post is for my own future reference as much as anything else - sorry).

FWIW I agree with the "caution" that Geoff Dabelko is warning us of.

A word of caution on climate change and 'refugees'
Scholars, policy analysts, and even military officers are breaking down climate change's impacts into what they hope are more manageable topics for examination. The migration that climate change could cause is one such topic. For instance, the Center for American Progress recently posted a piece entitled "Climate Refugees: Global Warming will Spur Migration." The International Peace Academy analyzed "Climate Change and Conflict: The Migration Link" (PDF) in a May 2007 Coping With Crisis working paper. Climate change-induced migration also figured prominently in the security perspective offered by the CNA Corporation's Military Advisory Board in its report, "National Security and the Threat of Climate Change."

In many respects, these pieces are careful in their discussion of the topic. But allow me a few words of caution on climate change and migration, based on what we learned from a series of programs on the topic in the late 1990s here at the Environmental Change and Security Program at the Woodrow Wilson Center.

After discussing the difficulties with using "refugees" as a term to discuss climate change induced migration this interesting article concludes:
The most nuanced conflict work now being done focuses on how environmental scarcity or abundance can exacerbate more proximate causes of conflict such as ethnic difference or relative deprivation. Likewise, the key to getting climate on the table as a principal driver of migration is to carefully trace how it interacts with the many other factors that cause people to move.

Climate and migration links may prove to be effective arguments in the larger political discussions of climate change mitigation. That is clearly the way the Center for American Progress is deploying them. Raising migration (and its potentially negative impacts on security, which the CNA report highlights) as an additional cost of inaction may be effective in some political settings. But to maintain a focus on improving the lives of people on the ground, it is crucial to translate this larger theoretical and political argument into a variety of specific interventions. Then, when donors, NGOs, and host governments become convinced of the challenges presented by climate and security linkages, there will be a full menu of responses to offer and implement.

The Boom in Green and Environmentally Friendly Jobs

Given the recent setting up of an MSc Environmental and Resource Economics in the Department of Economics it is always good for the press to pick up on something we have known for a while - students with this type of qualification are getting jobs that are (1) well paid, (2) interesting and (3) that may appease the minds of economists who question the greed of capitalism and want to know that if they are to join the rat race that it OK to be a rat.

A Green Living
Graduates of the class of 2007 are finding the job market is receptive to those who want to do good by the environment. As public awareness of global warming grows, companies are scrambling to put in place greener practices, to present themselves as more eco-friendly and to develop products and services to fill a new demand for all things green. The phenomenon is creating jobs in fields like urban planning, carbon trading, green building and environmental consulting. "The environmental job market is the strongest that it's been in many years," says Kevin Doyle, president of the Boston-based consulting company Green Economy Inc. and coauthor of "The ECO Guide to Careers That Make a Difference." The labor market for recent grads is strong overall. "The biggest factor is that the baby boomers are retiring," says John Esson, director of the Baltimore-based Environmental Careers Center. But green jobs are growing especially quickly—at double-digit rates in some specialties, like consulting. The fastest-growing professions, according to Doyle's analysis of recent U.S. Department of Labor figures, include environmental engineers, hydrologists, environmental-health scientists and urban and regional planners.

Allison Shapiro, who graduated from Georgetown University's School of Foreign Service in June with a concentration in environmental studies, accepted a job as a research assistant with the consulting company ICF International. The Fairfax, Va.-based firm devotes a large chunk of its business to such projects as evaluating how well congestion pricing can decrease vehicle emissions and helping manufacturing companies reduce energy use. One of the tasks Shapiro has been charged with is making sure companies are in compliance with EPA regulations. Before deciding on the offer, though, she waded through job postings on the site, which has recently been flooded with entry-level communications positions for various green organizations, and weighed the possibility of doing soil research in Belize. "There's an overwhelming demand for people who study something environment-related to intern or work," she says. Patricia Hellyer, director of global recruiting at ICF, says the company looks for students majoring in such fields as economics, math, engineering, public policy and earth sciences, and who have excellent communication and organizational skills.

But employers and college guidance counselors say you don't have to have studied conservation biology to work in a green field. "The environment is a career that can use any major, including history, anthropology, economics, policy, law and technology," says Karen Kirchof, assistant dean of career services at Duke's Nicholas School of the Environment and Earth Sciences. One field that's snapping up new grads with liberal arts backgrounds is green building. Esson says architects and engineers need staff to research new materials as they become available. "They need people who are passionate about the environment and smart enough to find green building materials because they're popping up all the time. You have to verify that they're green before you pop them into a building."

Overall, climate change and the environment are such vast fields that virtually anyone with any background can make a difference. Says Kirchof: "The environmental career field is one that can use people from all disciplines. We have a great challenge ahead of us, and it's going to take all of us to find the solutions." That's a sentiment to which all new grads can tip their caps.

Saturday, July 28, 2007

Inequality and US wages: Globalisation off the hook?

This is an excellent article - clear and well written and hammers home a point. Globalisation is not all bad. Many of the points raised deserve further research.

H/T to Greg Mankiw

A Reality-Based Economy

If you've paid attention to the presidential campaign, you've heard the neopopulist story line. C.E.O.'s are seeing their incomes skyrocket while the middle class gets squeezed. The tides of globalization work against average Americans while most of the benefits go to the top 1 percent.

This story is not entirely wrong, but it is incredibly simple-minded. To believe it, you have to suppress a whole string of complicating facts. The first complicating fact is that after a lag, average wages are rising sharply. Real average wages rose by 2 percent in 2006, the second fastest rise in 30 years.

The second complicating fact is that according to the Congressional Budget Office, earnings for the poorest fifth of Americans are also on the increase. As Ron Haskins of the Brookings Institution noted recently in The Washington Post, between 1991 and 2005, ''the bottom fifth increased its earnings by 80 percent, compared with around 50 percent for the highest-income group and around 20 percent for each of the other three groups.''

The third complicating fact is that despite years of scare stories, income volatility is probably not trending upward. A study by the C.B.O. has found that incomes are no more unstable now than they were in the 1980s and 1990s.

The fourth complicating fact is that recent rises in inequality have less to do with the grinding unfairness of globalization than with the reality that the market increasingly rewards education and hard work. A few years ago, the rewards for people earning college degrees seemed to flatten out. But more recent data from the Bureau of Labor Statistics suggests that the education premium is again on the rise.

Fifth, companies are getting more efficient at singling out and rewarding productive workers. A study by the economists Thomas Lemieux, Daniel Parent and W. Bentley MacLeod suggests that as much as 24 percent of the increase in male wage inequality is due to performance pay.

Sixth, inequality is also rising in part because people up the income scale work longer hours. In 1965, less educated Americans and more educated Americans worked the same number of hours a week. But today, many highly educated people work like dogs while those down the income scale have seen their leisure time increase by a phenomenal 14 hours a week.

Seventh, it's not at all clear that the big winners in this economy are self-dealing corporate greedheads who are bilking shareholders. A study by Steven N. Kaplan and Joshua Rauh finds that it's not corporate honchos who are filling up the ranks of the filthy rich. It's hedge fund managers. Or, as Kaplan and Rauh put it, ''the top 25 hedge fund managers combined appear to have earned more than all 500 S.&P. 500 C.E.O.'s combined.'' The hedge fund guys are profiting not because there's been a shift in social norms favoring the megarich. It's just that a few superstars are now handling so much capital.

Eighth, to the extent that C.E.O. pay packets have thickened (and they have), there may be good economic reasons. The bigger a company gets, the more a talented C.E.O. can do to increase earnings. Over the past two and a half decades, the value of top U.S. companies has increased 500 percent, according to Xavier Gabaix and Augustin Landier. The compensation for the C.E.O.'s of those companies has also increased 500 percent.

Ninth, we're in the middle of one of the greatest economic eras ever. Global poverty has declined at astounding rates. Globalization boosts each American household's income by about $10,000 a year. The U.S. economy, despite all the bad-mouthing, is chugging along. Thanks to all the growth, tax revenues are at 18.8 percent of G.D.P., higher than the historical average. The deficit is down to about 1.5 percent of G.D.P., below the historical average.

All of this is not to say everything is hunky-dory. Inequality is obviously increasing. There's evidence that global trade is producing more losers.

Instead, the main point is that the Democratic campaign rhetoric is taking on a life of its own, and drifting further away from reality. Feeding off pessimism about the war and anger at Washington, candidates now compete to tell dark, angry and conspiratorial stories about the economy.

I doubt there's much Republicans can do to salvage their fortunes by 2008. But over the long term a G.O.P. rebound can be built by capturing the Bill Clinton/Democratic Leadership Council ground that the Democrats are now abandoning. Whoever gets globalization right will have a bright future, and in the long run, the facts matter.

Friday, July 27, 2007

World Economics: Climate Change articles

A good collection of papers that continue the "economics of climate change" debate.

Included is a paper from Simon Dietz, Dennis Anderson, Nicholas Stern, Chris Taylor & Dimitri Zenghelis entitled "Right for the Right Reasons" arguing against the general view from many economists that the Stern review somehow got it right but for the wrong reasons. They call this the FINAL rejoiner - case closed?

World Economics


Continuing the debate from previous issues, a paper by Simmonds and Steffen criticises part 1 of the ‘Dual Critique’ by Carter et al. on the science of climate change, that appeared in Vol. 7, No. 4 of this journal. The dual critique authors respond. The debate then moves on, with responses by critics of the Stern Review to papers in the previous issue [Vol. 8, No. 1] by defenders of the Review’s approach and conclusions. An article by David Henderson questions the way governments are responding to climate change issues and in particular their reliance on the process of the Intergovernmental Panel on Climate Change. The debate is concluded in this issue with a final rejoinder by members of the Stern team.

Response to ‘The Stern Review: A Dual Critique—Part I: The Science’
Ian Simmonds & Will Steffen
In their comments on part one of the ‘Dual Critique’ [Vol. 7, No. 4] the authors draw attention to a number of instances where the treatment of sources and evidence is selective and biased, and perhaps where it reveals a modest understanding of the vast amount of conventional and well-established literature on climate science and allied topics. The purpose of this record is not fundamentally to dissect all the main points made by the Dual Critique authors. Rather, Simmonds and Steffen have confined themselves to commenting under a few headings on issues which they found particularly striking (grossly misleading, inconsistent with the workings of the climate system, or just plain wrong).

Response to Simmonds and Steffen
David Holland, Robert M. Carter, C. R. de Freitas, Indur M. Goklany & Richard S. Lindzen

A Stern Reply to the Reply to the Review of the Stern Review
Richard S. J. Tol & Gary W. Yohe
Tol and Yohe point out that, in their reply [Vol. 8, No. 1] to Tol and Yohe’s review [Vol. 7, No. 4], the Stern team demonstrates the fragility of the numerical findings of the cost–benefit analysis in the Stern Review. At the same time, the Stern team puts less weight on cost–benefit analysis as a guide to policy making on climate change. Tol and Yohe show that the Stern Review allows several, mutually contradictory interpretations of the model that underlies the cost estimates; and argue that each interpretation implies that Stern’s cost estimates have a severe downward bias.

Climate Science and the Stern Review
Robert M. Carter, C. R. de Freitas, Indur M. Goklany, David Holland & Richard S. Lindzen
Fundamentals of the climate science dispute and common misunderstandings of some issues raised about Part 1 of the Dual Critique of the Stern Review [Vol. 7, No. 4] are discussed. One consideration is that a distinct anthropogenic greenhouse gas signal has not yet been identified within natural climate variations. The slight warming that has occurred in the late 20th century, falling within previous natural rates and magnitudes of warming and cooling, is a priori unalarming. Empirical evidence shows that the warming effect of increasing carbon dioxide at the rates of modern industrial emission and accumulation is minor, noting the established logarithmic relationship between gas concentration increases and warming. No global increase in temperature has occurred since 1998 despite a 15 ppm (4%) increase in carbon dioxide concentration, and an expectation of continued warming even at constant CO2 levels. The key issue is assessment of risk, but that includes the risk of future coolings as well as warmings, as well as their significance relative to other factors. This is why an adaptive policy towards climate change is the most sensible response option.

Governments and Climate Change Issues
The case for rethinking

David Henderson
Governments, and in particular the governments of the OECD member countries, are mishandling climate change issues. Both the basis and the content of official policies are open to serious question. Too much reliance is placed on the established process of review and inquiry which is conducted through the agency of the Intergovernmental Panel on Climate Change. This process, which is wrongly taken to be objective and authoritative, has been made the point of departure for over-presumptive conclusions which are biased towards alarm, in the mistaken belief that ‘the science’ is ‘settled’. Rather than pursuing as a matter of urgency ambitious and costly targets for drastic further curbing of CO2 emissions, governments should take prompt steps to ensure that they and their citizens are more fully and more objectively informed and advised. This implies both improving the IPCC process and going beyond it. As to the content of policy, it is not the case that the choice now lies between two extremes, of no action and the immediate adoption of much stronger measures to curb emissions. The orientation of policies should be made more evolutionary and less presumptive, with actual policy measures focusing more on carbon taxes rather than the present and prospective array of costly and intrusive regulatory initiatives.

Right for the Right Reasons
A final rejoinder on the Stern Review
Simon Dietz, Dennis Anderson, Nicholas Stern, Chris Taylor & Dimitri Zenghelis
Four authors of the Stern Review on the Economics of Climate Change, and Dennis Anderson who provided advice and background papers for the Review, make a final rejoinder on the debate about the Review that has occupied recent issues of this journal. They respond to comments in the present issue by Carter et al., by Henderson, and by Tol and Yohe. Carter et al. continue to argue against a growing body of scientific evidence and a growing consensus on that same evidence. The source of their critique is, first, a distinctly partisan, and increasingly untenable, position on the broad range of available scientific evidence and, second, a mistrust of the international consensus-building exercise centred on the Intergovernmental Panel on Climate Change. Henderson is also largely preoccupied with the latter, procedural issues. Tol and Yohe focus on economic arguments. Their critique is rather narrower in focus and concerns the way in which abatement costs were calculated in the supporting work carried out by Dennis Anderson. It rests on basic confusions and misconceptions, many of which were explained in previous contributions. However, readers of World Economics might be more interested in a broader reflection: how would the Stern team, following the debate of the last eight months, assess the approach, policies and arguments set out in the Review? Their view is that their analyses and policy proposals, and the arguments in support, are sound and have stood up well to scrutiny. In other words, they were right and for the right reasons. Central to many critiques of the Review is a fundamental misunderstanding of the role of formal, highly aggregated economic modelling. Nevertheless, the Stern team have argued strongly and in their view convincingly that, even within the confines of formal economic modelling, the concerns raised by a small group of commentators do not overturn their basic conclusion that the cost of action is much less than the cost of inaction. The critics here fall short by failing to simultaneously afford the necessary importance to issues of risk and ethics.

Wednesday, July 25, 2007

"Responsible China": CSR round-up for China

This blog was never intended to be China-centric but as is the way of the world, when people think of the impact of globalisation on the environment, China is in the front line both in terms or absolute levels of emissions and in terms of feeling the impact of climate change and the affects of pollution on the population.

One blog that specifically deals with Corporate Social Responsibilty (CSR) in China is "ResponsibleChina". The blog's daily roundup of CSR and environmental stories is useful (and I am sure will become the source of some posts on here). Certainly a blog worth sticking in a reader and has been put into our blogroll in the sidebar.

Some example links from today's roundup and one earlier post (FT) that touch on topics often discussed in this blog include:

Chinese local government ignoring national green agenda[edie news centre]
"The central government is committed to achieving the (green) targets but some local governments have turned a blind eye to them," He Bingguang, NDRC deputy director, told China Daily.

According to Mr He, some local governments had been giving preferential treatment to steel, cement and other high energy consuming and polluting industries despite the top leadership's repeated warning that "they are overheated and should be brought under control".

China cancels environmental report[LA Times]
BEIJING — From a public relations standpoint, it didn't look good. In the space of less than a month, China had quashed two potentially embarrassing environmental reports that would have said what most people already know: This is a country facing a costly and increasingly deadly environmental crisis.

First, in early July, reports surfaced that China had successfully lobbied the World Bank to redact portions of an environmental assessment that calculated how many people were likely to die prematurely as a result of air pollution.

Then, late last week, the government announced that it was canceling plans to publish a "green GDP" report that would have calculated the cost of pollution to China's rapidly growing economy, as measured by its gross domestic product.

Despite relatively strong laws, enforcement of China's environmental policies is patchy at best, largely left to provincial governments that have a stake in local economic growth, regardless of the environmental cost. And it is those officials, some experts believe, who may have put the brakes on the recent reports.

Green vs growth battle in Beijing[The Austrailian]
The Organisation for Economic Co-operation and Development a week ago released a report on China concluding that "rapid economic development, industrialisation and urbanisation have generated severe and growing pressures on the environment, resulting in significant damage to human health and depletion of natural resources".

Wang Jin-nan, the technical head of the project to develop a green GDP, from the Chinese Academy for Environmental Planning, told Beijing News that there had been fierce opposition from local officials eager to maintain high growth figures.

Taking the waters[Financial Times]
Across large swaths of China's rapidly industrialising countryside, polluted water is killing tens of thousands of people every year, threatening the health of millions more and cutting the crop yields of farmers who have few other economic resources to fall back on.

The scale of the problem has been thrown into sharp relief in recent weeks as authorities turn off the taps of whole cities because of a spate of toxic blue-green algae blooms and chemical spills. In a toughly-worded warning this month, Pan Yue, deputy head of the State Environmental Protection Administration (Sepa), said China's "approach of growth through industrialisation" had pushed its environment "close to breaking point".

Mr Pan said 26 per cent of the water in China's seven biggest river systems had been found to be so polluted that it was dangerous to come into contact with or had "lost the capacity for basic ecological function". Sepa also deems seven of nine big monitored lakes polluted to such levels. Water quality is deteriorating even in areas subject to well-funded government clean-ups over the last decade, it warns.

The scandals and the prospect of a worsening crisis have prompted expressions of concern at the highest levels: Wen Jiabao, the premier, has called for the management of fresh water supplies to be treated as a priority "state project". Sepa itself appears determined to seize the moment to push for tougher enforcement of China's existing environmental regulations. This month it announced that it would not issue approvals for new industrial projects in six -cities, two counties and five industrial zones until authorities there cracked down on local companies found to be in violation of water protection rules.


Tuesday, July 24, 2007

Globalisation, trade and job losses

Does globalisation cause job losses? What drives international trade patterns? Should workers who lose their jobs as a result of trade be compensated? How can one tell whether it was trade or technology or something completely different that casued the job loss?

This blog post provides links to 2 papers, a Washington post article and some of my papers that provide an overview of this interesting topic. H/T: Greg Mankiw. My bold.

Aid May Grow for Laid-Off Workers
As part of their campaign to soothe an anxious middle class, congressional Democrats are preparing legislation that would significantly expand federal aid to the most obvious victims of the global economy: workers whose jobs move offshore or are lost to foreign imports.

Under a Senate bill to be introduced today, computer programmers, call-center staffers and other service-sector workers who make up the vast majority of the nation's workforce would for the first time be eligible for a generous package of income, health and retraining benefits currently reserved for manufacturing workers who lose their jobs to international trade.

Democrats say the expansion of the Trade Adjustment Assistance (TAA) program would begin to reweave the social safety net for the 21st century, as advances permit more industries to take advantage of cheap foreign labor -- even for skilled, white-collar work. By providing special compensation to more of globalization's losers and retraining them for stable jobs at home, they say, an expanded program could begin to ease the resentment and insecurity arising from the new economy.

The program, established as part of the Trade Expansion Act of 1962, is the nation's primary source of aid to workers who lose their jobs to foreign competition. Laid-off manufacturing workers must demonstrate to the Labor Department that they lost their jobs because of foreign imports or a decision to shift production to a U.S. trading partner subject to a free-trade agreement.

If their applications are approved, workers can receive two years of benefits on top of state unemployment payments, which typically last six months. The benefits include income support payments, job training, job search and relocation assistance, and a tax credit that covers 65 percent of monthly health-insurance premiums. Workers over 50 who take a new job at lower pay are eligible for wage insurance, which makes up half the difference between their old salary and the new one, up to a maximum of $5,000 a year, for two years.

Last year, the Labor Department approved 1,400 petitions covering about 400,000 workers, according to a recent study by the Government Accountability Office, though fewer than 100,000 workers sought and received benefits. The agency denied 800 petitions, mainly because the workers did not produce "an article" and hence fulfill the basic definition of a manufacturing worker. Most of the denials involved two industries, the GAO said: business services such as computer programming and airport-related services such as aircraft maintenance.

All told, the changes would double spending on the program, which cost the government just under $1 billion last year.

"Frankly, TAA is a very integral part of our efforts to reduce barriers and expand trade . . . and my view is they ought to go together," said Sen. Charles E. Grassley (R-Iowa), the senior Republican on the Finance Committee.

Last week, White House spokesman Tony Fratto declined to comment on the Democratic proposals for expansion, except to question their cost and the wisdom of covering service workers. With those job losses, he said, "it becomes impossible to draw lines that show the displacement is owing to trade."

Exactly - identifing which workers are displaced as a direct result of trade is not easy - any "back to work" assistance is welcome but such help should be available to all workers. It is likely that globalisation is some form or another will have been responsible.

The NBER papers below provide more information:


"Estimating Trade Flows: Trading Partners and Trading Volumes"
NBER Working Paper No. W12927

Harvard University - Department of Economics,
National Bureau of Economic Research (NBER), Centre
for Economic Policy Research (CEPR)

Princeton University - Department of Economics,
Centre for Economic Policy Research (CEPR),
National Bureau of Economic Research (NBER)

Tel Aviv University - Eitan Berglas School of

Full Text:

ABSTRACT: We develop a simple model of international trade with heterogeneous firms that is consistent with a number of stylized features of the data. In particular, the model predicts positive as well as zero trade flows across pairs of countries, and it allows the number of exporting firms to vary across destination countries. As a result, the impact of trade frictions on trade flows can be decomposed into the intensive and extensive margins, where the former refers to the trade volume per exporter and the latter refers to the number of exporters. This model yields a generalized gravity equation that accounts for the self-selection of firms into export markets and their impact on trade volumes.
We then develop a two-stage estimation procedure that uses a selection equation into trade partners in the first stage and a trade flow equation in the second. We implement this procedure parametrically, semi-parametrically, and non-parametrically, showing that in all three cases the estimated effects of trade frictions are similar. Importantly, our method provides estimates of the intensive and extensive margins of trade. We show that traditional estimates are biased, and that most of the bias is not due to selection but rather due to the omission of the extensive margin. Moreover, the effect of the number of exporting firms varies across country pairs according to their characteristics. This variation is large, and particularly so for trade between developed and less developed countries and between pairs of less developed countries.


"Offshoring: General Equilibrium Effects on Wages, Production and Trade"
NBER Working Paper No. W12991

University of Geneva - Graduate Institute of
International Studies (HEI), Centre for Economic
Policy Research (CEPR), National Bureau of Economic
Research (NBER)

London School of Economics & Political Science
(LSE) - Department of Geography and Environment,
Centre for Economic Policy Research (CEPR)

Full Text:

ABSTRACT: A simple model of offshoring, which depicts offshoring as "shadow migration," permits straightforward derivation of necessary and sufficient conditions for the effects on wages, prices, production and trade. We show that offshoring requires modification of the four classic international trade theorems, so econometricians who ignore offshoring might reject the Heckscher-Ohlin theorem when a properly specified version held in the data. We also show that offshoring is an independent source of comparative advantage and can lead to intra-industry trade in a Walrasian setting. The model is extended to allow for two-way offshoring between similar nations, and to allow for monopolistic competition.


Finally, I have written a number of papers looking specifically at trade induced adjustment and its relationship with intra-industry trade where the smooth adjustment hypothesis states that if trade changes are intra-industry in nature (changes in imports and exports within a given industry are matched) then the adjustment implciations are less severe than if trade changes are inter-industry in nature.

Intra-Industry Trade and Labour-Market Adjustment: A Reassessment Using Data on Individual Workers

Marius Brulhart, University of Lausanne
Robert J.R. Elliott, University of Birmingham
Joanne K. Lindley, University of Sheffield

We re-examine the relationship between intra-industry trade and labour reallocation, using individual-level data on manufacturing worker moves in the United Kingdom. The contribution of this analysis is twofold. First, we estimate the impact of intra-industry trade on worker moves between occupations as well as between industries. Second, we run individual-level regressions that allow us to control for worker heterogeneity. Our results suggest that intra-industry trade does have the stipulated attenuating effect on worker moves, both between occupations and between industries, but that this effect is relatively small compared to other determinants of labour reallocation.
Suggested Citation

Marius Brulhart, Robert J.R. Elliott, and Joanne K. Lindley. "Intra-Industry Trade and Labour-Market Adjustment: A Reassessment Using Data on Individual Workers" Review of World Economics 142.3 (2006): 521-545.
Available at:


On the Measurement of Trade-Induced Adjustment

A. K.M. Azhar, Universiti Putra, Malaysia
Robert J.R. Elliott, University of Birmingham

Globalisation and closer regional integration has led to significant increases in trade between nations that in turn impacts on existing long standing trade partnerships. A consequence of changing trade patterns is an increase in the pressure for resources to reallocate between industries and sectors. This paper provides an integrated approach to the analysis of trade induced adjustment that complements the existing literature. Adjustment pressures are documented in accordance with the theoretical underpinnings of the smooth adjustment hypothesis and satisfy a number of desirable criteria, monotonicity, consistency and country specificity. The applicability of our approach is examined using UK manufacturing data.
Suggested Citation

A. K.M. Azhar and Robert J.R. Elliott. " On the Measurement of Trade-Induced Adjustment" Review of World Economics 139.3 (2003): 419-439.
Available at:

Other papers can be found at:


Monday, July 23, 2007

Environmentalists joining Economists as purveyors of Doom and Gloom?

Gristmill recently published an article by Peter Madden who writes about how it is important for greens to think positively instead of relying on apocalyptic stories of heating planets and imminent global disaster.

It is good to see it is not just the dismal scientists that are waking up to the fact that espousing doom is not good for your public image. The fact Peter is also a Brit is not surprising - no matter howhard we try, citizens of the UK find it hard to match the unbridled optimism and enthusiasm of our counter-parts across the Atlantic.

Brit's Eye View: Lose the doom and gloom
We have a problem, we greens. It has to do with the way that we talk about the future. We do need to have a more plausible account of what the kind of world we are recommending would be like.

However, our main narrative about the future talks of apocalypse and doom and gloom: the earth is dying; species are disappearing; the planet is overheating.

If people want to do something about it, too often they're told they'll have to lead a life of sacrifice and constraint. And if they won't, we'll guilt-trip and scare them 'til they repent.

And even if they do as we say, they also worry that it probably won't make much difference anyway because the Chinese, Indians, and North Americans are all busy ignoring the issues.

I'm painting a caricature, of course, but you get my point. Our story isn't very attractive to lots of people: it is too grounded in fear and negatives. We need to stop peddling what one recent report called "climate porn."

The majority of people want positive things they can aspire to. We need to paint more attractive visions. This, however, is easier to say than to do.

This article is also the first time I have come across the term "climate porn" - a post on this concept can only be a day away.


Meat is murder on the environment

A shamelessly popularist post but the facts speak for themselves. Cows are seriously bad for the environment whether they are dead or alive.

Meat is murder on the environment[New Scientist]
A kilogram of beef is responsible for more greenhouse gas emissions and other pollution than driving for 3 hours while leaving all the lights on back home.

This is among the conclusions of a study by Akifumi Ogino of the National Institute of Livestock and Grassland Science in Tsukuba, Japan, and colleagues, which has assessed the effects of beef production on global warming, water acidification and eutrophication, and energy consumption. The team looked at calf production, focusing on animal management and the effects of producing and transporting feed. By combining this information with data from their earlier studies on the impact of beef fattening systems, the researchers were able to calculate the total environmental load of a portion of beef.

Their analysis showed that producing a kilogram of beef leads to the emission of greenhouse gases with a warming potential equivalent to 36.4 kilograms of carbon dioxide. It also releases fertilising compounds equivalent to 340 grams of sulphur dioxide and 59 grams of phosphate, and consumes 169 megajoules of energy (Animal Science Journal, DOI: 10.1111/j.1740-0929.2007.00457.x). In other words, a kilogram of beef is responsible for the equivalent of the amount of CO2 emitted by the average European car every 250 kilometres, and burns enough energy to light a 100-watt bulb for nearly 20 days.

The calculations, which are based on standard industrial methods of meat production in Japan, did not include the impact of managing farm infrastructure and transporting the meat, so the total environmental load is higher than the study suggests.

Most of the greenhouse gas emissions are in the form of methane released from the animals' digestive systems, while the acid and fertilising substances come primarily from their waste. Over two-thirds of the energy goes towards producing and transporting the animals' feed.

For more reading on cow burps - which also "blows" out of the water a popular misconception about cows and climate change.

Cows that burp less seen helping in climate fight
He noted the average dairy cow belches out about 100 to 200 liters of methane each day, making diet changes a key potential factor in reducing this greenhouse gas.

"There is a common misperception about how methane gets into the atmosphere," he said. "It is actually through belching rather than the other end."


Thursday, July 19, 2007

Arrow gets to the Heart of the Climate Change Debate

Professor Kenneth Arrow (Noble Prize winner in Economics 1972) speaks on Climate Change.

Subscription kind of required - guests can read for free.

Global Climate Change: A Challenge to Policy
Kenneth J. Arrow explains why something must be done to limit global warming even if the Stern Report inadequately discounted future costs.

Kenneth J. Arrow (2007) "Global Climate Change: A Challenge to Policy," The Economists' Voice: Vol. 4 : Iss. 3, Article 2.
Available at:


Who killed the bees? Nature or Capitalism?

When the first stories came out about the collapse of bee colonies in the US and then Europe (or was it the other way round) plenty of faces were put in the frame including the increasing prevalence of mobile phone masts that are popping up on the top of all good school buildings near you. I resisted blogging on this like so many others as it seems to be a standard newspaper scare story but can resist no longer:

Are mobile phones killing our bees?[Omega-News April 2007]

Honey bees are dying all over the globe. What's going on?[]
Albert Einstein once predicted that if bees were to disappear, man would follow only a few years later. That hypothesis could soon be put to the test.

We will present data in this article on four possible causes which may be killing the honey bees: 1) The hybrid genetically altered plants developed by Monsanto (described below), 2) The possibility that cellphone radio frequencies may be hindering the bees from locating their hives, 3) The possibility of a virus and 4) The possibility that a mite could be infecting the bees. As more details are know we will post them.

Millions of Bees Die - Are Electromagnetic Signals To Blame?[Sepp Hasslberger March 2007]
At Cornell Univ. honeybees in a hive relocated into a new building became disoriented. After extensive research ruled out other causes, someone noticed the hive was next to the building's electric transformer. The bees were confused by 60 hz magnetism strong enough to interfere with homing and communication to gather nectar and pollen. (

Mobile phones could lead to bee decline[The Ecologist April 2007]

However, perhaps our "scientist" has the answer or is this just another "theory" that to be debunked?

Asian Parasite Killing Western Bees - Scientist
MADRID - A parasite common in Asian bees has spread to Europe and the Americas and is behind the mass disappearance of honeybees in many countries, says a Spanish scientist who has been studying the phenomenon for years.

The culprit is a microscopic parasite called nosema ceranae said Mariano Higes, who leads a team of researchers at a government-funded apiculture centre in Guadalajara, the province east of Madrid that is the heartland of Spain's honey industry.

So what does our Spanish expert say about mobile phone masts -
Another theory points a finger at mobile phone aerials, but Higes notes bees use the angle of the sun to navigate and not electromagnetic frequencies.

Well he didn't take long to debunk 100s of blog and newspaper articles.

In answer to the question posed in the title, it is clear that nature played a part but one might ask "how did the parasite get to the US and Europe from Asia in the first place?"

The blame clearly lies with "Globalisation" and its constant bedfellow "rampant capitalism".

Finally, I like the title of the PlanetArk article - the inclusion of the word "scientist" at the end just adds that pointless air of authority to the article.

Wednesday, July 18, 2007

Pollution deaths in China update

Following our post dated 4th July China, Globalisation and the environment: link round-upin which I posted a link to the World Bank report that was written up in a FT article suggesting that 450,000 Chinese dies each year from pollution related diseases.

Today China replied to argue that the figures underlying the headline were baseless. This article does little to convince.

World Bank Death-By-Pollution Figures Baseless - China
BEIJING - World Bank estimates of hundreds of thousands of premature Chinese deaths each year from polluted air and water are baseless, a vice minister of China's State Environmental Protection Administration said on Tuesday.

The Financial Times said this month the Chinese government, which conducted the survey in partnership with the World Bank, had asked the lender not to publish the estimates for fear they could trigger social unrest.
China, beset by growing public alarm about acrid air and toxic water, has promised to cut major industrial pollutants by 10 percent between 2006 and 2010. But last year the country failed to meet the annual target.

The survey says about 460,000 Chinese die prematurely each year from breathing polluted air and drinking dirty water.

Zhou Jian, vice minister of the administration, said linking environment and health was a "very complex scientific issue" and that it was impossible to estimate how much of a person's life pollution shaves off.

"I don't dare conclude that any country can clearly and accurately say that because of environmental problems, or because of pollution problems, that people's lives are cut by a certain amount, that they are made sick or even die," he said.

"I don't think that data exists ... I think the World Bank report lacks a precise, scientific foundation, regardless of how many people it says die in China because of pollution."

The conference version of the study, available at the bank's Web site, says some estimates of the physical and economic cost of pollution have been omitted because of uncertainties about calculation methods and their application.

However, the report goes on to estimate the health costs from premature deaths associated with outdoor air pollution at 394 billion yuan (US$51.8 billion). With each life valued at 1 million yuan, that works out at a death toll of 394,000.

The study puts the cost of deaths from diarrhoea and cancer caused by drinking polluted water at 66 billion yuan, pointing to 66,000 premature deaths a year.

China-watchers said it was standard practice in research projects conducted with the government for both sides to have a veto over the conclusions.

On Monday, a senior US lawmaker on Monday urged World Bank President Robert Zoellick to release the mortality figures the congressman said were omitted from a draft bank report on the effects of pollution in China.

Barney Frank, a Democrat from Massachusetts, in a letter to Zoellick made public on Monday, said he was troubled to read that Chinese health and environment officials suppressed the estimates and the parts of China that were worst hit.

Frank has led US congressional hearings this year on the World Bank and, separately, on Washington's dispute with Beijing over the value of the Chinese currency, which the United States has said is undervalued.

Enforcement of Environmental Regulations

Evidence that supports the pollution haven hypothesis (the idea that the North relocates its dirty production to the South) is difficult to find for numerous reasons outlined in some of our papers HERE.

One problem with cross-country studies is that it is hard to measure the extent of a countries environmental regulations so that we can make cross country comparisons. This problem is exacerbated by the fact that a country may appear to have strict environmental regulations but these are not enforced.

We have done some recent work on China looking at this issue across Chinese provinces with a PhD student of mine Jing Zhang. This is one reason that we had to extend our analysis to also consider how well governed a province is and how much effort it makes to curb corruption. However, the problem is my no means restricted to China.

The following article from PlantArk emphasises the problem. My bold.

OECD Decries China Enforcement of Environment Rules
BEIJING - China's efforts at environmental protection have been ineffective and inefficient largely because the central government has been unable to implement its policies, the Organisation for Economic Co-operation and Development said.

Rapidly growing China is poised to overtake the United States as the world's top emitter of greenhouse gases, and Beijing faces rising international calls to accept mandatory caps on carbon dioxide emissions from factories and vehicles.
Beijing should consider making the State Environmental Protection Agency (SEPA) a ministry and strengthening its role in supervising local environmental protection bureaus, the Paris-based OECD, which groups 30 industrialised countries not including China, said in a report released on Tuesday.

In addition, environmental laws and regulations should be compiled into an environmental code so they can be more easily understood, local leaders should be made more accountable for environmental performance and China should extend the use of economic incentives and penalties, it said.

"The biggest obstacles to environmental policy implementation are at the local level," the report said.

"There is a need for much stronger monitoring, inspection and enforcement capabilities to establish a better mix of incentives and sanctions. In addition, environmental expenditure needs to be made more efficiently and environmental policy instruments need to be made more effective."

Chinese leaders acknowledge the huge challenges facing China, home to some of the world's 20 most polluted cities, as it struggles to meet energy efficiency goals in the face of unbridled economic growth.

About 460,000 Chinese die prematurely each year from breathing polluted air and drinking dirty water, according to a recent World Bank study.

The authorities are closing down dirty industrial plants, raising car fuel-efficiency standards and tweaking taxes to discourage energy-intensive production. China has also introduced higher drinking water standards, but state media reports severe pollution of China's vast lakes and rivers on an almost daily basis.

Tuesday, July 17, 2007

Water, water everywhere but not a drop to drink

Climate change can make things look rather odd at times...

China Says Climate Change Drying up Major Rivers
BEIJING - Chinese scientists have warned that rising temperatures are draining wetlands at the head of the the country's two longest rivers, choking their flow and imperilling water supplies to hundreds of millions of people.

China Warns of More Flood Misery, Disease
BEIJING - Hundreds of thousands of villagers in east China's Huai river basin, already suffering the region's worst flooding in 50 years, have been told to brace for more heavy rains this week, state media reported on Monday.

Torrential summer rains across the country have fed floods and landslides that had killed 403 people, left 105 missing and forced the evacuation of 3.17 million by Friday, the China Daily said.

Friday, July 13, 2007

Reseach Paper: International Economics of Natural Resources and Growth

A question often asked by students is how does a country's endowment of natural resources affect economic growth? As a cornerstone of Marcoeconomics theories of growth from Solow to the more recent endogenous growth theory are studied extensively

What is often ignored is the relationship with natural resources. With the "scarcity" of resources being increasingly highlighted in the popular press this new research paper is timely.

A review of the recent empirical evidence is included which may be of interest.


"The International Economics of Natural Resources and Growth"
CESifo Working Paper Series No. 1994

University of Iceland - Faculty of Economics and
Business Administration, Centre for Economic Policy
Research (CEPR), CESifo (Center for Economic
Studies and Ifo Institute for Economic Research)


Full Text:

ABSTRACT: This article is in three parts. First, it briefly
describes the contribution of natural resources to economic
growth around the world, pondering the question whether an
abundance of natural resources is a blessing or a curse. Second,
an attempt is made to provide a glimpse of recent empirical
evidence that can be brought to bear on this question. Third, the
article discusses the experience of Norway, the world's third
largest oil exporter. To date, Norway has appeared to be mostly
free of the worrisome symptoms, such as the Dutch disease, that
have afflicted many other countries with abundant natural

Thursday, July 12, 2007

Research Papers: Economic Growth, Trade, and Environmental Quality in a Two-region World Economy

Some theory papers make it onto this blog. What it seems to be saying is that "globalisation is good for the environment" regardless of the trade regime. How to test these predictions - now that is the question.

Economic Growth, Trade, and Environmental Quality in a Two-region World Economy
Sibel Sirakayaa,*, Stephen J. Turnovskyb, Nedim M. Alemdarc

This paper examines the linkages between international trade, environmental degradation and economic growth in a dynamic North-South trade game. Using a neoclassical production function subject to an endogenously improving technology, the North produces manufactured goods by employing labor, capital and a natural resource that it imports from the South. The South extracts the resource using raw labor, in the process generating local pollution. We study optimal regional policies in the presence of local pollution and technology spillovers from North to South under both noncooperative and cooperative modes of trade. Non-cooperative trade is inefficient due to externalities. Cooperative trade policies are efficient and yet do not benefit the North. Both regions gain from improved productivity in the North and faster knowledge diffusion to the South regardless of the trading regime.

Link: [PDF]

Salmon and Flamingos

After the creation of the "Wildlife" tag for the Bear story below two other stories have come to light. At the heart of "environmental meltdown" is economics of course. The second article is a classic "tragedy of the commons" story.

Factory may destroy natural wonder
One of nature's most spectacular sights - millions of pink flamingos migrating between the Rift Valley's alkaline lakes - is in danger of disappearing forever, according to conservationists.

Tata Chemicals, part of the giant Tata industrial group in India, plans to construct a soda-ash plant on Lake Natron in northern Tanzania, the most important breeding spot for the endangered lesser flamingo. Each summer 500,000 of the birds, three-quarters of the world's breeding population, fly to the lake to nest.

and in Russia: (h/t. Chinadialogue).

The end of the wilderness
Sitting in his snug log cabin next to the swirling Bystraya river, Alexander explained when he went fishing.

"Sometimes we do in the day. Sometimes we do it at night. There's no set time," he admitted, passing round a tub of mouth-wateringly delicious wild salmon and a chunk of brown bread.

"In the winter we dig holes in the ice and fish. We also shoot geese," he said, showing photos of himself cradling his rifle in a large snow hole, next to his floppy-eared retriever Bzhik.

Alexander is a poacher. Not a solitary amateur, but part of a professional gang, equipped with boats and a four-wheel-drive jeep. In an outbuilding, poachers in green fatigues were carefully repairing their nets. His workplace is Kamchatka, a remote volcanic peninsula on Russia’s Pacific coast, 7,500 miles (12,000 kilometres) and nine time zones east of Moscow.

Kamchatka is home to a quarter of the world's salmon. Every July and August, millions of the fish struggle up its rivers and lakes to spawn. But, increasingly, most of them don't make it.

"We catch so many fish that the different salmon species no longer return. Once we've exhausted one species we move on to the next," Alexander said, offering me a spoonful of orange salmon caviar and a cup of tea.

Poaching in Kamchatka is on such a large scale that, like the sturgeon, the Pacific salmon is at risk of disappearing altogether. The 750-mile (1,200-kilometre) peninsula is one of the world's last truly great wildernesses, home to the rare Steller’s sea eagle, puffins and brown bears, who roam around its geysers and snow-covered calderas, or collapsed volcanoes. Kamchatka has more than 300 volcanoes, 29 still smoulderingly active.

As the main food source rapidly disappears, however, conservationists fear that Kamchatka is on the brink of ecological meltdown. Laura Williams, director of WWF's Kamchatka office, said: "When you fly over Kamchatka, you are in awe of the wilderness below you. There are no roads and no settlements. I think right now the threats are relatively localised -- with the exception of salmon, which is very widely over-fished."

In Soviet times, the Kamchatka peninsula was a strategic military base, off-limits to foreigners. Poaching was severely punished. But with the collapse of communism, and Russia's transition to a market economy, the law has ceased to exist. Instead, poachers pay off the officials tasked with protecting the fish. Asked whether politicians, the police or ordinary Russians were involved in this trade, Valery Vorobyev, the director of one of Kamchatka's largest fishing firms, Akros, said: "Everybody."

The result of this ubiquitous criminal enterprise, according to Mr Vorobyev, is that the region's once-abundant marine life is vanishing. Out in the Sea of Okhotsk, a slate-grey expanse of frozen water that stretches from Kamchatka's western coast to the gulag town of Magadan, the crabs have all but gone.

"In 1992 we caught 35,000 tonnes of king crab. Last year it was 3,400 tonnes. We need to stop fishing crab now if the species is to survive," Mr Vorobyev said. A further threat to the salmon came from the recent discovery of oil on the peninsula's western shelf.

In the Bering Sea, on the east coast near the foggy town of Petropavlovsk-Kamchatsky, illegal Japanese trawlers have cleaned out the pollack.

Kamchatka has about 12,000 salmon-eating bears -- the largest population in Eurasia. But they, too, are in trouble. In April and May, American hunters using helicopters and snowmobiles shot 300 bears -- a perfectly legal pursuit costing $10,000 (£5,000) per dead bear. Illegal hunting accounted for another 600.

Observers believe more than 100,000 tonnes of salmon a year are illegally fished. They are mostly taken for their caviar, which sells for 1,000 roubles (£20, or $40) a kilo (2.2 pounds). The fish are thrown away. The problem is made worse by the region's stunning remoteness -- a nine-hour plane journey from Moscow, the world's longest domestic flight.

Wednesday, July 11, 2007

Does a Bear Kill in the Woods?

We are used to seeing news stories of French farmers protesting about the evils of globalisation and generally being rather "protective".

The most recent protest however was something of a surprise. Instead of the traditional sheep burning, French farmers have taken to dumping dead sheep in front of their town hall to protest not about cheap imports but Bears.

It appears they kill 300 sheep and cattle a year. Is that a lot? Not according to the government who claim another 20,000 die for other reasons. Environmentalists are equally laid back. However, it is not hard to see why the bear was wiped out in the first place.

Has some contingent valuation guy come along and worked out the benefits? Who benefits? Are there avid bear watchers out there in hides? Do we all gain some feeling of welfare and well-being from this reintroduction - I think I might? Can the farmers be compensated by those who gain from having the bears there? I might be willing a pay a pound a year to help (although that would blow my google advert earnings in one go).

French Farmers Dump Dead Sheep to Protest Bears
TOULOUSE, France - Dozens of angry French farmers dumped the bodies of six dead sheep in front of their town hall on Wednesday, saying the animals had been killed by bears that were reintroduced to the Pyrenees mountains.

The farmers say that bringing the bears back into the region on the border between France and Spain under a government project is threatening their livestock.
"There is a growing revolt among farmers and we wanted to show ... that it's a daily occurrence for farmers to have their animals devoured 50 metres from their houses," said Marie-Lyse Brouilh, a local farming official.

The farmers blame one bear named Franska for many of the deaths and on Monday and Tuesday evenings they tried to force her out onto the plain with firecrackers and gunshots.

But local officials say that Franska, who wears a tracking collar, is not responsible for most of the dead animals.

The farmers are expected to meet with local officials soon to discuss the programme that began in 1996 as part of a European bear reintroduction plan.

The farmers complain the project was started by town dwellers and Parisians and does not take their livelihoods into account.

Environmentalists dismiss the idea of any serious damage to sheep or cattle herds caused by a total wild bear population in the region estimated at around 20.

The government says bears kill around 300 sheep and cattle a year in the region. This compares with up to 20,000 losses a year for other reasons.

Can I work in finance and be socially and environmentally responsible?

Many economics undergraduate students see the study of economics as a means to a very rewarding end. Indeed, students of mine often find jobs in the top city banks and accountancy firms.

So what is a financially minded but socially and/or environmentally conscious student to do? Those that take environmental economics may fit in here somewhere, likewise those students that take a Masters degree in Environmental Economics.

It is for this reason that I am posting this article from today's inbox. Thanks to Forex Blog for sending me this link.

After some introductory blurb the article lists 13 socially responsible finance jobs although I am not sure where they got the number 13 from.

13 Socially Responsible Careers in Finance

If you're interested in a financial career, you might be curious about how your interests can lead to reconciliation between your job and your belief system. Social finance might open the door to several solutions for your dilemma. While social financing might seem new, it's been around since the first individual took a stand against profit at any cost. A Quaker would no more finance slavery before the Civil War than a conscientious objector would finance war machines today.

Before you have an epiphany about your career goals, you might want to learn more about the various facets within social financing, the career opportunities that are open to you, and the education you may need to pursue your dreams.

Social Finance Defined

Social finance means that financial instruments are used to promote social goals. Financial instruments used to accomplish these goals include credit, savings, investments, and loans, among other devices. These tools help the poor to cope better with risk, take advantage of income-generating opportunities, to organize and to have a voice. These tools also incorporate personal values and societal concerns with investment decisions, where individuals or groups hope to support sustainable business efforts.

Social finance has, historically, belonged to governments and charitable or religious organizations; however, with a focus on global warming and with news about difficulties encountered by individuals in underdeveloped countries, the private sector has become involved in this specialized field. While some businesses and individuals seek to use funds for philanthropy, others want to contribute with an eye to profit.

So, while the social goals may seem similar among most social financiers, intents behind those goals may vary widely. For instance, a public corporation and a private individual both may want to support lower income populations. But, the corporation might want to eliminate poverty to create a new consumer pool for their products while the individual might work toward the same goal to support a belief in social equality.

The 4 main jobs listed are:

Community Investor:


Nonprofit Sector:

Social Entrepreneur:

See the article for more information. However, the sentiment of the final paragraph of the article is worth posting and should make interesting reading to all economics graduates.
No matter your direction once you get your feet wet in this field, you may learn that financial opportunities don't always lead to gluttony, lust, and depravity. Nor will they all lead to living without the needs vital to survival. Whether you lean toward nonprofit or for-profit careers in social financing, you can find an area that needs your support and interest. You may find that your new career will help you "do good" and do well.

Friday, July 06, 2007

Environmental Regulations and employment + comments

The motivation for this post is 3-fold. First, some blatant self-publicity; second, to discuss academic publishing; and third, to highlight the difference is data quality between the US and the EU.

1. Our paper has just been published:

Do Environmental Regulations Cost Jobs? An Industry-Level Analysis of the UK
This paper revisits the 'jobs versus the environment' debate and provides the first analysis for a country other than the US. We firstly examine the impact of environmental regulations on employment assuming such regulations are exogenous. However, for the first time in a study of this nature, we then allow environmental regulation costs and employment to be endogenously determined. Environmental regulation costs are not found to have a statistically significant effect on employment whether such costs are treated as being exogenous or endogenous. We therefore find no evidence of a trade-off between jobs and the environment.

Our results tend to support those found in a number of US studies.

2. The process of publishing academic papers in Economics is renowned for long delays between submitting a paper and seeing it in print. This can take over 2 years with authors often waiting a year before they even receive referee reports. In my experience this process has improved in recently. One reason for this I believe is the emergence of the online journals the best known of which is the Berkeley Electronic Press (Bepress) system.

The key to the system is that:
Submissions are guaranteed to receive a decision within 10 weeks. The median decision time is 52 days. We also offer simultaneous consideration at 4 quality-rated tiers1.

Our small offering was accepted for the bottom tier (boo, hiss). But as it says on the tin, we got our first reports within 10 weeks, the revisions were again reviewed within 10 weeks and then the paper was published. Even with revisions this was still a rapid process compared with the existing process. What is the cost? Submission is free but the individual cost is the commitment to referee two papers when sent within 10 weeks (or face a large retrospective submission fee).

This is an excellent method of incentivising academics to just sit down and write a review. A referee report usually takes between 1 and 2 days (or is that just me). However, most academics will put a paper on a pile for 6 months and then eventually, after a written warning, write the report in a day. The Bepress system merely acts to focus the mind a little.

A special mention should go to Don Fullerton, University of Texas who was the editor of the journal we published in, The B.E. Journal of Economic Analysis & Policy. His editing was exceptional and must be very time consuming. For academics to give so much time and effort to the often thankless job of editing a journal is humbling - so thanks to Don Fullerton.

Of course, the delay that the "established" journals impose may well be strategic. Knowing that a long lag exists should put off spurious submissions and is a signal of quality. Only the best need apply. This saves the journal considerable administrative costs. A high submission fee has a similar effect. Professor Derek Lesley has a good paper on this published in the American Economic Review. See the link for long and short versions of his excellent paper.

3. In the writing of the above paper (and other works) it became clear that, as UK based academics, we face a trade off with no easy solution that goes to the heart of what academics actually do.

In our case, writing a paper begins with:

(A) a question that is usually a combination of chatting over coffee, reading newspapers, blogs, books, working papers and published papers, with a little thinking thrown in.

(B) then we ask, "how can we answer this question?" (after checking whether it has been answered before, how it has been answered before and which data did it use). As UK academics our preference is to work on UK or EU data. (1) because we know more about UK policy and (2) we would like to contribute to the policy debate in the UK. The ideal is if the question is new but it is still possible to write a decent article (in theory) using different (better) methodologies of data for a different country (assuming there is reason to expect different results).

However, herein lies the problem. Data for the US is, in general, in a different league to the UK and Europe (not to mention developing countries).

It is becoming clear that often, to answer a question well enough to be publishable in a top journal, one would need to use US data - there is more of it, it is better quality, it is more disaggregated etc. Otherwise referee's say, "nice question, nice answer but your data are rubbish - Reject". Should we therefore have gone straight to US data? (We have done this on a couple of occasions). The problem with this is that (1) we would need to spend time learning the policy framework of the US to permit more insightful policy recommendations (2) data is not always so easy to obtain for non-US based academics or the costs can be prohibitive.

The answer - the UK (ONS) and Europe need to increase both the quality and the availability of their data so EU based economists can answer the big questions using UK/EU data. Of course the costs will be large but one good academic paper with an insightful policy prescription could save millions. Examples welcome.

In the short run we will continue to mix and match but will look closely at using the more comprehensive US data if we stumble upon the "big idea".

Thursday, July 05, 2007

International trade in "Old Glory" - wrong end of the stick?

To mark the 4th of July when the US finally gained independence from the motherland this post concerns the curious action of Minnesota that has banned the flying of any American flag that was not made in the USA.

The penalty - £1,000 or 90 days in jail.

Of course, on this "globalisation" website we are interested in all acts of protectionism and this appears to be the thin end of the new "protectionist" wedge that is sweeping America (if wedges can sweep).

As a sucker for statistics here are some beauties:

In 2000 America imported $748,000 of US flag, mostly from Taiwan.
In 2001 America improted $51.7 MILLION of US flags, motly from China.

In a regression you would need a serious 9/11 dummy thrown in there. The speed with which China reacted to market demand is a great example of why globalisation works.

If the ban on imported flags had been in place in 2001 there would have a large number of upset patriots who would either have had to pay through the nose for their old glory or been flagless.

The other interesting statistic from today's Times is that 45% of all Americans fly their flag daily.

In the UK I would suspect the figure would be less than 1% at best rising dramatically just before England get knocked out of the latest football competiton after which it falls back to less than 1% within a day or two.

Americans fly the flag for July 4, as long as it’s not made in China
As if raising and waving millions of Stars and Stripes was not patriotic enough at Independence Day celebrations yesterday, the flags now have to be made in the US.

The state of Minnesota has taken the most draconian action, requiring all US flags sold in the state to be of American manufacture. Violations of the law, which comes into force at the end of the year, will be punished by a $1,000 (£495) fine or 90 days in jail.

From this month, schools and colleges in Arizona are being forced to equip every classroom with a US-made Stars and Stripes – sometimes known as “Old Glory”.

Tennessee state law already stipulates that any US flag bought with public money cannot be imported from another country, while similar Bills are being considered by legislators in New Jersey and Pennsylvania.

Such measures chime with the protectionist mood sweeping America. The Democrats, in particular, have become increasingly concerned about preserving manufacturing jobs that they believe are being destroyed by free trade and cheap foreign imports.

In this cause Old Glory has, as ever, emerged as a potent symbol. Last year Republicans failed by a single vote to get the two-thirds majority they needed in the US Senate for a constitutional amendment banning the burning of the flag.

Wednesday, July 04, 2007

China, Globalisation and the environment: link round-up

When we talk about "globalisation and the environment" what are we really referring to?

The remit of this blog is fairly wide but what we are really interested in covering is how the trend towards an increasingly globalised world will impact on the environment.

Yes, the vast majority of sensible social and physical scientists acknowledge that climate change is in part caused by human activity.

The question we will to address is whether the increasing role of trade, multinationals, foreign direct investment, migration of labour, the free flow of capital and more importantly ideas is good or bad for the environment.

Irrespective of the affect on local pollutants one might ask whether globalisation will make climate change worse in the long run or short run or neither.

I suspect that globalisation will have a worsening affect short-term (in terms of CO2) but that in the long term it will be beneficial. The crucial question therefore is how short is the short term and will the worsening lead the world past a tipping point when it becomes too late for the beneficial affects of globalisation to kick in.

One of the main reasons for the negativity is the huge growth of countries like China and India. We all know the "China builds 2 coal fired power stations a week" anecdote but this does encapsulate the problem. There is no doubt world CO2 levels have increased due to sheer scale of Chinese production and the methods of production. Whilst technological improvements are being introduced the scale affect still outweighs any technique affect.

Moreover, in this blog we have also covered local Chinese pollution problems. One does not have to look far to find pictures of factories churning out fumes, polluted rivers and people wearing masks. Statistics that 16 of the 20 dirtiest cities are in China are easy to find. See the article below that has just announced that pollution kills nearly 500,000 people a year in China.

It is for this reason that we spend time documenting the environmental problems in China. They are, in a sense, caused by the West's demand for cheap goods and the desire for Multinationals to avoid paying the costs of regulation in the West (that can be avoided legally or illegally in China).

China is therefore at the frontline of the globalisation and environment debate. If we are concerned with climate change it is one thing to recycle your cardboard but quite another to change the habits of the world's most populous and largest CO2 emitting country (who incidentally probably made the product that was packaged excessively in the cardboard you are now recycling).

Here are a couple of links from today's PlanetArk relating to China.

On regulations:

China Punishes Cities for Polluting Rivers
BEIJING - China's top environmental watchdog has punished several cities and over 30 factories for chronic river pollution, accusing growth-obsessed local governments of worsening degradation to an "unbearable" extent.

Beijing Taking Million Cars Off Streets in August Trial

GUATEMALA CITY - Beijing officials will withdraw one million cars from the city's streets next month in a trial run as plans are drawn up to reduce pollution levels for next year's Olympics.

Pollution has been a worry for the International Olympic Committee (IOC) as China's economic boom has fuelled increased energy consumption.

Deaths in China from Pollution

Pollution Kills 460,000 Chinese a Year - World Bank
BEIJING - About 460,000 Chinese die prematurely each year from breathing polluted air and drinking dirty water, according to a World Bank study.

The Financial Times reported on Tuesday that the Chinese government, the bank's partner in the research project, had asked the lender not to publish the estimates for fear they could trigger social unrest.

The conference version of the study, available at the bank's Web site, says some estimates of the physical and economic cost of pollution have been omitted because of uncertainties about calculation methods and their application.

However, the report goes on to estimate the health costs from premature deaths associated with outdoor air pollution at 394 billion yuan (US$51.8 billion). With each life valued at 1 million yuan, that works out at a death toll of 394,000.

The study puts the cost of deaths from diarrhoea and cancer caused by drinking polluted water at 66 billion yuan, pointing to 66,000 premature deaths a year.


China Environment Chief Says Pollution Fuelling Unrest
BEIJING - Chinese anger with worsening pollution is fuelling increasing protests, the nation's top environmental official said, criticising local governments who he said protected factories turning rivers into "sticky glue".

Chief of the State Environmental Protection Administration (SEPA), Zhou Shengxian, said discontent with pollution "has resulted in a rising number of 'mass incidents'" -- an official euphemism for riots, protests and collective petitions -- the official Xinhua news agency reported late on Wednesday.
Speaking to officials, Zhou did not give overall numbers for such acts but said SEPA had received 1,814 citizen petitions in the first five months of this year demanding an improved environment, an 8 percent rise on the same period of 2006, Xinhua reported.

The government has been struggling to curb pollution from the factories, mines and industrial plants that have driven frantic growth. China has promised to cut emissions of major pollutants by 10 percent between 2006 and 2010, but last year the country failed to meet the annual target.

Zhou lambasted local officials, eager to generate revenue and jobs, who have fended off pollution controls on local businesses.

"In a considerable number of regions, the Party centre's and State Council's demands in environmental protection have not been implemented," he said.

"Some businesses don't rest deep in the night when they have no scruples about dumping pollution in rivers."

A recent inspection of the Yellow, Yangtze and other major rivers and lakes found that about half the 75 waste water treatment plants checked either under-performed or did not work at all, and 44 percent of 529 businesses checked violated environmental laws, Zhou said.

In some places dumping was so bad that rivers have "turned into sticky glue", he added.

Despite official promises to clean up filthy air and water, China has recently been struck by a series of pollution spills that have drawn sharp criticism from domestic media.

State media reported on Thursday that tap water had been restored to 200,000 residents of Shuyang County in the heavily industrialised province of Jiangsu after a spill of industrial chemicals stopped supplies for about 40 hours.

Another SEPA official said earlier that last year, 26 percent of the length of the country's seven main river systems had pollution of grade 5 or worse, making it unfit for human contact.

About 460,000 Chinese die prematurely each year from breathing polluted air and drinking dirty water, according to a World Bank study.

The Financial Times reported on Tuesday that the Chinese government, the bank's partner in the research project, had asked the lender not to publish the estimates for fear they could intensify public discontent.

At a regular Foreign Ministry briefing on Thursday, spokesman Qin Gang disputed the assertion, saying "the report has not reached its final conclusion, and not been published, thus the so-called situation of China requiring some statistics to be removed did not exist".

Zhou urged officials to root out factories using secret pipes to dump pollution and to halt new projects lacking environmental checks.

"Environmental protection offices and enforcement staff must stand up when the time demands," he said. "Dare to struggle against polluting behaviour." (Additional reporting by Vivi Lin)

Sunday, July 01, 2007

The Economics of the Doha Round and the WTO

I thought it was worth posting the contents of the latest special issue from Pacific Economic Review. Remember that the environment is receiving more attention in this round than any previous round.


Robert E. Baldwin
pages 253–266
Abstract. This paper stresses the importance of political as well as economic factors for understanding negotiating outcomes in multilateral trade negotiations such as the Doha Round. In particular, it is argued that economic factors of the type traditionally emphasized by economists in their classrooms are by themselves inadequate for analysing the negotiating process. A variety of political economy factors are discussed as explanations for the disappointing results of the Doha Round.

Bernard Hoekman
pages 267–292
Abstract. Two distinct challenges confront WTO members – whether to ‘save’ the WTO’– that is, a multilateral trading system that is based on non-discrimination and most favoured nation liberalization – and if so, how to do so, and determining what role the WTO should play in attaining (pursuing) national development objectives. This paper explores whether moves to achieve the first objective will help achieve the latter, and whether specific actions to pursue more seriously economic development objectives through the WTO could help move the system closer to achieving the goal of non-discrimination.

Andrew G. Brown and Robert M. Stern
pages 293–318
Abstract. We first discuss why fairness is a condition of the agreements among governments that form the global trading system. We then suggest that fairness can best be considered within the framework of two concepts: equality of opportunity and distributive equity. We thereafter discuss what these mean as applied to market access and its supporting rules as well as to dispute settlement and trade remedy measures. Finally, we make some comments about fairness in the Doha Development Round.

Kym Anderson, Will Martin
pages 319–333
Abstract. This paper provides estimates of the potential gains to the Asia Pacific region from completely freeing merchandise trade globally and from partial liberalizations that might emerge from the Doha Round. Particular attention is given to agriculture, where the majority of the gains would arise. The results suggest that moving to free global merchandise trade would boost real incomes in the Western Pacific proportionately more than in other regions. The Doha partial liberalization scenarios considered would move the world only a small way towards complete free trade, but inreasingly so the more developing countries themselves are willing to open up.

Michael O. Moore
pages 357–379
Abstract. Evidence presented in this paper suggests that substantial, and perhaps even modest, antidumping reform is unlikely to occur in the near future in multilateral trade negotiations. One reason is that the growing list of countries that use antidumping extensively has created new constituencies that will resist reform. Second, traditional antidumping users, especially the USA, have shown strong resistance to further reform and have implemented past reform in a minimalist fashion. Even if substantial changes are forthcoming, experience with antidumping reform from the Uruguay Round means that the economic impact of reform could be limited.

Sven W. Arndt
pages 381–394
Abstract. While the WTO process of multilateral trade liberalization encounters increasing resistance, in part because the most difficult issues have finally risen to the top of the agenda, market-based forces are contributing to international economic integration. One of the most potent is cross-border production networks. This paper explores the implications of such networks for trade policies and development strategies. It argues that participation in production networks requires trade policy adjustments and domestic reforms that can and should be undertaken unilaterally and that such changes will improve the climate for WTO negotiations.