Thursday, February 28, 2008

Environmental impacts of China's WTO-accession

Another classic "glibalisation and the environment" paper:

This is actually a very good question to ask. The paper in a recent issue of Ecological Economics does a decent job of introducing the topic and outlining the main issues but employs CGE analysis to arrive at its conclusions. However, such black box results are never entirely convincing.

Environmental impacts of China's WTO-accession

Haakon Vennemoa, Kristin Aunanb, Jianwu Hec, Tao Hud, Shantong Lic, Kristin Rypdal

ECON Analysis, P.O.Box 5, 0051 Oslo, Norway
CICERO Center For International Climate and Environmental Research, Oslo, Norway
Development Research Center of State Council, Beijing, China
Policy Research Center for Environment and Economy of SEPA, Beijing, China

The paper concludes perhaps surprisingly that:

We have found that WTO accession improves China's environment as far as main air pollutants are concerned. There are also gains to public health and aggregate welfare, but the distribution becomes more skewed. The reason for these developments is that WTO induces a new course for industry growth. The textile and apparel industries, already China's largest export earners, gain tremendous momentum
and increase close to 50% after WTO-accession. The growth of these and industries supplying their inputs draw resources from heavy industry and from agriculture. In short we find a “composition effect” that is favourable to the environment.

The obvious question is why has China not become a pollution haven. These conclusion make some sense and add some credibility to the predictions in the paper.

The reason we find a positive composition effect in our material is that the comparative advantage in the labor dimension dominates. A main effect of WTO is to lift export restrictions in the textile and apparel sectors. These are labor
intensive, but not pollution intensive as far as air is concerned. In our material we recognise the comparative advantage in labor, but not the comparative advantage in pollution. Why is it that WTO-accession does not allow China to play out its comparative advantage in pollution intensive goods? It is useful to distinguish between different elements of accession. Perhaps paradoxically, agricultural import barriers do seem to have a link with China's pollution advantage. Removing agricultural import barriers encourages industrial production, building on comparative advantage of the traditional sort (labor and pollution advantage). From Table 5 above we see that pollution goes up from that aspect of accession in isolation. Removing industrial import barriers on the other hand, actually leads to a decline in pollution intensive goods since pollution intensive industry loses when the protection is lifted. On the export side the quota under the Multi-Fibre Agreement is a significant barrier to Chinese labor advantage, but except forNOx andVOC, it isnot a barrier to an air relatedpollution advantage. It is the textile cluster that gains from removing the export barrier, and the cluster is not a major source of air pollution in China. In conclusion it is mainly removal of agricultural import barriers that exposes traditional pollution intensive comparative advantage, but the agricultural barrier is not dominant in the accession package. Thus, the composition effect of free trade is positive for the environment.


Wednesday, February 27, 2008

On the environmental consequences of dams

I post the following as it covers a possible area of future research on the "economics of dams" although it is on a distant burner at present.

This article touches on the economic and environmental consquences of China's previous desire to build dams, provide electricity and reduce flooding.

New dam repeats ‘stupid mistake’ [FT]

To its opponents, China’s Three Gorges dam on the Yangtze River is all the more tragic because it has a historical precedent. Built in the 1950s, the huge Sanmenxia – literally Three Gates Gorge – dam in central China is today regarded as a catastrophic failure with senior Communist party officials blaming it for many of the environmental and social problems that afflict the region.
Talking about the Sanmenxia dam this offical is clearly upset.
“This dam was really a stupid mistake,” says An Qingyuan, a former Communist party boss of Shaanxi province, the region most directly affected by the project and its aftermath. “We should consider all such projects from a scientific perspective and if it’s not scientific we shouldn’t do these stupid things. It was so stupid, stupid, I say.

The basic science behind the failure is not to hard to work out:
Despite a complete reconstruction in the early 1960s, sedimentation continued and spread up river, eventually leading to the very floods it was meant to prevent and causing Mao to angrily pronounce that if the dam did not work it should be blown up. By then, more than 400,000 people had been forcefully evicted to make way for the dam and its reservoir and many were living in slum-like conditions in nearby towns.


Slavery = Climate Change

Unlikely research award goes to a paper published in the relatively well respected (at least well read) journal "Climate Change".

Celsias explain all.

Climate Change - the new Slavery

The journal Climatic Change recently published a devastating review by Marc D Davison of the University of Amsterdam. Parallels in reactionary argumentation in the US congressional debates on the abolition of slavery and the Kyoto Protocol aims to show that there were very similar arguments used in the historic US Congress debates on Slavery as have been used in regards to the Kyoto Protocol.

Hmmmmm. This does not strike me as that devastasting and potentially combustable research which is not to say it should not be done.

It will be interesting to see if this paper generates further fall out in the mainstream press.


Tuesday, February 26, 2008

China uses capitalism to clean up markets

We come full circle - environmental regulations in China are getting tougher and China may soon cease to be a pollution haven - if it every was one.

China Orders Listed Firms To Be Greener [PlanetArk]

BEIJING - Beijing has launched a "green securities" scheme aimed at making it harder for polluters to raise capital and requiring listed firms to disclose more information about their environmental record.

The initiative is part of a drive by the State Environmental Protection Administration (SEPA) to enlist other government agencies to give financial and economic policies a green hue.

China has adopted "green credit" and "green insurance" in recent months and has plans for "green taxation" and "green trade" to help clean up the economy.

This quote is useful:
The need to comply with tougher environmental standards is among the reasons executives regularly give for why the cost of doing business in China is rising.

This data would be most useful.
The second pillar of the programme is a requirement that listed companies provide more information about their environmental performance.

SEPA said less than half of listed companies bothered to even mention the environment in their 2006 annual reports.

Greater disclosure would not only spur companies to meet their environmental responsibilities but would also help to protect investor interests, Pan said.


Sunday, February 24, 2008

Big Macs, salads and subsidies

Nice little dig by Celsias at the US meat and dairy subsidies. Click to see the all telling figure.

Why Eatng a Big Mac is Cheapers than eating a salad [Celsias]

Almost 75% of U.S. government subsidies go into meat and dairy production, but less than half a per cent goes into fruit and vegetable production.


Wednesday, February 20, 2008

Are ASEAN Countries Havens for Japanese Pollution-Intensive Industry?

Blatent self publicity - newly released on the waiting public:

"Are Asean Countries Havens for Japanese Pollution-Intensive Industry?"

World Economy, Vol. 31, Issue 2, pp. 236-254, February 2008


In an era of closer worldwide economic integration, the role that environmental regulations play in shaping a country&apos's comparative advantage is greater than ever. This has led to fears that dirty firms will relocate from developed to developing countries where environmental regulations may be less stringent the so-called pollution haven hypothesis. To date, however, there is little support for the existence of pollution havens despite anecdotal evidence and the theoretical predictions. In this paper we employ a unique industry-level dataset for Japan and examine whether Japanese industries have relocated production to their ASEAN neighbours in response to the relative stringency of Japanese environmental regulations. Not only do we find no evidence for pollution-haven-consistent behaviour but also some indication that the complex relationship between the characteristics of Japanese dirty industries and environmental regulations may actually have reduced Japanese outward FDI to the Philippines.

Access to a working paper version can be found on my BePress page HERE.


Brian Hoskins: "Climate change in an uncertain world"

Last night at the University of Birmingham Professor Sir Brian Hoskins gave a talk on "climate change in an uncertain world".

The slides of this talk are now available online HERE.[PDF]

I have never seen so many pretty pictures in one place - a valuable source of graphs for reports, papers and blog posts.

CERT Annual Lecture 2008

The CERT Annual Lecture 2008 was given by Professor Sir Brian Hoskins, a world-leading meteorologist and climate scientist. Sir Brian is based at the University of Reading and has recently been appointed as the first Director of the Grantham Institute of Environmental Change at Imperial College London. His research extends across many areas of meteorology, including the Indian monsoon and global warming. He has contributed to the Stern Review and the IPCC Fourth Assessment Report. He is a past President of the Royal Meteorological Society and has been a Member of Council of the Royal Society since 1999. In 2007 he was awarded the Symons Gold Medal of the Royal Meteorological Society.


Economic Possibilities for our Grandchildren

An interesting paper from Fabrizio Zilibotti looking at whether Keynes was right - would people become less oppressed by the satisfaction of material goods?

Well he has been wrong so far but perhaps, just perhaps, we have reached the peak of consumption in the west. China and India are a differnt ball game entirely so globally there is a long way to go.

”Economic Possibilities for Our Grandchildren” 75 Years after: A Global Perspective

Date: 2007-12

By: Fabrizio Zilibotti


In the heart of the Great Crisis, amidst great uncertainty and concerns surrounding the future of capitalism, John Maynard Keynes launched his optimistic prophecy that growth and technological change would allow mankind to solve its economic problem within a century. He envisioned a world where people would work much less and be less oppressed by the satisfaction of material needs. To what extent have his predictions turned out to be accurate? This essays attempts to provide some answers.

Keywords: Capitalism, Consumption, Environmental Sustainability, Growth, Keynes, Leisure.

JEL: B31 E12 E66 I31 J22


Monday, February 18, 2008

Porter Hypothesis tested for Sweden

A new working paper from Runar Brännlund (Umeå University) examines evidence for the Porter hypothesis using long run data for Sweden. Any paper on the "to read pile".

I am a little concerned about the long time period - 1913 through to 1999 which involved some rather large world events like 2 world wars. Interestingly but perhaps not surprisingly little evidence is found. A closer read required. I suspect his final line of the abstract is the right one:

A rather robust conclusion is that there is no evident relationship between environmental regulations and productivity growth. One explanation is that regulations and productivity actually is unrelated. Another potential explanation is that the regulatory measure used does not capture perceived regulations in a correct way.

Productivity and environmental regulations - A long run analysis of the Swedish industry

Date: 2008-02-01

By: Brännlund, Runar (Department of Economics, Umeå University)


The aim with this study is to evaluate the potential effects on productivity development in the Swedish manufacturing industry due to changes in environmental regulations over a long time period. The issue is closely related to the so called Porter hypothesis, i.e. whether environmental regulations (the right kind) that usually is associated with costs triggers mechanisms that enhances efficiency and productivity that finally outweighs the initial cost increase. To test our hypothesis we use historical data spanning over the period 1913-1999 for the Swedish manufacturing sector. The model used is a two stage model were the total factor productivity is calculated in the first stage, and is then used in a second stage as the dependent variable in a regression analysis where one of the independent variables is a measure of regulatory intensity. The results show that the productivity growth has varied considerably over time. The least productive period was the second world war period, whereas the period with the highest productivity growth was the period after the second world war until 1970. Development of emissions follows essentially the same path as productivity growth until 1970. After 1970, however, there is a decoupling in the sense that emissions are decreasing, both in absolute level and as emissions per unit of value added. A rather robust conclusion is that there is no evident relationship between environmental regulations and productivity growth. One explanation is that regulations and productivity actually is unrelated. Another potential explanation is that the regulatory measure used does not capture perceived regulations in a correct way.

Keywords: Environmental regulations; productivity; Porter hypothesis
JEL: Q52 Q55 Q56

Space: the final frontier for the common tragedy

Neat little link between the tragedy of the commons and the shooting down of space hardware from Common Tragedies. The economics is spot on.

Who has the most to lose is the near orbit is made effectively unusable? The US? The Chinese or Russians or sports fans?

Space waste - A tragedy of the cosmic commons [Common tragedies]

Yesterday the Bush administration ordered the military to attempt to shoot down a crippled spy satellite in the next two weeks. While the administration says that it needs to destroy the satellite in order to “prevent any possible contamination from the hazardous rocket fuel on board”, I think it’s clear to all that this is action is a direct response to China’s similar act a year ago. Ignoring all the disingenousness of the justificaton (as if Bush cares about the environment) and the ridiculousness of the missile defense program (Reagan literally dreamed it up after watching Star Wars), there is an interesting economics component to the this story.

Standard procedure for removing unwanted or obsolete satellites from space involves taking them out of orbit and letting them disintegrate in the heat of the atmosphere. This results in essentially no remaining debris. China, for reasons we can only guess at, decided to ignore this protocol when it shot it’s satellite down last January. This resulted in an explosion of debris which is currently racing around the Earth at ten times the speed of a bullet. The effect has been a significant increase in the incidence of debris damage to other satellites. This is interesting because while “space” is conceptually limitless, the section of space optimal for observing and communicating with our planet is becoming increasingly crowded. However, given all of the complexities associated with delimiting and regulating it, this “space” is still essentially a free for all, with actors ignoring externalities and shortsightedly plundering a limited resource. Thus, if we are not careful, space, or at least a section of it, could go the way of Hardin’s commons.

Thursday, February 14, 2008

profit in cutting emissions

Study finds profit in cutting emissions[FT}

Half the cuts in greenhouse gas emissions needed to make the world safe can be achieved at a net profit to the global economy, a study has found.

McKinsey, the consultancy, publishes a report on Thursday concluding that investment in energy efficiency of about $170bn a year worldwide would yield a profit of about 17 per cent, or $29bn.

This investment, encompassing only energy-saving measures that could be done quickly and at minimal cost, would also cut carbon dioxide emissions by about half the amount needed to stabilise the gas at about 550 parts per million, the limit of safety according to the Intergovernmental Panel on Climate Change.

The cost of tackling climate change has been hotly debated, with some economists arguing that immediate action to cut emissions would cost only a few per cent of future global gross domestic product, while waiting would be more expensive because of the need to adapt to the effects of climate change. Others say it would be cheaper to wait for low-carbon technologies, such as renewable energy, to come down in price.

Global Warming not so bad (if you are a New Zealand wine producer)

Every cloud has a silver lining:

NZ Wine Industry Upbeat About Global Warming [PlanetArk]

WELLINGTON - Global warming, which is threatening the viability of the drought-stricken wine industry in Australia, could be a boon for neighbouring New Zealand which has been enjoying a growing reputation for its quality wines.

New Zealand's subtle flavoured wines, mostly whites such as Sauvignon Blanc but also reds such as Pinot Noir, are appearing on the tables of fine restaurants from London to Los Angeles and are winning medals at prestigious international wine shows.

Yet despite success at producing quality wines, New Zealand has long had trouble producing wines in significant export quantities due to its weather. New Zealand is one of the world's most southern countries and frosts and biting winds from Antarctica make it hard to cultivate wine-worthy grapes.

But that may change.

Higher temperatures due to global warming are expected to make cold areas of New Zealand more temperate and better suited to grape cultivation. So it's no surprise that New Zealand wine-growers are upbeat about a future that includes climate change.

"The big picture for New Zealand wine is very, very good," said Philip Gregan, chief executive of industry body New Zealand Winegrowers.


Unmasking the pollution haven effect

It is good to see a pollution haven hypothesis paper using industry and trade data from 20 years ago can still get into a journal of the qualiy of International Economic Review. Of course Levinson and Taylor are two of the best known researchers in this area who do consistently excellent work. Scott Taylor (and Brian Copeland) can be considered the fathers of the "trade and the envvironment" literature.

I had come across this paper years ago and as an aside this is a clear example of the publishing lags involved in economics. This paper was probably started in 2003, finished in 2004 and published in 2008. Economists need to be patient.

International Economic Review

Volume 49 Issue 1 Page 223-254, February 2008


* Arik Levinson††Georgetown University, U.S.A.; University of Calgary, Canada and
* M. Scott Taylor†1†Georgetown University, U.S.A.; University of Calgary, Canada

*Manuscript received July 2004; revised September 2006.


We use theory and empirics to examine the effect of environmental regulations on trade flows. A simple model demonstrates how unobserved heterogeneity, endogeneity, and aggregation issues bias standard measurements of this relationship. A reduced-form estimate of the model, using data on U.S. regulations and trade with Canada and Mexico for 130 manufacturing industries from 1977 to 1986, indicates that industries whose abatement costs increased most experienced the largest increases in net imports. For the average industry, the change in net imports we ascribe to regulatory costs amounting to 10% of the total increase in trade volume over the period.


Interesting to note that Scott Taylor has a Bepress homepage. I have one of these and I believe ALL academics should have one. It is an excellent free service and fantastic for getting your papers read (this is of course relative).

My HOMEPAGE on Bepress.

Copeland and Taylor's "Trade and the Environment: Theory and Evidence" book can be found here.


Tuesday, February 12, 2008

Economics of the Finite Earth

We have an internal seminar on Monday 18th February in the Senior Common room at 12 by Aart Heesterman. The title of the seminar is most intriguing:

Economics of the Finite Earth: A critique of the theory of environmental economics, its relation to economic growth and social stability, and its practical application to global warming

The talk will be based on his book that can be read HERE.

The very first line of the whole book inspired this post. Here is that line and the first few paragraphs as a taster.

Environmental economics is in a mess.

Economics more generally has, since the classics, been based on the assumption that a substance or resource that commands no price, is either of little relevance, or else is available in to all practical purposes, unlimited amounts. This has never been genuinely the case. The development of Western industrial and commercial affluence has invariably impacted on the established life stiles of others, from the Highland clearances to the colonisation of ‘empty’ countries in ‘terra nullius’. Now it is the planet itself, the integrity of the atmosphere and the oceans, the very basics of life that is under threat. Both water, surely the most basic and fundamental necessity, and the clean air we need to live a healthy life, remain locked in a convention that regards them as a limitless ‘free goods’, for everyone to take and deplete to their heart’s content.

We argue that appropriate fiscal measures to assign financial costs to environmental degradation, are the most cost effective way of safeguarding the earth. We also explore some of the technical means that might be used in that context, and the sociopolitical obstacles in the way of reaching an agreement on a course of action to this purpose. We take the necessity of measures to contain environmental degradation, and global warming in particular, for granted.

In addition, the practice of discounting, as almost invariably applied in cost benefit analysis, has no clear and consistent support in economic theory, and certainly not in relation to the containment of long-term environmental degradation. Three arguments, each of them flawed, are raised in the defence of the erroneous idea, that somehow, there are objective reasons for regarding the future as less important than our present affluence.

I believe that all will be welcome if you are in the University of Birmingham direction next Monday and fancy a limp sandwich and some environmental economics.

Megabubbles and the collapse of the West

Peak Oil is a great website for off beat and doom filled stories that will often appeal to dismal scientists.

This one caught my eye.

I must say this is one "new economic theory" story that is more off beat that most.

You Vote: What Megabubble Will Be The Next To Bring Us Down

Hollywood tag lines fit Exxon Mobil's $40 billion profit as well as the movies: "There will be Blood. There will be Greed. There will be Vengeance."

Our "war of civilizations" is not of theologies but a primal battle to control basic resources essential to survival. Yes, there is blood ... and oil ... and greed ... and vengeance ... and wars for survival.

At the highest level, this war's being waged in the elite towers of Wall Street and London and Dubai and Singapore: Quants in Turnbull & Asher shirts trading commodity derivatives, gunning for megabonuses, soaring high, like stealth bombers detached from the bloody fighting 40,000 feet below.

That's also how Eric Janszen's radar reads the world in Harpers Magazine's "The Next Bubble." Inside a thought-bubble common on Wall Street, he invents a new economic theory from the simple observation "that the Internet and the housing hyperinflations transpired within a period of 10 years."

Get it? Two bubbles, 10 years apart: An anomaly, yet suddenly we have a bizarre new economic theory: "There will and must be many more such booms, for without them the United States can no longer function. The bubble cycle has replaced the business cycle."

We're told the "next bubble" is already here: "Alternative energy," says Janszen. In his new "perpetual bubble-blowing machine" theory this means that biofuels, solar, wind, nuclear, hydroelectric and geothermal energies are the new bubble, until it peaks and "creatively destructs" around 2013.

2013? Yes, then Wall Street will replace it with a new bubble. Bubble after bubble, accelerating, increasing in size and frequency ad infinitum. And each time, "we will be left to mop up after yet another devastated industry," while Wall Street "will already be engineering its next opportunity." Unfortunately, the only thing perpetual is greed.

Small wonder Janszen dismisses my challenge on his Web site, claiming I have "no idea how the economy actually works." And yet, since my days at Morgan Stanley, I've seen many other theories that undercut this bizarre idea of a "perpetual bubble-blowing machine" which is predicated on a weak assumption: That the planet has an inexhaustible supply of oil and other natural resources. Unfortunately, that assumption is faith-based wishful thinking, much like Greenspan, Bernanke and Paulson's assumptions that the subprime problems were "contained."

The main alternative is "Peak Oil" theory, which the world's Exxon-Mobils hate. "Peak Oil" forecasts a different end game. Janszen's theory simply predicts America's economy will "creatively self-destruct" in 2013 while Wall Street is busy creating a newer, bigger bubble. In marked contrast, "Peak Oil" forecasts:

A "not-so-creative destruction" of the oil industry The end of Wall Street's "bubble-blowing machine" A steady decline of the oil-dependent global economy Widespread resources wars intensifying through the 21st century


Key issues for attention from ecological economists

From the inbox:

A chance to read for free an article from Environment and Development Economics by PAUL R. EHRLICH (Stanford University).

EDE is a decent journal and it is useful for non-economists to read academic articles every once in a while. I am also keen to support open access to journals.

This article gives mainstream environmental economists a perhaps deserved kicking whilst highlighting the failure of ecological economists to get their message across.

I am not convinced by this statement but perhaps I will be after reading the paper: is clear that ecological economics is in a position to become the central subdiscipline of economics.

I wonder if the env-econ boys would agree?

Key issues for attention from ecological economists [HERE]

ABSTRACT. This paper gives an ecologist’s overview of the deteriorating environmental
situation. It then describes areas where the activities of ecological economists seem
appropriate (e.g., ecosystem service valuation, trade) and others requiring more attention (e.g., definitions of utility, social discounting, preserving population diversity, global toxification, the epidemiological environment, overpopulation, overconsumption, the economic impacts of nuclear explosions, and the equilibration of opportunity costs when attempting to solve global dilemmas). A general problem is the failure of ecological economists adequately to communicate their results and concerns to the general public and to decision makers. In view of the demonstrable failure of traditional economics to focus its attention on what will be the central issues of the twenty-first century, it is clear that ecological economics is in a position to become the central subdiscipline of economics. In order to do so, it is important for ecological economists to always keep the ‘big picture’ in view.


Monday, February 11, 2008

"Green Economics"

When a news article includes the term "green economics" it has to be blogged.

If it is true that we are on the cusp of an age of "green economics" this should mean that environmental economists should be in higher demand. Certainly numbers are up on our MSc in Environmental and Resource Economics not least because of the increase in "green jobs".

Age of 'Green Economics' is Upon Us - UN's Ban [PlanetArk]

CHICAGO - UN Secretary-General Ban Ki-moon said on Thursday the world is on the cusp of "the age of green economics" and called on nations to cooperate to fight global warming and promote the transformation.

"With the right financial incentives and a global framework, we can steer economic growth in a low-carbon direction," Ban said in remarks prepared for delivery to a Chicago business group.

Ban, who has made the environment a centerpiece of his year-long leadership of the UN, urged the United States and other countries to partner with the "world's only truly global institution" to combat such scourges as climate change, terrorism and infectious diseases.

"No nation, alone, can deal with such problems," Ban said. "Operating effectively in today's world requires partnership. It requires co-operation, engagement and dialogue -- as well as global rules."

Three-quarters of Americans in surveys believe the United Nations should play a larger role in the world, he said, and a similar proportion say US foreign policy should be coordinated with the international body.

The United States is the biggest single funder of the United Nations though the body has been an object of frequent criticism, particularly from Republicans, for how it is run and for the perception it impedes US goals.

Ban said global investment in green energy is projected to hit $1.9 trillion by 2020, an indication of an economic shift that will rival the industrial revolution and the technology revolution of the past two centuries.

"We're now on the threshold of another (transformation) -- the age of green economics," Ban said.

"Businesspeople in so many parts of the world are demanding clear and consistent policies on climate change -- global policies for a global problem," he said.


Sunday, February 10, 2008

Google to save the planet? Outspends US government on environment

An interesting little snippit from the blogosphere.

Means absolutely nothing of course but google is still OK but losing traction fast. Publicity like this will help them appear to to the good guys again.

The author of this blog piece has taken some liberties with the data but hey, it's Sunday.

Google to Outspend US Government on Environment [Planetsave]

A report is circulating regarding my favorite tech company, that they are pledging themselves to invest hundreds of millions of dollars in to big alternative-energy projects started by commercial businesses. They plan to focus on projects that have traditionally had a hard time getting financing. Thus, I would imagine the majority of such projects will get financing, considering Bush’s position on such things.

The executive in charge of their environmental push, Dan Reicher, said Wednesday that “There are a lot of technologies that get to the pilot scale and look promising, but the first few large commercial projects deploying those technologies, financing those can be extremely difficult.”

“Often the usual equity and debt players will say come back to us when you’ve demonstrated this at scale,” said Reicher, director of climate and energy initiatives for Google’s philanthropic arm,

Reicher referred to the “Valley of Death,” a term used in the technology industry to describe the difference between successfully developing a new technology and amassing scale. This is something that Google is aware of, and their pledge to invest such moneys as they can in to projects is hoped to alleviate this problem.

“When you get to building a commercial-scale project in the energy world, you can be looking easily at hundreds of millions or even across the billion dollar threshold,” Reicher said. “Over years we’ll be looking at hundreds of millions of dollars. So we’re very mindful of the Valley of Death.”

Google has already committed large amounts of finances to various green projects, both within their own company and without. They’ve committed $20 million to funding start-up firms researching solar-thermal and high-altitude wind power, and another $10 million to Pasadena, California-based eSolar Inc to support research and development on solar thermal power.

Wednesday, February 06, 2008

"Business and the Environment": An academic overview

It has just been announced that the historic and well regarded Department of Economics at the University of Birmingham is set to leave the School of Social Sciences and merge with the Birmingham Business School.

There are undoubtedly advantages and disadvantages with such a move although intellectually I believe this to be a backward step.

Still, if you cannot beat them, join them.

Hence, here is the future of environmental economics at Birmingham. The most scary thing about this paper is that there are no equations or regressions. Help.

Postcards from the Edge: A review of the business and environment literature [PDF]


Environmental issues, while of growing interest, have been outside the main focus of business scholarship. This position on the periphery may have been a good thing. It allowed scholars of business and the environment to consider unusual theories and evaluate overlooked phenomenon. In doing so, they created a body of research that provides new insights on two topics of mainstream interest -- the sources of competitive advantage and the origin and function of self-regulatory institutions.


Is air pollution too high in the UK?

Given the news that London now has a low emission zone to stop what Ken Livingstone calls the "1000 premature deaths from air pollution" this new research paper from Katharina Janke, Carol Propper and John Henderson is timely.

They clearly have access to some excellent data.

Low Emission Zone [Transport UK]

London Low Emission Zone [London]

The paper is called:

Are current levels of air pollution in England too high?
The impact of pollution on population mortality

We examine the relationship between common sources of airborne pollution and population mortality in present day England. The current air quality limit values are low by both historical and international standards, and these are set at levels which are believed not to be harmful to health. We assess whether this view is correct. We use data at local authority level for the period 1998 to 2004 to examine whether current levels of airborne pollution, as measured by annual mean concentrations of carbon monoxide, nitrogen dioxide, particulate matter less than 10 μm in diameter (PM10) and ozone, are associated with excess deaths. We examine all cause mortality and deaths from specific cardiovascular and respiratory causes that are known to be exacerbated by air pollution. We exploit the panel nature of our data to control for any unobserved time-invariant associations at local authority level between high levels of pollution and poor population health and estimate multi-pollutant models to allow for the fact that three of the pollutants are closely correlated. We find higher levels of PM10 and ozone are associated with higher mortality rates. The size of the effects we find translates into around 4,500 deaths per annum.


Monday, February 04, 2008

Gobalization, Energy and the Environment Conference Warsaw 2008

A conference that I should be attending. To submit or not submit.

The Conference "Globalization, Energy and the Environment" to be held on May 29th and 30th, 2008 is continuing an experience of previous events organized by the Warsaw School of Economics and University of Washington to evaluate impacts the globalization might have on natural environment and global environmental policy.


The primary theme of the forthcoming conference focuses on the relationship between energy and the environment in the global context. Energy use and supply is of fundamental importance to society and, with the possible exception of agriculture and forestry, has made the greatest impact on the environment of any human activity - a result of the large scale and pervasive nature of energy related activities. Although energy and environment concerns were originally local in character - for example, problems associated with extraction, transport or noxious emissions - they have now widened to cover regional and global issues such as acid rain, transboundary impacts of energy use and the greenhouse effect. Such problems have now become major political issues and the subject of international debate and regulation.

It is for this reason that there is a need for an international conference dedicated to energy and environment issues.


"Every Cloud": Air pollution and temperature

Is it really a silver lining that air pollution generated during the working week might lead to clearer skies and warmer weather at the weekend? I suspect your average asthma sufferer would disagree.

Clearly as economists we could work out how much pollution people are willing to put up with to have clearer skies at the weekend. I suspect not a lot.

Workweek Fumes May Make Some US Weekends Drier [PlanetArk]

NEW YORK - Air pollution may have a silver lining in some parts of the United States -- it might help make summer weekends less rainy, according to a new study.

Scientists have long questioned whether particulate pollution from vehicles and factories, which is higher during the workweek, changes weather patterns.

The study, published on Thursday in the Journal of Geophysical Research - Atmospheres, found that tiny particulate matter from workweek pollution may "seed" summer clouds in the US Southeast, where plentiful hot, moist air tends to form more rain.

"There is a kind of a feedback loop," where pollution causes heavier storms during the workweek that flush smog from the atmosphere and tend to leave summer weekend weather clearer and less rainy, said Thomas Bell, an atmospheric scientist at NASA's Goddard Space Flight Center and the report's lead author.

"Pollution dies on the weekends, so you have the tendency for less severe storms and nicer, clearer air," he said.

On average, it rains more in the Southeast between Tuesday and Thursday than from Saturday through Monday, the NASA-funded study found.

Its satellite data found that afternoon rainfall peaks on Tuesday, with 1.8 times more rainfall than on Saturday, which experiences the least amount of afternoon rain.

The pollution-rain connection was less pronounced in western half of the country, where it tends to be drier in the summer.

In cloud seeding, water and ice in clouds grab hold around particles, forming additional water droplets that lead to heavier rainstorms.

Bell said the study suggests that weather forecasters may be able to sharpen their rain predictions by focusing more on pollution levels. (Reporting by Timothy Gardner; Editing by Xavier Briand)


Open-Access Losses and Delay in the Assignment of Property Rights

A new NBER working paper by Gary Libecap examines open-access and the depletion of natural resources. The paper is theoretcal but does include some empirical examples that includes fisheries and non-renewable resources.

Open-Access Losses and Delay in the Assignment of Property Rights


Gary D. Libecap (University of California, Santa Barbara)


Even though formal property rights are the theoretical response to open access involving natural and environmental resources, they typically are adopted late after considerable waste has been endured. Instead, the usual response in local, national, and international settings is to rely upon uniform rules and standards as a means of constraining behavior. While providing some relief, these do not close the externality and excessive exploitation along unregulated margins continues. As external costs and resource values rise, there finally is a resort to property rights of some type. Transfers and other concessions to address distributional concerns affect the ability of the rights arrangement to mitigate open-access losses. This paper outlines the reasons why this pattern exists and presents three empirical examples of overfishing, over extraction from oil and gas reservoirs, and excessive air pollution to illustrate the main points.