Sunday, March 30, 2008

U.S. Climate Policy Developments

There are only so many over hyped and biased newspaper articles one can read about US climate change policy.

For an academic perspective:

U.S. Climate Policy Developments

Date: 2007-10-31

By: Toshi Arimura (Resources for the Future)
Dallas Burtraw
Alan J. Krupnick
Karen L. Palmer


This paper outlines recent developments in U.S. climate policies. Although the United States does not participate in the Kyoto Mechanism, a number of climate policies are being implemented at state level as well as at the federal level. First, we report and compare the federal cap and trade proposals in the 110th Congress. Then, the paper illustrates the current situations of state level climate policies, such as the Regional Greenhouse Gas Initiative in the northeastern states or AB32 in California. We analyze these proposals from the viewpoint of technology policies and impacts on international markets. It is found that technology policies play important roles in the cap and trade proposals and that there is a great expectation for carbon capture and sequestration (CCS) technology. In terms of the impacts on international markets, several federal proposals as well as regional programs permit trading in international markets. As emission targets become more stringent in the future, U.S. GHG emitters are more likely to interact with these markets. Thus, despite the lack of U.S. participation in the Kyoto Protocol, U.S. markets will be linked to foreign markets, at least, in an indirect way.

Keywords: United States, climate policy, cap and trade, the Kyoto mechanism, technology policy
JEL: K32 Q48 Q54 Q58


U.S. Climate Policy Developments

There are only so many over hyped and biased newspaper articles one can read about US climate change policy.

At least in one place we have an academic perspective:

U.S. Climate Policy Developments

Date: 2007-10-31

By: Toshi Arimura (Resources for the Future)
Dallas Burtraw
Alan J. Krupnick
Karen L. Palmer


This paper outlines recent developments in U.S. climate policies. Although the United States does not participate in the Kyoto Mechanism, a number of climate policies are being implemented at state level as well as at the federal level. First, we report and compare the federal cap and trade proposals in the 110th Congress. Then, the paper illustrates the current situations of state level climate policies, such as the Regional Greenhouse Gas Initiative in the northeastern states or AB32 in California. We analyze these proposals from the viewpoint of technology policies and impacts on international markets. It is found that technology policies play important roles in the cap and trade proposals and that there is a great expectation for carbon capture and sequestration (CCS) technology. In terms of the impacts on international markets, several federal proposals as well as regional programs permit trading in international markets. As emission targets become more stringent in the future, U.S. GHG emitters are more likely to interact with these markets. Thus, despite the lack of U.S. participation in the Kyoto Protocol, U.S. markets will be linked to foreign markets, at least, in an indirect way.

Keywords: United States, climate policy, cap and trade, the Kyoto mechanism, technology policy
JEL: K32 Q48 Q54 Q58

Thursday, March 27, 2008

Sport and Climate Change

An offbeat but interesting post on Celsias on the impact that climate change will have on sport. It would be flippant to say that this is the least of our worries but this has not stopped many academic papers looking at equally irrelevant "climate change effects".

Not surprisingly golf and winter sports get a hammering.

Climate Change and the Future of Sport [Celsias]

What is the future of sport? How can it be made more sustainable? Which ones will survive the end of cheap energy?

These "Dam" Externalities get everywhere

Despite my poor attempt at a play on words in the title (there must be a better one), the "economics of dams" is something that interesting me for some reason.

I just can't help thinking that the knock on effects of dams are never fully included (either upstream or downstream) in any cost benefit analysis.

Today's PlanetArk post on the effect of Chinese built dams in Cambodia articulate my initial fears more eloquently. The title of the article is misleading. These are Chinese built dams but are located in Cambodia.

The main loss will be felt by those perpetual losers in these matters, the "indigenous communities", followed closely by the always "rare" wildlife (turtles in this case and some migrating fish) plus an ark load of other big beasts.

Chinese Dams Threaten Cambodia's Forests, Farmers [PlanetArk]


Faced with a rapidly growing but power-starved economy, Prime Minister Hun Sen has decided the rivers flowing from one of the few elevated spots in a relentlessly flat country should become its battery pack.

With this in mind, in the last two years he has agreed to at least four Chinese-funded hydropower projects as part of a $3 billion scheme to boost output from a measly 300 MW today to 1,000 MW in a decade, enough to power a small city.

The indigenous communities who have lived off the forests in the Cardamoms since the dawn of time appear to be the ones who will be paying the biggest price.



Few people argue that Cambodia's 14 million people need more power.

After decades of war and upheaval, including the Khmer Rouge "Killing Fields" of the 1970s, the economy has finally taken off, growing at nearly 10 percent a year.

But its antiquated, mainly diesel-fuelled power plants can meet only 75 percent of demand, meaning frequent blackouts and unit prices around twice those of neighbouring Thailand and Vietnam -- both factors inhibiting faster expansion.

With the closer ties Hun Sen has cultivated with Beijing in the last five years, Chinese cash and dam-building expertise has become a logical solution to what is one of the inevitable pains of breakneck growth.

"Chinese investment in hydropower is so important for Cambodia's development," Foreign Minister Hor Namhong said in January after meeting with his Chinese counterpart Yang Jiechi.

But critics maintain that much of the planning is taking place with scant regard for the long-term impact on the environment in a country where (80) percent of people still rely on agriculture for their livelihoods.

"Poorly conceived and developed hydro-power projects could needlessly and irreparably damage Cambodia's river system with serious consequences," said Carl Middleton of the US-based International Rivers Network.


The Chinese embassy in Phnom Penh denied Beijing was taking any short-cuts in dam construction in Cambodia -- part of a massive aid package designed to ensure a compliant friend in the region.

"They comply with environmental standards and are approved by the Cambodian government," said a Chinese diplomat who did not wish to be named. "We just want to help Cambodia as much as we can."

But the Chay Areng project hardly appears to be a model of transparency.

The deal was signed in late 2006 with China Southern Power Grid Co (CSG), one of China's two grid operators, to build a 260 MW plant at an estimated cost of $200 million and with a completion date of 2015.

With no prior consultation, the first villagers knew of the project was when Chinese engineers turned up this year to start working on feasibility studies -- details of which CSG and the government are reluctant to discuss.

Environmentalists who have conducted their own studies say the dam's lake will cover 110 sq km (42 sq miles) and displace thousands of indigenous people in nine villages.

More than 200 animal species, including elephants, sun bears, leopards and the endangered Siamese crocodile, would be affected upstream, said Sam Chanthy, head of the NGO Forum, a foreign-funded non-governmental organisation in Phnom Penh.

Downstream, the delicate ecosystem of the flooded forest, home to some of the world's rarest turtle species as well as hundreds of types of migratory fish, would also be hit by disruptions to water flow, he said.

"It won't take long for these invaluable assets to disappear when the dam is built," said Eng Polo, of wildlife group Conservation International.


Wednesday, March 26, 2008

Richard Sandor "The Carbon King" strikes gold

It is always interesting to read about "economists" making millions (usually from some sort of convoluted hedge fund deal) but it would be remiss of me not to cover a "economist makes millions" story that involves environmental economics.

One impressive quote is that Richard Sandor, an economist remember, is labeled as "gregarious". Not a term often employed to describe economists.

This is a long article that is worth reading. Some of the more salient quotes are included below.

Economist Strikes Gold In Climate-Change Fight [Wall Street Journal]

LONDON -- The planet is getting warmer. Richard Sandor, a 66-year-old economist, is getting wealthier.

His company, London-based Climate Exchange PLC, has carved out a key role in Europe's booming trade in "carbon permits" -- essentially, buying and selling the right to pollute. Since 2005, the European Union has required major polluters to either cut the amount of carbon dioxide they spew, or buy pollution credits in the open market.

A big chunk of the action occurs on an exchange founded by Mr. Sandor, a one-time Berkeley professor who has morphed into a gregarious climate-change entrepreneur.

It all seems so simple. Why didn't I think of it (given I was teaching this stuff).

Yesterday, Climate Exchange's stock jumped 16% after the firm reported a tripling in 2007 revenue to £13.6 million, or about $27 million. That gives the company, which handles about 90% of the trading on carbon exchanges, a market capitalization of roughly $1.31 billion. Mr. Sandor's 20% stake is worth more than $260 million on paper.

Sander's take on this is spot on. This "bold" quote applies to environmental economists in general (but not ecological economists).

It's an unusual mix of markets theory and environmentalism. "The right wing always suspects you of being a tree-hugging environmentalist and the left wing accuses you of being a money-grubbing capitalist," says Mr. Sandor, who back in the 1990s developed a markets-based system to cut down on pollutants causing acid rain.

Sander does not have it all his own way however. With the current financial crisis "financial wizards" are getting a bad press. This is a valid criticism.

Other criticisms of carbon trading focus on the financial wizards -- such as Mr. Sandor -- who design and run the markets. "Financial resources are being redistributed to the banks and traders rather than paying for technological innovations to cut emissions," says Carlo Stagnaro of the Italy-based economic think tank Istituto Bruno Leoni, who just published a paper on the European Union's emissions-trading system.

Robert Stavins (a well respected and well published environmental economist) gets in on the act:

Robert Stavins, an environmental economist at Harvard's John F. Kennedy School of Government, agrees Europe's carbon market isn't perfect, but defends the role of financiers. "The only way we can fight climate change is if there is an opportunity for businesses and individuals to make a fortune off of it," he said.

That's what Mr. Sandor has done. "I am a capitalist who runs a business and has to deliver value to shareholders," he said during a recent interview at the Ritz Hotel in London. "I consider myself to be an environmentalist, but I divorce those sentiments from my day job."

It is good to see that making a fortune is consistent with being an environmentalist although I am not sure that the "only way" to fight climate change is to ensure a select few individuals become multimillionaires.

A little background on Sander for economists out there:

Mr. Sandor, a dapper professor in close-cropped hair and tailored suits, started his career teaching economics and finance at the University of California, Berkeley, where he developed ideas for trading intangible things, like interest rates or mortgages, on a market.

He later made a name for himself at the Chicago Board of Trade where he did leading work on developing financial futures markets in the U.S.

As a final note I am still not convinced of the current business model of Sander's company. As an AIM quoted stock it is lightly regulated and is susceptible to political shocks. There are far better AIM investments out there at the moment.


Tuesday, March 25, 2008

We are number 2

An email arrived this morning from SSRN informing us that one of our papers has made it into the top 10 of downloaded papers. The category?

TOP 10 Papers for Journal of AE: Environmental Ethics, Ecology, Ethical Treatment of Nonhuman Animals

Now I am worried - no economics in the title. The competition appears to be a rather motley bunch. At least we beat "The Education of Ada" - whatever she is and the "The Evangelical Debate Over Climate Change" whatever that is.

Here is the top 10 so I can try and work out how this happened.

Rank Downloads Paper Title

1 201 Energy Charter Treaty's Investor Protection Provisions: Potential to Foster Solutions to Global Warming and Promote Sustainable Development
Edna Sussman,
Hoguet Newman Regal & Kenney LLP,

2 117 Endogenous Pollution Havens: Does FDI Influence Environmental Regulations?
Matthew A. Cole, Robert J.R. Elliott, Per G. Fredriksson,
University of Birmingham - Department of Economics, University of Birmingham - Department of Economics, University of Louisville - Department of Economics,

3 83 The Evangelical Debate Over Climate Change
John Copeland Nagle, Notre Dame Law School,

4 66 Well-Ordered Science: The Case of GM Crops
Matthew J. Lister, University of Pennsylvania - School of Law,

5 57 World Religions and Clean Water Laws
Daryl Fisher-Ogden, Shelley Ross Saxer, Abraham Lincoln University School of Law, Pepperdine University - School of Law.

6 50 Business, Ethics, and Global Climate Change
Denis G. Arnold, Keith Bustos, Keith Bustos, University of Tennessee, Knoxville, University of Berne, Philosophy Department.

7 47 Government Regulation or Other 'Abridgements' of Scientific Research: The Proper Scope of Judicial Review under the First Amendment
Barry McDonald, Pepperdine University - School of Law,

8 31 The Greening of Higher Education
Lea-Rachel D. Kosnik, University of Missouri at St. Louis - Department of Economics,

9 28 Normative Aspects of a 'Substantive' Precautionary Principle
Gordon Hull,Iowa State University - Dept. of Philosophy and Religious Studies,

10 17 The Education of Ada
Eric T. Freyfogle, University of Illinois - College of Law,

So intrigued was I by the final entry that I felt compelled to post the abstract. Woaaahh, this is not economics. Where are the equations and t-stats? Looks fun though.

Charles Frazier's award-winning, popular novel, Cold Mountain, expresses sharp criticisms of industrial, technological society and probes the ways the modern world might return to the land to fashion a culture and economy more sensitive to place. Unlike Aldo Leopold, who turned to wild nature for guidance on how people might live, Frazier looks to the small farm and to a land-based economy as the foundation for a new order. Frazier's normative thinking is largely woven into a story line featuring a young, highly cultured woman, Ada Monroe, who finds herself alone on a farm during the Civil War. So ignorant is Ada of nature and food systems she cannot feed herself, even in mid-summer. Into Ada's life comes her opposite, a young woman named Ruby, who is all nature and no culture. As he recounts the interactions of Ada and Ruby, Frazier comments on how American society might return to basics, as the two women did, to search for more lasting ways of blending nature and culture. As the story unfolds, Frazier offers multiple visions of how people might relate to the land. Ultimately he rejects the locally based, visions of plenty ideal sketched by Ruby, as well as a number of escapist and aesthetic alternatives, in favor of a more complex, cultured ideal that blends careful attentiveness to local nature with selective aspects of urban refinement. Frazier's novel stands as one of the most important agrarian conservation writings of the past half century. This essay is drawn from a new book, Agrarianism and the Good Society, which explores from various perspectives the cultural origins of our environmental and land-use predicament.


UK call to delay biofuels obligation

It was only a matter of time. With commodity prices rising it is finally sinking in that biofuels are not all they were cracked up to be.

Any environmental economist could have told you that replacing oil with crops was going to lead to knock on effects elsewhere. And so it has come to pass. I tend to agree with Professor Watson's comments below.

Even the green groups show good common sense thinking.

Today's FT reports.

Call to delay biofuels obligation [FT]

Ministers came under pressure on Monday to delay a move to force motorists to use biofuels, after the government’s top environment scientist warned that the supposedly green initiative could prove counter-productive.

Robert Watson, chief scientist at the Department for the Environment, on Monday called on ministers to postpone the introduction of the obligation, proposed for April 1, until a government-commissioned review of biofuels’ environmental sustainability had been completed.


Some scientists argue that the carbon benefits of burning biofuels may be outweighed by the environmental factors involved in their production, as well as the impact on food prices.

It would obviously be totally insane if we had a policy to try and reduce greenhouse gas emissions through the use of biofuels that’s actually leading to an increase in the greenhouse gases from biofuels,” Prof Watson told the BBC.


Greenpeace argued that it would be “incredibly reckless” to press ahead with the policy without knowing its full impact on climate change. Friends of the Earth warned of the “potentially catastrophic impacts on people and the environment” of western countries setting volume targets for biofuel production.


Wednesday, March 19, 2008

How to become an Ecological Economist

The title of this post raises as many questions as it answers and harks back to the fundamental differences between "environmental economists" and "ecological economists". Malte Faber (Heidelberg) is the author.

It is great to be able to read a paper designed to tell me how I can make the conversion and to at least understand the differences as perceived by an Ecological Economist.

This is interesting reading for those wanting to know the difference if only to discount the idea as academic madness. Does the abstract sound tempting?

How to be an Ecological Economist [PDF]

To answer the question “How to be an Ecological Economist”, we must start by defining the field of Ecological Economics. Mainstream Economics altogether lacks the concepts required to deal adequately with nature, justice and time. It was the absence of these three concepts in this otherwise great social science that led to the establishment of Ecological Economics. The interest in nature, justice and time is its defining characteristic. The main thesis of this paper is that our field is a fragile institution and that the professional existence of an ecological economist is no less fragile. However, this very fragility also represents freedom, scope for free thinking, conceptualising and research. Nevertheless, to be able to really use and in turn enjoy the full scope of this freedom, an ecological economist needs certain specific characteristics, in particular what is termed in the German philosophical tradition “Urteilskraft” and in English “power of judgement”. A description of these characteristics is developed in this paper, providing an answer to the question “How to be an ecological economist?”

The paper concludes with the following short paragraph (my bold):

To sum up: Interdisciplinary studies broaden our horizon, time further expands our perspective. However, we must be aware that this broadening involves a risk of arbitrariness. Here, the power of judgement protects ecological economists. While it is an important aspect of judgement, professionalism alone runs the risk of fostering narrowness. Sensitivity to time not only expands our perspective, it also reinforces humility, by forcing us to face up to our own ignorance. Attentiveness to the Gestalt of Ecological Economics problems leads to openness, safeguarding against narrowness. If all these qualities are truly cultivated by ecological economists, then the two fragilities of the institutional structure and the excessive demands of the task of an ecological economist can be turned into strengths: Ecological economists will blossom and Ecological Economics will flourish.


"Thermo Economics"

In our search for new fields of economics with outlandish names comes a high quality offering from John Bryant (Vocat International).

His new brand of economics is called:

"Thermo Economics".

What is it you may ask.

An analysis of possible restrictions on economic development posed by climate change and resource factors. The paper examines international trends over several decades of GDP, capital stock, population and energy demand and intensity, and the extent to which these trends may need to change to meet restrictions on CO2 emissions arising from consumption of fossil fuels.

This short 4 page article is worth reading not least as it has some interesting and odd looking graphs. My interest is also perked when I read a final line that states:

A new economic age beckons

The article concludes:

All the forgoing analysis shows that in predicting the future, policymakers, managers and economists are increasingly having to take account of the impact of resource and waste factors on the world. Releasing unlimited CO2 into the atmosphere is no longer an option, in terms of temperature rise and potential loss of land. Over-fishing the world’s seas for food on behalf of a growing world population could be short-sighted. A part of the problem is the escalating size of the world population itself. Though overall this is now growing at a lower rate, for some countries, with large and densely-populated areas, future growth will present policymakers with a difficult situation to deal with. Over the next few decades humankind may have to get used to a
low or nil growth GDP scenario, placing a limit on consumption and what this may mean in terms of the distribution of world wealth. A new economic age beckons.


A lawyer's perspective on Bali Climate Change Conference

From the inbox:

It is always useful to read other professions take on climate change and in this case the Bali conference. Lawyers tend to provide well researched and well written technical pieces that can inform economists.

First two paragraphs below:

The Bali Climate Change Conference [ASIL]

The Bali Roadmap marks a milestone in the process of international consensus building, setting forth a multilateral legal framework to address climate change. Delegates at the UN Climate Change Conference in Bali (Dec. 3-15 2007) launched a two-year process with a comprehensive agenda and 2009 deadline to complete negotiations for a post-2012 agreement. The Bali Conference included both the thirteenth annual meeting of the Conference of the Parties (COP 13) to the 1992 UN Framework Convention on Climate Change (UNFCCC) and third Conference of the Parties serving as the Meeting of Parties to the 1997 Kyoto Protocol (COP/MOP 3).[1]

The building blocks of the Bali Roadmap include: mitigating climate change by cutting emissions; facilitating clean technology transfer; adapting to such consequences of climate change as floods and droughts; and financing adaptation and mitigation measures. Bali delegates additionally agreed to support activities such as funding developing countries to prevent deforestation. This process will include demonstration initiatives involving indigenous communities over the next two years -- culminating in negotiations on forestry in relation to a post-2012 regime. Bali delegates agreed to establish a mechanism to fund tropical countries to preserve their rainforests and launched an Adaptation Fund.

Tuesday, March 18, 2008

Research paper review - "Globalisation and the Environment"

Time to catch up on all those unread papers. These are required reading over the next few weeks/months. At least this post is a permanent reminder of how much there is to do without using a tree or two to print them all out.

This first paper takes the pollution haven literature to the next level. A good analysis (and they cite us twice).

Have Countries with Lax Environmental Regulations a Comparative Advantage in Polluting Industries?
Date: 2007-04-24
By: Quiroga, Miguel
Sterner, Thomas
Persson, Martin


We aim to study whether lax environmental regulations induce comparative advantages, causing the least-regulated countries to specialize in polluting industries. The study is based on Trefler and Zhu’s (2005) definition of the factor content of trade. For the econometrical analysis, we use a cross-section of 71 countries in 2000 to examine the net exports in the most polluting industries. We try to overcome three weaknesses in the empirical literature: the measurement of environmental endowments or environmental stringency, the possible endogeneity of the explanatory variables, and the influence of the industrial level of aggregation. As a result, we do find some evidence in favor of the pollution-haven effect. The exogeneity of the environmental endowments was rejected in several industries, and we also find that industrial aggregation matters.

Keywords: comparative advantage, environmental regulation, trade, pollution haven, Porter hypothesis
JEL: F18 Q56

This next paper is similar to a paper we published in ERE looking at convergence. The results of this paper are oppostite to our own. Their longer time series might have something to do with it but I am still a little dubious about thier results. Furthermore I want to know the answer to "why does converegence matter"?

Testing for Convergence in Carbon Dioxide Emissions Using a Century of Panel Data

Date: 2007-05-16
By: Westerlund, Joakim
Basher, Syed A.


This paper tests the convergence in per-capita carbon dioxide emissions for a collection of developed and developing countries using data spanning the period 1870 to 2002. For this purpose, three recently developed panel unit root tests that permit for dependence among the individual countries are employed. The results lend strong support in favor of convergence for the panel as a whole. Estimates of the speed of this convergence is also provided.

Keywords: Emissions convergence; Panel unit root tests; Common factors; Half-life.
JEL: C32 C33 Q54 Q28

An old favourite and a paper I may have blogged on before but not read yet (fully).

Technology, International Trade, and Pollution from U.S. Manufacturing

Date: 2007-08-02
By: Levinson, Arik (Georgetown University)


Total pollution emitted by U.S. manufacturers declined over the past 30 years, even though manufacturing output increased. This improvement must result from one of two trends: (1) changes in production or abatement processes (“technology”); or (2) changes in the mix of goods manufactured in the United States, which itself may result from increased net imports of pollution-intensive goods (“international trade”). In this paper, I first show that most of the decline in pollution from U.S. manufacturing has been the result of changing technology instead of changes in the mix of goods produced, although the pace of that technology change has slowed over time. Second, I present evidence that increases in net imports of pollution-intensive goods are too small to explain more than about half of the pollution reductions from the changing mix of goods produced in the United States. Together, these two findings demonstrate that shifting polluting industries overseas has played at most a minor role in the cleanup of the U.S. manufacturing sector.

Keywords: pollution havens, trade and environment, pollution intensity
JEL: F18 D57 Q55 Q56

This paper needs to be looked at as it gets "wine" into the abstract as well as bubbles leading to an obvious joke. In a world of asset bubbles this may be a timely paper.

Bubbles in Prices of Exhaustible Resources

Date: 2007-08
By: Boyan Jovanovic


Aside from the equilibrium that Hotelling (1931) displayed, his model of non-renewable resources also contains a continuum of bubble equilibria. In all the equilibria the price of the resource rises at the rate of interest. In a bubble equilibrium, however, the consumption of the resource peters out, and a positive fraction of the original stock continues to trade forever. And that may well be happening in the market for high-end Bordeaux wines.
JEL: E44 G12

An interesting application of biofuels to China.

Food Security and Biofuels Development: The Case of China

Date: 2007-10
By: Fengxia Dong (Center for Agricultural and Rural Development (CARD)) (Food and Agricultural Policy Research Institute (FAPRI))


Biofuels production is expanding rapidly all over the world, driven by rising crude oil prices, the desire of countries to be energy independent, and concerns about climate change. As developed countries, especially the United States, are expanding biofuels production, developing countries are expanding their biofuels industries as well, to power their growing economies. However, developing countries must address the food security issue when they develop biofuels. As China is a developing country with rapid economic growth, population growth, significant demand for fuels, and food security concerns, it serves as a good example for studying the opportunities and challenges faced by developing countries under current conditions. This study analyzes the background, history, and current situation of biofuels development in China. Some implications for developing countries are also provided.

Keywords: biofuels, food security, China.

The following is a standard "globalisation" story using Swedish data from the Journal of International Economics written by my PhD supervisor and others.

Surviving globalisation

David Greenaway,
Joakim Gullstrand
and Richard Knellera


This paper investigates the effects of international trade on firms' strategies for industry exit, either via closedown, switching industry or being acquired. We use a rich dataset of Swedish firms that extends over two decades to track firm choices between alternative strategies. We find that higher levels of international competition increase the probability of exit by merger and closedown. If trade is more intra-industry in character, the effect of import penetration on the probability of exit is less. The probability of exit by switching industry is higher in revealed comparative disadvantage industries. Finally, we find that the geographical source of international competition is important, the effects of trade on exit being strongest when trading partners are other OECD countries.

"Is Accra a Superstar City?"

I am a sucker for an interesting paper title. Today's paper that caught the eye is urban economics related. If Matthew Kahn can post almost exclusively about cities on his "green economics" blog then I am sure I can get away with it.

This is the sort of question that demands an answer (and for a some will involve dusting off the atlas to see where the Accra is). Don't be afraid to admit it.

The first thing that comes to mind is where did the data come from and what is the quality. This remains a concern. Also taking a US based methodology to an African city is problematic.

Unfortunately the abstract does not live up to the title. Where is the mention of celebrities and rock stars?


Is Accra a Superstar City?

World Bank
World Bank - Policy Research Department December 1, 2007

World Bank Policy Research Working Paper No. 4453

A recent study of house price behavior in U.S. cities by Gyourko, Mayer, and Sinai (2006) raises questions about so-called superstar cities in which housing is so inelastically supplied that it becomes unaffordable, as higher-income families outbid residents. We consider the case of Accra, Ghana, in this light, estimating the elasticity of housing supply and discussing the implications for growth and income distribution. There is not a great deal of data available to examine trends in Accra, so our method is indirect. First, we use a variant of the traditional monocentric city model to calculate the elasticity of Accra's housing supply relative to those of other similarly-sized African cities. This suggests that housing supply responsiveness is much higher elsewhere. This muted supply responsiveness is consistent with the observed higher housing prices. Second, we estimate a number of traditional housing demand equations and reduced form equations. Placing a number of restrictions on the equations allows us to infer Accra's housing supply elasticity. Taken together, our approaches suggest that lower-income families in Accra have such poor housing conditions because the market is extremely unresponsive to demand. Although the outcomes we have traced - high housing prices and low quality - are not unusual relative to the other developed country superstar cities, they are extreme. The welfare costs are considerable, so much so that in addition to direct housing market effects, these policies also appear to have potentially significant implications for the achievement of more equitable growth.

Keywords: Economic Theory & Research, Housing & Human Habitats, Banks & Banking Reform, Public Sector Management and Reform

Working Paper Series

Suggested Citation

Buckley, Robert M. M. and Mathema, Ashna S., "Is Accra a Superstar City?" (December 1, 2007). World Bank Policy Research Working Paper No. 4453


Monday, March 17, 2008

How many humans to die in the next 100 years?

Not sure why this Dilbert post appeals to me. I blame years of economics training. The environmental economics link is Malthus related.

I suspect that Dibert's worse case scenario is about right. Add in a little bit of climate change induced catastrophe and some resource related wars in the next 100 years and the numbers could fly up.

Sadly I got pretty close. What does that mean?

Try This at Home

Let me try a little test with you. I’ll ask you a question, and you answer within 5 seconds. The point is to see how different your first reaction is to the answer you eventually settle on.

Here’s the setup. Imagine a baby born today, who ends up living to the age of 100. Now think about the course of that baby’s hundred years on earth, and answer the following question in five seconds. No cheating. Five seconds.

Question: During that baby’s 100 years of life, how many people will die?


Don’t read on until you have your answer.

I’ll bet your answer was somewhere in the millions.

There are 6 billion people on earth right now, and virtually all of them will die in the next hundred years. Add to that the several billion who will be born during the baby’s life and not be so lucky to live to old age. I think an estimate of 10 billion deaths is entirely reasonable. And that’s if things go well. The worst case is probably 20 billion people.

Is that mind-boggling?

Sunday, March 16, 2008

The environmental performance of firms

In the latest edition of Ecological Economics (out this week) we analyses the relationship between multinationals and the environmental performance of firms.

The unique selling point of this paper is that we are able to take into account knowledge spillovers from human capital to see whether owners of firms that were trained or worked in a multinational take with them better knowledge of environmental management practices and energy efficiency.

This is globalisation and the environment in action.

The environmental performance of firms: The role of foreign ownership, training, and experience

Matthew A. Cole University of Birmingham, United Kingdom
Robert J.R. Elliott University of Birmingham, United Kingdom
Eric Strobl Ecole Polytechnique Paris and SALISES, France


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

Jel classification: Q56; Q52; F21; F23
Keywords: previous termEnvironmentnext term; Spillovers; Foreign Direct Investment

I have a feeling I might have posted on this when the working paper came out - apologies.

Saturday, March 15, 2008

Wheat super disease could kill us all

A headline that all dismal scientists should appreciate.

The New Scientist reports on the emergence of a super-blight called "Ug99" - a fine name for a fungus if ever I heard one. The economics comes is from Ug99's ability to change to attack plants that had previously been genetically modified tp protect against it. That is one clever fungus.

The race is on to find a solution.

Billions at risk from wheat super-blight[New Scientist]

"This thing has immense potential for social and human destruction." Startling words - but spoken by the father of the Green Revolution, Nobel laureate Norman Borlaug, they are not easily dismissed.


he disease is Ug99, a virulent strain of black stem rust fungus (Puccinia graminis), discovered in Uganda in 1999. Since the Green Revolution, farmers everywhere have grown wheat varieties that resist stem rust, but Ug99 has evolved to take advantage of those varieties, and almost no wheat crops anywhere are resistant to it.

The strain has spread slowly across east Africa, but in January this year spores blew across to Yemen, and north into Sudan (see Map). Scientists who have tracked similar airborne spores in this part of the world say it will now blow into Egypt, Turkey and the Middle East, and on to India, lands where a billion people depend on wheat.

Friday, March 14, 2008

Carbon Trading Companies facing difficulties

The FT today report on the increased losses on EcoSecurities - a carbon trading company. This all leads back to the poor design of the system. Where were the environmental economists?

This article provides some interesting insights into the working of the scheme from ground level.

EcoSecurities falls as loss exceeds forecast [FT]

EcoSecurities warned of difficulties in the burgeoning market in carbon credits as its shares plunged 17 per cent on Thursday.

The carbon trading group made a loss of €43.3m (£33.1m) in 2007, compared with a loss of €19.5m in 2006, on revenues of €7.2m, up from €3m. The loss was much worse than expected partly because of the failure of a contract to deliver 900,000 carbon credits to a company in Mauritius, for which EcoSecurities had to pay €9.2m.

Shares in the company, which halved late last year after it announced delays in the issuance of many of its credits, fell 24p to 116p.

Bruce Usher, chief executive of the carbon trading group, said regulatory difficulties still dogged the fledgling carbon market.

“Conditions in the carbon market are less than ideal. Projects [to generate carbon credits] do get registered and [the credits are] issued, but it’s a very inefficient system,” he said.

He added: “It will continue to be difficult for a while. There is no immediate-term panacea to these problems.”

Carbon credits are issued by the United Nations under a provision of the Kyoto protocol known as the clean development mechanism. Projects in developing countries that reduce emissions, such as wind farms or solar panels, are rewarded with a carbon credit for every tonne of carbon dioxide avoided. Developed countries can buy these credits as a contribution towards their obligation to cut their emissions by 2012.

The credits can also be bought by companies covered by the European Union emissions trading scheme. UN credits sell for between €5 and €15 a tonne, while EU carbon permits traded at about €22 on Thursday.

Mr Usher said trading was being made more difficult by a delay in allowing UN credits to be bought by companies in the European trading scheme. The system necessary to allow such trades will not be ready before April 2009.

Andrew Shepherd-Barron, an analyst at KBC Peel Hunt, said the results were well below his expectations of a €27.6m loss, but said: “It looks much worse than it is.”

He said the company had not managed to register many carbon projects with the UN in the past four months. But he said the stock market was being “demanding” in pricing EcoSecurities shares so low, because it did not give full value to the company’s portfolio of 130m credits.


Wal-Mart to "green" Chinese suppliers

As part of any analysis of the costs and benefits of multinationals and FDI the popular mantra is about "spillovers" whether they be technical or knowledge spillovers. In recent work we have been searching (not always successfully) for evidence of "environmental spillovers".

Here is further annecdotal evidence.

Wal-Mart Pushing Chinese Suppliers To Go Green - CEO [PlanetArk]

GOLETA - Wal-Mart Stores Inc will meet with its thousands of Chinese suppliers this fall as part of a big push to reduce waste and emissions at factories that make its products, Chief Executive Lee Scott said on Thursday.

"We started a very aggressive program in China that is not only going to deal with environmental sustainability, but is also going to deal more aggressively with the issues of sourcing in China," Scott said during an appearance at the Wall Street Journal ECOnomics conference in Goleta, California.

As the world's largest retailer, Wal-Mart is considered one of the few companies that can use its heft to tackle environmental issues, like reducing energy consumption. It has already pushed its US suppliers to cut back on packaging and has set a goal of one day producing no waste and using energy only from renewable sources.

But Wal-Mart has also stumbled with some of its "green" efforts. For instance, it has found that pushing suppliers to make electronics that use less energy or can easily be recycled is harder than it appears, and involves a great deal of re-engineering.

To help speed up its efforts in China, Wal-Mart has hired an outside consulting firm, Scott said at the conference. It will also work with non-governmental organizations to help its plant inspectors understand the company's sustainability initiatives.

"It will take a long time," Scott said of the initiative.

Scott told reporters at the conference that he would personally attend the meeting this fall.

The company's top priorities in China will be to address the appropriate disposal of waste as well as to make reductions in both waste and greenhouse gas emissions. It will also work on reducing packaging and boosting energy efficiency, much as it has in its US business, Scott said.

Wal-Mart has pushed its suppliers to cut back on the amount of packaging they use by 5 percent by 2013.

Wal-Mart is also working with its suppliers to make the most "energy intensive" products in its stores 25 percent more energy efficient within three years. By 2010, the retailer also wants all its flat-panel TVs to be 30 percent more energy efficient.

Thursday, March 13, 2008

Launch of "Journal of Natural Resoruces Policy Research"

A new journal, to be launched in January 2009 has a call for papers. There are plenty of environmental journals on the market but this might have a slightly more policy slant to it.

Not enough economics for my liking but worth keeping an eye on.



Date of Publication: January 2009

Editor: Chennat Gopalakrishnan, Professor
University of Hawaii at Manoa

For information about the editorial board,
please visit the journal website at:

Journal of Natural Resources Policy Research, a peer-
reviewed quarterly journal, publishes original policy-
oriented papers addressing a broad range of natural
resource fields including water, minerals, energy,
fisheries, and forestry in a synthesizing fashion, rather
than as stand-alone specialty areas. It will also publish
papers on the natural resource implications of climate
change, natural disasters, and biodiversity loss, among
others. The papers, ideally, will be based on both
conceptual and empirical studies and will be primarily
policy-focused. Our goal is to foster productive dialog
among the disparate sectors in the broad field of natural
resources and among various social science perspectives
leading to an improved understanding of institutional and
economic dynamics and informed policy making.


We are inviting original papers in policy analysis, policy
modeling, policy surveys and synthesis, institutional
analysis, conceptual/theoretical papers, case studies and
case histories from academic and non-academic experts in
the natural resources and environmental field. We are
looking for papers dealing with, but not limited to, the
following topics:

1. Natural resource policy broadly defined - scope and
2. Holistic vs. sector-specific approach
3. Policy framework - components, sequencing, linkages,
integration, robustness
4. Conceptual/theoretical paradigms - rationale and
evolutionary perspectives
5. Country studies, case studies, case histories, survey
6. Natural resource policy modeling
7. Natural resource institutions - design and
8. Natural resource policy crafting - ownership,
allocation, planning, development, markets and
pricing, conservation
9. Natural resources and political externalities; public
choice and rent-seeking
10. Natural resource use and environmental quality
11. Public-private partnership issues
12. Natural resources and institutional entropy
13. Transboundary, transnational, and transgenic resources
14. Natural resource policy - efficiency, equity, and
15. Trigger issues - climate change, natural disasters,
human disasters, deforestation, endangered species,
invasive species, environmental pollution

The deadline for submission of full-fledged papers, prepared
in accordance with the guidelines of JNRPR is June 15, 2008.
Please see:

Please limit your paper to a maximum of 6,000 words. Submit all
manuscripts electronically to:


Should the World Bank be funding a polluting power plant in India?

David Wheeler (a top environmental/development economist) examines the case of the World Bank funding a coal fired power station in India.

This article makes for interesting reading all the more so because David Wheeler is so closely linked to the World Bank.

DAVID R. WHEELER is Lead Economist in the Infrastructure/Environment team of the World Bank's Development Research Group.

Tata Ultra Mega Mistake: The IFC Should Not Get Burned by Coal

During the last week of March, the Board of the World Bank Group's International Finance Corporation (IFC) will consider the proposed Tata Ultra Mega project, which will construct a huge (4,000 MW) coal-fired power plant at Mundra in India's Gujarat State. According to the IFC's own estimate, this plant will emit 25.7 million tons of CO2 per year for at least 25 years, adding another 643 million tons to an atmospheric carbon load that is already driving us toward an environmental catastrophe.

Professor Wheeler then goes on to debunk a series of World Bank claims and then concludes:

In short, IFC's proposed Tata Ultra Mega project is obsolete, unnecessary, ultra-dangerous for the planet, and mega-dangerous for the environmental reputations of the IFC and the World Bank Group. Does anyone really believe that donor-country taxpayers will continue supporting the Bank Group if it takes billions for the Clean Technology Fund with one hand and invests billions in coal-fired monsters with the other? Let's get serious here. The IFC's Board should take Ban Ki-Moon’s Bali declaration of a planetary emergency seriously, vote no on Tata Ultra Mega, leave coal-fired power behind, and commit to renewable power. They will find a willing partner in the Indian Government, which has already begun piloting solar thermal power and would undoubtedly welcome a big push on renewables.

Climate Change Economics - see for yourself

Here is a neat little tool that can show the effects of various assumptions on the economic impact of climate change on the average American.

All students (and indeed academics) should have a play. The Porter (innovation) Hypothesis is hidden in there somewhere.

See for yourself

H/T: Common Tragedies

Today, Yale’s School of Forestry & Environmental Studies posted a new website developed by economics professor Robert Repetto. In a way that anybody can easily understand, it synthesizes the results of thousands of policy simulations from 25 economic models being used to predict the economic impacts of reducing U.S. carbon emissions. To try this new website, just click on This website identifies the seven key assumptions accounting for most of the differences in the models’ predictions. It shows that even under the most unfavorable assumptions regarding costs, the U.S. economy is predicted to continue growing robustly as carbon emissions are reduced. Under more favorable assumptions, the economy would even grow more rapidly if emissions are reduced than if they are allowed to continue to increase as in the past. Even better, this new website allows site visitors to decide how likely they think each of the seven key assumptions are, and on that basis see for themselves what economic impacts all the leading economic models would predict, if carbon emissions are reduced by specific percentages over the next two decades. If you visit this site, you can make your own assumptions about the key factors that will influence the costs of stopping climate change and see the results.


Wednesday, March 12, 2008

The dead to be "Carbon Neutral" in Australia

This article of interest (to me at least) for two reasons. First, who knew that graves were only leased for 50 years in Australia and are then reused unless the lease is renewed.

There has to be an (albeit rather morbid) economic paper in there somewhere on how the next generation values dead relatives. For example, are mothers graves or fathers graves more likely to be renewed after 50 years?

The second point of interest is that officials have quite rightly taken into account grave tending costs when working out the overall impact of cremation vrs burial with cremations, perhaps surprisingly, coming out as 10% greener than burials in the long run.

Australian Cemetery To Offer Carbon-Free Funerals [PlanetArk]

An Australian cemetery has unveiled plans to take the carbon out of cremations by offering new green funerals to help combat global warming.


While cremations initially produce more carbon emissions than a burial, cemetery chief executive Bryan Elliott said over time, burials ended up producing about 10 percent more greenhouse gas.

"If we plant one tree for every service, either burial or cremation, we will more than offset the carbon emissions," Elliott told Reuters on Tuesday.

The Centennial Park Cemetery carries out more than 900 burials and around 3,300 cremations a year. Elliott said every cremation created around 160 kg (353 pounds) of carbon dioxide, compared to 39 kg of carbon dioxide for each burial.

But when the cost of maintaining grave sites, mostly covered by lawns at Centennial Park, is taken into account, cremations came out 10 percent greener than burials.


Milan: Pollution Capital of Europe

I was initially surprised to see Milan winning the award for the pollution capital of Europe and after Inter Milan's timely exit from the Champions league last night this topic was too tempting to pass over.

When one considers the state of industry in Eastern Europe this is even more surprising although it appears that it is traffic alone that is largely to blame.

One quote struck me as particularly "ironic":

Even the city's chain-smoking fashionistas are donning anti-smog masks.

Milanese Children Suffer as City Named Pollution Capital of Europe [Environmental Graffiti]

commenting on an article in the Daily Telegraph:

Milan 'is pollution capital of Europe' [Telegraph]

It might be renowned as the European capital of design, fashion and football, but Milan has a rather less glamorous aspect: its reputation as the Continent's most polluted city.

New evidence suggests levels of toxic fumes from its traffic-clogged streets are having an alarming effect on infant mortality rates, and sending thousands of children to the city's accident and emergency departments.

The warning from doctors at Milan's Macedonio Melloni hospital comes despite the city's much trumpeted new "ecopass" congestion charge, which was designed to slash air pollution.

Since its introduction in January, levels of pm10s - tiny particles less than 10 micrometres (um) in diameter produced by vehicle exhausts - have already breached the official EU safety level levels on 36 days out of 60.

On 15 February, in one of the worst days on record, levels peaked at 185 micrograms per cubic metre of air - almost four times over the official limit.

Even the city's chain-smoking fashionistas are donning anti-smog masks.

Masks however, won't stop the smaller, most dangerous pm10s, those with a diameter of less than 2.5 um, from passing deep into the lungs, from where they can cause breathing problems, heart disease and cancer.

In 2004 a report by the World Health Organisation estimated that in Italy's most polluted urban centres, 9 per cent of non accident-related deaths among the over-30s were due to pm10s.

The latest research suggests that children are also being hit hardest by the airborne pollutants. Dr Alessandro Fiocchi, director of paediatrics at the city's Macedonio Melloni hospital, compared the number of children admitted with breathing problems - some life-threatening - on a given day with pm10 levels in the air.

In one period of 10 days in which pm10 levels averaged 67ug/m3, he saw 176 such admissions. In another 10-day period, in which pm10 levels averaged 110 ug/m3, more than twice the safety limit, admissions soared to 401.

Dr Fiocchi said the figures "confirmed the urgent need to limit the damage that is affecting one child in four in the region".

The findings also back suggestions in the European Journal of Epidemiology that high pm10 levels can significantly increase infant mortality.

Emily Backus of Milan's Parents Against Smog group said it was hardly surprising that the Ecopass had had so little effect on pm10 levels.

"The pollution charge introduced January 1 covers just 4 per cent of the city's territory and is not particularly onerous: a 10-year-old diesel truck can tool about the historic centre for €2.5 with the purchase of 50 passes," she said.

Backus suggests the Ecopass is merely a token gesture, designed to strengthen Milan's bid to host Expo 2015.

The city's mayor, Letizia Moratti, has denied this and last week said she would consider banning traffic from the city centre on Sundays.

One lung specialist, Prof Luigi Allegra of Milan University, this week set out an alternative 25 -point plan that he says the city should adopt to prevent to thousands of premature deaths.

He is proposing that the pollution charge be raised and the zone be extended outwards, that new metro lines be constructed and that extensive parking sites be provided on the edge of the city so that people living outside Milan can drive their cars there and connect easily with public transport on their way into the city.

And significantly, he calls for the use of diesel cars to be discouraged. They might produce less C02 than petrol-engined equivalents, but they also create 100 times more pm10s and are responsible for most of the particulates contaminating the city's air.


"The sun never sets": Empire and Trade

A globalisation post that seeks to at least illustrate that globalisation is not a recent phenomenon. Famously, writer John Wilson once said of the British empire:

"His Majesty's dominions, on which the sun never sets,"

which was then simplified to ""the sun never sets on the British Empire."

All of which brings us back to the effect of empire on trade. In once sense the answer is obviously yes and probably to a significant extent. The reasons are also intuitively obvious - reduced transaction costs, common language, no trade barriers and of course, and relevant to today's Euro debate, a common currency.

This new NBER paper uses a standard gravity approach to examine this issue.


Trade and Empire

Santa Clara University - Department of Economics; National Bureau of Economic Research (NBER)
Claremont McKenna College; National Bureau of Economic Research (NBER) January 2008

NBER Working Paper No. W13765

Although many modern studies find large and significant effects of prior colonial status on bilateral trade, there is very little empirical research that has focused on the contemporaneous impact of empire on trade. We employ a new database of over 21,000 bilateral trade observations during the Age of High Imperialism, 1870-1913, to quantitatively assess the effect of empire on trade. Our augmented gravity model shows that belonging to an empire roughly doubled trade relative to those countries that were not part of an empire. The positive impact that empire exerts on trade does not appear to be sensitive to whether the metropole was Britain, France, Germany, Spain, or the United States or to the inclusion of other institutional factors such as being on the gold standard. In addition, we examine some of the channels through which colonial status impacted bilateral trade flows. The empirical analysis suggests that empires increased trade by lowering transactions costs and by establishing trade policies that promoted trade within empires. In particular, the use of a common language, the establishment of currency unions, the monetizing of recently acquired colonies, preferential trade arrangements, and customs unions help to account for the observed increase in trade associated with empire.


Saturday, March 08, 2008

Undercover economist and climate change

Tim Harford, the undercover economist gives his view on the role of institutions in fighting climate change.

He floats the idea of the UK having an independent climate change committee (similar in its independence to the Bank of England and their fight against inflation.

His arguments are fine although of course largely meaningless for the reasons he eventually gets to in the final paragraph. The international nature of the climate change problem means no one country can make a unilateral difference.

Meltdown economics[FT]

So it is tempting to leap to the conclusion that the UK needs an independent environmental authority with sufficient credibility to fight climate change, just as we now have a central bank with the credibility to fight inflation.

There is something in that idea, but the MPC’s Dr Sentance is not so hasty, and rightly so. Climate change is a more complex, uncertain, and international problem than monetary policy; it will need a new kind of institution. Successful institutions do not spring up overnight. They evolve over time. Finding the right institution to fight climate change is going to be a matter of trial and error. It is time to start experimenting.


Kivalina, Alaska takes on the world

Celsias have an interesting piece highlighting the plight of Kivalina, Alaska. The photograph alone is worth a blog post.

David Takes On Goliath as Alaska Village Sues Energy Firms for Climate Change [Celsias]

Kivalina is attempting to sue just about everyone for the climate change induced creek that they find themselves in. You could argue that it appears to be a rather optimistic place to build a town. Do they have broadband internet access?

The town is suing twenty four energy companies for emissions causing climate change which is, in turn, causing coastal erosion that threatens the towns continued existence. The complaint (PDF) names one coal company, nine oil companies and fourteen power companies, including Exxon Mobil, BP, Chevron, Conoco and Duke Energy, asking that they pay $400 million to move the town to safer ground on the mainland.

If they win this case there will be islands all over the world getting the lawyers involved. A hopeless case but a good way of highlighting how climate change is impacting real people.

SO how did this town get into this problem in the first place:

Kivalina, with a population of 400 mostly Inupiat Eskimos, is located in the Chukchi Sea on a shrinking barrier island that is being buffeted by waves due to shrinking sea ice that formerly acted as a barrier.

A story that is worth following and I am sure Celsias will keep us up to date.


Friday, March 07, 2008

Public Protest and Industry Location in China

There are numerous papers that examine the impact of lobby groups on the location of dirty industry the majority for the US using TRI data.

It is always good to see some real life examples and all the more surprising for the fact that it is in China.

Xiamen mayor: Controversial chemical plant to be relocated after public protest [People's Daily Online]

Following persistent public protest, a controversial chemical project planned for the coastal tourist city Xiamen, Fujian Province, is likely to be relocated, Mayor Liu Cigui said in Beijing on Friday.

"We have proposed to relevant central government departments to relocate the paraxylene (PX) plant," said Liu, also a National People's Congress (NPC) deputy, on the sidelines of the ongoing session.

"Faced with the choice of becoming a chemical industry base or a coastal scenic city, we think we should stick to the latter," Liu told reporters after a panel discussion of the legislature.

"Under the trademark as a modern tourist city, we have decided after careful studies and assessments that Xiamen should focus on finance, logistics, research and development, tourism, high-end manufacturing and services businesses, and become a regional cultural and educational center."

Xiamen residents had been lashing out at the proposed chemical plant, arguing it would be detrimental to the environment and people's health. In addition, the city along the Taiwan Straits would also lose its longstanding reputation as one of the most livable cities in China.

After several rounds of public hearings and debates, the construction was put on hold in June. Experts concluded the southern area of Haicang District, the original location of the planned PX plant, was too small and inadequate for the diffusion of atmospheric pollution.

Liu added the PX plant "is still a good project" and in line with the industrial development scheme of the national government." It should be moved to somewhere else, because Xiamen is short of land for the project construction."

Lu Zhangong, Fujian Province Party chief and NPC deputy, commended the Xiamen government on Friday for following public opinion. "The public are also right to express their concerns," he said.

Xiamen is the second biggest city in Fujian.

Zhangzhou, another city in the province, has expressed a willingness to accept the PX plant. "Zhangzhou City is capable of constructing the plant," said Mayor Li Jianguo.

However, it is up to the investor to decide where to go.

The 10.8 billion yuan (about 1.4 billion U.S. dollars) project by Tenglong Aromatic PX (Xiamen) Co. Ltd. is expected to produce 800,000 tons of paraxylene and generate revenues of 80 billion yuan annually.


Anyone got $190 Billion to "save the planet"

A new book puts the price of saving the planet at a mere $190billion. The question is whether $190 million is "mere" or actually a "substantial" amount.

The headline does appear a little over the top and I suspect it would cost a lot more than $190 billion.

What would it cost to wipe out world poverty, guarantee universal health care, stabilise population growth and roll back the ravages of global warming?

The second paragraph talks about the "prominent environmental economist" Lester Brown. He certainly has a CV as long as your arm HERE.

It is interesting that Brown sees himself as an optimist (a rare trait among economists).

That optimism sets Brown apart from eco-pioneers like Gaia guru James Lovelock, who has concluded it's too late to reverse the devastating effects of climate change.

"He might be right, and he's not the only one who thinks that," Brown said. "I have to hope there's a chance we can turn it around. Otherwise there's no point. Even if we lose it's better to go down fighting than just standing there."

This article in PlanetArk interviews Lester Brown. One notable quote from Brown who calls for:

"a great mobilisation" to fight climate change, equivalent to the Allied wartime effort to beat Nazi Germany"

New Book Puts Cost of Saving Planet at $190 Billion [PlanetArk]

LONDON - What would it cost to wipe out world poverty, guarantee universal health care, stabilise population growth and roll back the ravages of global warming?

About $190 billion a year, or the equivalent of a third of US annual military expenditure, a prominent environmental economist says in a new book.

"Once you accept that climate change, population growth, spreading water shortages, rising food prices etcetera are threats to our security, it changes your whole way of thinking about how you use public resources," Lester Brown told Reuters in an interview.

From eradicating adult illiteracy to restoring fisheries and stabilising water tables, the head of the Earth Policy Institute think tank in Washington calculates the cost of saving civilisation in a new edition of his best-selling "Plan B".

The $190 billion price tag compares with $1.2 trillion that world governments spent on military budgets in 2006. The United States splurged the most with $560 billion.

Describing a planet on the brink of environmental meltdown, Brown calls for a "great mobilisation" to fight climate change, equivalent to the Allied wartime effort to beat Nazi Germany.

Details of Plan B 3.0 can be found in his new book:

Plan B 3.0: Mobilizing to Save Civilization


Tuesday, March 04, 2008

Killer "Yellow Dust": Cross-Boundary pollution in action

Having read and sat through many papers looking at theoretical aspects of "cross-boundary" pollution it is always interesting to see it in action once in a while.

Cross boundary pollution has a way of focusing minds and the implications are potentially serious as the recipients of pollution may not take too kindly to the populace being menaced by other countries pollution. It certainly brings "political economy" issues to the fore.

China's Killer "Yellow Dust" Hits Korea, Japan [PlanetArk]

SEOUL - South Korea closed schools on Monday and its factories producing memory chips stepped up safeguards, as a choking pall of sand mixed with toxic dust from China covered most of the country and other parts of Asia.

The annual "yellow dust" spring storms, which originate in China's Gobi Desert before sweeping south to envelop the Korean peninsula and parts of Japan, are blamed for scores of deaths and billions of dollars in damage every year in South Korea.

It issued a yellow dust warning at the weekend. On Monday, school districts in southeastern regions urged parents to keep kindergarten and elementary school children at home.

"We advised the closure because kindergarten, primary school students have weaker immune systems," said Min Eyu-gi, an education official in Busan.

An official with the Meteorological Administration said the first major storm of the season, which has also hit parts of Japan, was dissipating.

But forecasts from China said cold air and little rainfall would lead to more storms from Wednesday through March 11, Xinhua news agency reported.

Taiwan mostly avoids the toxic clouds but skies in Taipei on Monday were overcast, with the government telling people to wear surgical masks and avoid exercising outdoors.

In Japan, car drivers and train operators were asked to be on alert because the sandstorms had greatly reduced visibility.

The sand storms have been increasing in frequency and toxicity over the years because of China's rapid economic growth and have added to increased tensions with neighbours South Korea and Japan over recent years.

The dust picks up heavy metals and carcinogens such as dioxin as it passes over Chinese industrial regions, before hitting North and South Korea and Japan, meteorologists say.

Dry weather and seasonal winds in China hurl millions of tonnes of sand at the Korean peninsula and Japan from late February through April or May, turning the skies to a jaundiced hue.

The state-sponsored Korea Environment Institute said the dust kills up to 165 South Koreans a year, mostly the elderly or those with respiratory ailments, and makes as many as 1.8 million ill.

Annual economic damage to South Korea from the storms is estimated at up to 5.5 trillion won ($5.82 billion), according to the institute.

Hynix Semiconductor Inc, the world's second-biggest maker of memory chips, said it has had to step up its filtration systems and make employees take longer air showers to make sure the dust does not contaminate its production lines and damage chips, made using technology that operates on a microscopic level.

South Korean retailers, however, have spotted an opportunity, offering special scarves, hats and other accessories for the yellow dust season.

Monday, March 03, 2008

Trade and Wages - Krugman speaks

A globalisation post really by Paul Krugman who is one of the world's leading trade economists.


How can we quantify the actual effect of rising trade on wages? The answer, given the current state of the data, is that we can’t. As I’ve said, it’s likely that the rapid growth of trade since the early 1990s has had significant distributional effects. To put numbers to these effects, however, we need a much better understanding of the increasingly fine-grained nature of international specialization and trade.

This is an excellent conclusion as it fits directly into my international trade research agenda analysing trade at the firm level.

H/T: Trade Diversion.

The World's 25 Dirtiest Cities 2008

Surveys of the world's dirtiest cities are always interesting. This time Forbes has added pictures. Of course, a picture of a rubbish dump means very little out of context but at least the methodology behind this list is relatively sound.

The World's Dirtiest Cities [Forbes]

All cities are positioned against New York, the base city with an index score of 100. For the Health and Sanitation Rankings, the index scores range from the worst on the list--Baku, Azerbaijan, with a score of 27.6--to the best on the list--Calgary, Canada, with a score of 131.7.

Lead-poisoned air lands Dhaka, Bangladesh, the No. 2 spot on the list. Traffic congestion in the capital continues to worsen with vehicles emitting fatal amounts of air pollutants daily, including lead. The World Bank-funded Air Quality Management Project aims to help.

which is based on numbers from the Mercer Human Resource Consulting's 2007 Health and Sanitation Rankings.

What readers may find surprising is that China does not appear. I believe this is because Chinese cities were not included or data was not available. Otherwise I suspect the picture would be different - or would it?

The criteria are as follows:

As part of their 2007 Quality of Life Report, they ranked 215 cities worldwide based on levels of air pollution, waste management, water potability, hospital services, medical supplies and the presence of infectious disease.

Africa does badly. Where is Iran? Is is surprising that Baghdad is not higher? The bottom line appears to be that wars (civil or otherwise) and not good for your health or pollution. The scores are relative to New York = 100.

1. Baku, Azerbaijan (27.6)
2. Dhaka, Bangladesh (29.6)
3. Antanananvo, Madagascar (30.1)
4. Port au Price, Haiti (34)
5. Mexico City, Mexico (37.7)
6. Adid Ababa, Ethiopia (37.9)
7. Mumbai, India (38.2)
8. Baghdad, Iraq (39)
9. Almanty, Kazakhstan (39.1)
10. Brazzaville, Congo (39.1)
11. Ndjamena, Chad (39.7)
12. Dares Salaam, Tanzania (40.4)
13. Bangui, Central African Republic (42.1)
14. Moscow, Russia (43.4)
15. Ouagadougou, Burkina Faso (43.4)
16. Basmako, Mali (43.7)
17. Point Noire, Congo (43.8)
18. Lome, Togo (44.1)
19. Conakry, Guinea Republic (44.2)
20. Novakschott, Mauritania (44.7)
21. Niamey, Niger (45)
22. Luanda, Angola (45.2)
23. Maputo, Mozambique (46.3)
24. New Dehli, India (46.6)
25. Pat Harcourt, Nigeria (46.8)

As a straw poll of the geographic knowledge of G&E readers be honest and tell me how many of these cities you had heard of before reading this list. No cheating.

Over 70% would be impressive is my guess.