Thursday, April 29, 2010

JEEM worthy

From the inbox:

Excellent news about one of my 2005 JEEM papers. Does this reveal that applied economics papers are more heavily cited than theory papers (of which there are a lot in JEEM) and in turn what does this mean? Does this infer that they have a larger impact? What does impact really mean? Given the period is from 2005-2009 this must give a large advantage to 2005 papers :-)

The certificate will take pride of place on my office wall. Now I need to try to write the elusive third JEEM paper. Not an easy task.

I am delighted to inform you that one of your papers has been recognised in the "Top 20 most-cited articles" published in Journal of Environmental Economics and Management 2005 - 2009*:

Industrial characteristics, environmental regulations and air pollution: An analysis of the UK manufacturing sector
Volume 50, Issue 1, (2005), Pages 121 - 143
Cole M.A., Elliott R.J.R., Shimamoto K.

We will be sending you a certificate (with additional certificates for co-authors for onward distribution) in acknowledge of your paper's achievement.


Wednesday, April 28, 2010

"Plastic Tomb"

We have previously covered the "great plastic patch" floating in an ocean near you. It has now inspired a song called "plastic tomb" - a great title. "Texas-sized vortex" is how the song's author describes the said patch - wow.

The video is worth watching - on mute if you are not a big fan of Peter Buffet's driving rock ballard.

The description provided with the video makes for interesting reading. You will have to judge for yourselves whether the beat is powerful and the harmonies chilling.

In honor of Earth Day, Peter is releasing the driving rock ballad "Plastic Tomb," whose powerful beat and chilling harmonies remind us of the relentless grip that big box stores have on today's consumer culture. The harm from such material excess is evident in the Great Pacific Garbage Patch – a Texas-sized vortex of marine litter consisting of pelagic plastics, chemical sludge, and other debris in the Northern Pacific ocean. With characteristic urgency, Peter urges us to break free from these wasteful habits, and in turn, eliminate the wake of plastic and paper across the planet.


Tuesday, April 27, 2010

Trade, Biolfuels and the environment

Within the globalisation and the environment family comes the introduction of biofuels into a Hecksher-Ohlin framework.

This is a potentially useful addition to the trade literature.

The Economics of Trade, Biofuel, and the Environment

Hochman, Gal, University of California, Berkeley and Ben Gurion University, Isreal;
Sexton, Steven, University of California, Berkeley;
Zilberman, David D., University of California, Berkeley and Giannini Foundation

The introduction of renewable biofuels was associated with global food crisis and unintended environmental consequences. This paper incorporates energy environment and agricultural sector to the classic Hecksher-Ohlin model to address these issues. A household production function model was introduced to model consumer energy choices and concern about externalities related to climate change and open space. The conceptual model links energy and food markets and derives guidelines for the development of climate change and land-use policies. The results suggest that globalization and capital flows increase demand for energy, leading to decline in food production, increase in food prices, and loss of environmental land. Globally optimal outcomes may require introducing an emission tax and a land-use tax. The introduction of these policies may undermine the factor price equalization theorem. Policies that allow enhancing either agriculture productivity (e.g., agriculture biotechnology) or biofuel productivity (e.g., second-generation biofuels), are shown to lessen the resource constraint associated with the cost of introducing renewable energy.


Migration and climate change

One of the main "negatives" associated with climate change are the potential costs from mass migration as thousands or millions of people move to avoid the worst ravages of changes in the climate and sea level rises.

The following World Bank policy paper might be of interest to get an academic perspective. I am not sure I believe that the risk of violent conflict is minimal although the fact that the majority of forced migration will occur in developing countries is self evident.

Accommodating Migration to Promote Adaptation to Climate Change [PDF]

Jon R. Barnett

Michael Webber

World Bank Policy Research Working Paper No. 5270

This paper explains how climate change may increase future migration, and which risks are associated with such migration. It also examines how some of this migration may enhance the capacity of communities to adapt to climate change. Climate change is likely to result in some increase above baseline rates of migration in the next 40 years. Most of this migration will occur within developing countries. There is little reason to think that such migration will increase the risk of violent conflict. Not all movements in response to climate change will have negative outcomes for the people that move, or the places they come from and go to. Migration, a proven development strategy, can increase the capacity of communities to adapt to climate change. The fewer choices people have about moving, however, the less likely it is that the outcomes of that movement will be positive. Involuntary resettlement should be a last resort. Many of the most dire risks arising from climate-motivated migration can be avoided through careful policy. Policy responses to minimize the risks associated with migration in response to climate change, and to maximize migration's contribution to adaptive capacity include: ensuring that migrants have the same rights and opportunities as host communities; reducing the costs of moving money and people between areas of origin and destination; facilitating mutual understanding among migrants and host communities; clarifying property rights where they are contested; ensuring that efforts to assist migrants include host communities; and strengthening regional and international emergency response systems.

Keywords: Population Policies, Climate Change Mitigation and Green House Gases, Health Monitoring & Evaluation, Climate Change Economics, Voluntary and Involuntary Resettlement

Wednesday, April 21, 2010

Is Hydropower the future?

I have inaugurated a new "label" called hydropower. This is one of my new exciting research projects and the links between the environment and hydropower are fairly obvious. The World Bank is pushing hydropower as a solution to green energy and growth but is it all that it is cracked up to be?

Are all hydroelectric dams "environmentally hazardous money losers"?

Brazil Completes Controversial Amazon Dam Auction {planetArk]
Brazil awarded a domestic consortium on Tuesday rights to build the world's third-largest hydroelectric dam in the Amazon rain forest in a chaotic auction amid criticism the dam is an environmentally hazardous money loser.

President Luiz Inacio Lula da Silva likely faces a prolonged battle over the 11,000 megawatt Belo Monte dam that he has heavily promoted despite opposition from a range of critics including Hollywood director James Cameron.

Government leaders say the project, due to start producing electricity in 2015, will provide crucial power for Brazil's fast-growing economy, but environmentalists and activists say it will damage a sensitive ecosystem and displace around 20,000 local residents.

State power regulator Aneel said a consortium including state electric company Eletrobras and a group of Brazilian construction companies -- considered the weaker of the two consortia that participated -- won the bid.

Those results were blocked from being announced for more than two hours because a last-minute injunction trying to halt the project on environmental grounds.

The results of the auction are unlikely to affect overall electricity rates in Brazil because most of the electricity is already set aside for specific clients, with only a small remainder entering power markets.


Financial analysts say the government set an artificially low price for the power to be generated by the dam, adding it faces considerable risks including cost overruns and the likelihood that protests will frequently halt construction.

Native Indians in the area are already promising just that.

Luis Xipaya, a local leader speaking to Reuters from the city of Altamira near the proposed dam site, said 150 Xikrin Kayapo Indians will move to a new village on the construction site by Wednesday.

"There will be bloodshed and the government will be responsible for that," Xipaya said.

Environmental activist group Greenpeace organized an early morning dump of several tonnes of manure at Aneel's gate to visually demonstrate "the legacy that the Lula government is leaving by insisting on this project."

The auction has for weeks been a stop-and-start process that by Tuesday had already been halted twice by court orders that the government quickly overturned.

The winning consortium, known as Norte Energia, will sell the power for 78 reais ($44.5) per megawatt hour, below the maximum price of 83 reais established by the government as the maximum.

Earlier this month two of the country's biggest construction firms walked away from Belo Monte, saying it financial returns were too low -- threatening the leave only one consortium in the running.

The Norte Energia consortium was formed at the last minute after the government added sweeteners including a 75 percent income tax write off and longer-term financing from the state development bank BNDES, which will finance 80 percent of the estimated cost of the project.

Slack investor interest also created the unusual situation of Eletrobras bidding in both consortia, though authorities said this was allowed under the bidding rules.

Official estimates put the construction costs at 19 billion reais ($11 billion) though private sector estimates go as high as 30 billion reais ($17 billion) for the project.

Originally conceived 30 years ago, progress on Belo Monte has been slowed over the years by protests, including an incident last year in which Kayapo Indians armed with clubs and machetes attacked a state electricity official.


Tuesday, April 20, 2010

Litter picking in the "death zone"

Cleaning up the environment is a worthy cause and all the more so when the cleaning up has to take place above 8000 metres - also known as the "death zone".

I can not put my finger on why I think this story is bloggable but it is strangely alluring.

The fact that the rubbish can be seen at all is related to the old favourite - "climate change" - snow melts, revealing piles of rubbish from the last 50 years.

Three corpses will also be removed from the mountain saving subsequent climbers from a rather dispiriting view.

Everest "Death Zone" Set For A Spring Clean Up [PlanetArk]
Twenty Nepali climbers are setting off to Mount Everest this week to try and remove decades-old garbage from the mountain in the world's highest ever clean-up campaign, organizers said Monday.

Many foreign and Nepali climbers have cleaned Mount Everest in the past but Namgyal Sherpa, leader of the Extreme Everest Expedition 2010, said no one had dared to clean above 8,000 meters (26,246 feet), an area known as the "death zone" for the lack of oxygen and treacherous terrain.

Sherpa and his team of seasoned climbers, carrying empty rucksacks and special bags, will risk the zone's thin air and freezing temperatures to pick empty oxygen bottles, gas canisters, torn tents, ropes, and utensils lying between the South Col and the 8,850 meter (29,035 feet) summit.

"This is the first time we are cleaning at that height, the death zone. It is very difficult and dangerous," said Sherpa, who has climbed Everest, the world's tallest peak, seven times.

"The garbage was buried under snow in the past. But now it has come out on the surface because of the melting of snow due to global warming," the 30-year-old said.

"The rubbish is creating problems for climbers ... Some items of garbage are from Hillary's time."

The mountain has become known as being the world's highest garbage dump. Many climbers leave their gear and trash behind as they descend due to exhaustion and lack of oxygen.

New Zealander Sir Edmund Hillary and Nepal's Tenzing Norgay Sherpa were the first to ascend to Mount Everest's summit in 1953. That feat opened Nepal as a popular tourist destination.

More than 4,000 climbers have since scaled the mountain and tourism, including climbing, is a key source of income for Nepal, among the world's poorest countries.

Sherpa's team hopes to bring down at least 2,000 kg of garbage and the corpse of a climber killed two years ago.

"I have seen three corpses lying there for years," Sherpa said.

"We'll bring down the body of a Swiss climber who died in the mountain in 2008 and cremate it below the base camp for which we have got the family's consent."

Thursday, April 15, 2010

4th World Congress of Environmental and Resource Economists - G&E are in the house

Good news from the inbox. I have not been to Canada before - I don't expect that Montreal has any good "tar sands" to look round while I am there.

Happy to meet up in Montreal with any readers/bloggers that are left given my shoddy posting frequency rate of late.

Hopefully the Icelandic volcano that has grounded planes in the UK today will have blown itself out by then (and mitigated climate change at the same time).

Dear Dr Robert Elliott:

We are happy to inform you that your paper, TRADE, ENVIRONMENTAL REGULATIONS AND INDUSTRIAL MOBILITY: AN INDUSTRY-LEVEL STUDY FOR JAPAN (Reference No: 37), has been accepted for presentation at the 4th World Congress of Environmental and Resource Economists that will be held at the Université du Québec à Montréal, June 28-July 2nd, 2010. We received more than 1700 submissions and the selection process has been highly competitive. Congratulations.

Presenters have to be registered by April 30th, 2010, in order for this decision to become effective and their paper to be included in the program. April 30th is also the deadline for early (lower fee) registration.

My current research with Toshi Okubo (Kobe) and Matt Cole (Birmingham) uses firm level data for Japan - so far, so good for the results.


Economists going green - Krugman goes Env-econ 101

Late to the party as usual but here is a link to the Paul Krugman article on environmental economics.

Building a Green Economy [NYT]

If you listen to climate scientists — and despite the relentless campaign to discredit their work, you should — it is long past time to do something about emissions of carbon dioxide and other greenhouse gases. If we continue with business as usual, they say, we are facing a rise in global temperatures that will be little short of apocalyptic. And to avoid that apocalypse, we have to wean our economy from the use of fossil fuels, coal above all.

But is it possible to make drastic cuts in greenhouse-gas emissions without destroying our economy?

It is a good question. This article is a must read for all environmental economics students.

In what follows, I will offer a brief survey of the economics of climate change or, more precisely, the economics of lessening climate change. I’ll try to lay out the areas of broad agreement as well as those that remain in major dispute. First, though, a primer in the basic economics of environmental protection.

The conclusion of this excellent article is that the economists and ready and we are tooled up with tools to make it happen. What is missing is the political will. Not for the first time, bad political decisions could have bad economic consequences.


Monday, April 12, 2010

Global climate deal hopes melt away

The predictable failure of Copenhagen will be compounded when the US and China agree not to have any legally binding rules on emissions. This is of no surprise although total and utter failure may lead to some benefits......

Of course a "shift to a less amitious goal might help". Why was this no pursued in the first place given the inevitable failure of the more ambitious goals?

The only real solution in my opinion is for the big six or even the big two (US and China) to sign their own bilateral deal. This is the only real way to make any progress on CO2 emissions in the short term.

The "will" has been "sapped" and will take time to recover.

Giving Up Climate Treaty May Unblock U.N. Deal [PlanetArk]
The prospect of a global climate treaty is fading as the world's top two carbon emitters, China and the United States, avoid legally binding action. Experts say a shift to a less ambitious goal might help.

Less focus on a new treaty might resolve a tangle of disputes over the legal framework and drive concrete action, for example to preserve rainforests or to help developing nations cope with droughts, heatwaves, floods or rising seas.

U.N. climate talks to try to agree a tougher, wider successor to the present Kyoto Protocol entered their third year at an April 9-11 meeting in Bonn, Germany, the first since a fractious summit in Copenhagen in December.

Copenhagen was billed as the world's best chance to agree a new treaty. Failure to achieve a treaty or the smaller goal of binding carbon cuts for rich nations has sapped momentum and is forcing a search for less ambitious solutions.

"We can't afford only to keep coming back year after year, we have to explore other options," said Annie Petsonk, international counsel at the U.S.-based Environmental Defense Fund, adding that a treaty was still possible.

Annual U.N. climate meetings have failed to achieve any major breakthrough since signing the Kyoto Protocol in 1997. The present round of that pact expires in 2012.

Experts note a less formal deal, outside a legal framework, may now emerge, building on the actions of individual nations.

More than 100 countries have backed a non-binding Copenhagen Accord to mobilize $30 billion in climate aid from 2010-2012 to help poor nations face the impacts of climate change, underscoring what could be agreed outside a legal framework.

"It used to be said that countries would only act if there was a treaty, but that's not the case," said Jake Schmidt, international climate policy director at Natural Resources Defense Council.

"A lot is happening even though we don't have an international agreement," he said, referring to the accord.


Mexico, which will host the next annual talks after Copenhagen in Cancun in late 2010, said that demands for a legally binding treaty should not get in the way of progress at that meeting.

"We do not want to get ensnared in the legal stuff so that we will be prevented from moving. What we want is to achieve a sensible global mobilization," Mexico's chief delegate Fernando Tudela said.

"If a legally binding treaty is possible and helps, we are all for it. But it's not a pre-condition for moving in the right direction." One senior developing country delegate accepted privately that the U.N. process may never agree a legal pact.

The difficulty of agreeing a binding treaty centers on the United States and China, who "remain in a dance about this issue," said Jennifer Morgan, from the World Resources Institute.

"There's not a legal treaty until you break this Gordian knot of the U.S. and China in particular having very different views of what it means to be legally binding," said Alden Meyer, of the Union of Concerned Scientists.

U.S. legislation to cut emissions is stalled in the U.S. Senate. And the United States will balk at binding targets unless China makes its own actions accountable in some international way.

Another roadblock to any treaty is a requirement for unanimity in U.N. talks -- absent in Copenhagen and which remained elusive in Bonn, as developing nations notably Cuba, Bolivia and Venezuela rejected any attempt to build agreement in smaller groups.

One of the reasons why a treaty has been the goal, especially of developing countries, was because it allows for sanctions on rich countries which miss their targets. Enforcing a non-binding deal is far more difficult.

Petsonk advocated an approach where rich nations tied developing countries and each other to certain minimum action before benefiting from a $125 billion carbon market.

That would draw upon a voluntary World Trade Organization model which has widened free trade by offering the benefits of WTO membership.

The biggest buyer of carbon offsets, the European Union, has already laid plans to limit its financing of carbon-cutting projects in emerging economies which do not bolster climate action. The United States, Japan and Australia plan cap and trade schemes which would scale up that carbon finance carrot.

Without such an approach the only crutch to a non-binding deal may be international criticism. "Naming and shaming may be what we end up with," Meyer said.


Wednesday, April 07, 2010

Peak Oil Man discovers economics!

"Peak Oil" and the peak oilers associated with this idea are a strange bunch. It is interesting to note that the daddy of peak oil has suddenly realised that "economics" might have something to say on this matter.

Economics is sometimes a little more subtle than supply and demand. Behaviour is the key.

Peak Oil Man Shifts Focus To Peak Price, Demand [World Environment News]

The economic shock of global recession has led a prime exponent of the theory conventional oil output has peaked to shift his view of the consequences, but he still thinks the world has to go green.

Retired petroleum geologist Colin Campbell, who worked for major oil companies as well as smaller firms, has long been associated with the belief the world's oil supplies are dwindling.

He does not waver from that and dismisses the argument of the so-called optimists that technology will manage to keep eking out more and more oil to keep pace with rising demand.

What has changed is his opinion of the price impact and implications for fuel consumption after the spike of July 2008 to nearly $150 a barrel was followed by world economic recession, a deep drop in fuel use and a crash in oil futures to just above $30 in December 2008.

"I have changed my point of view about future prices," said Campbell, who used to think the peak in conventional oil production, which he believes happened in 2005, would lead to a relentless price surge.

Instead, the record rally led to a peak in demand in the developed world.

"Peak oil drives prices up in the first place. It has its own mechanism. We're sort of at peak demand right now," Campbell told Reuters from his home in the village of Ballydehob, West Cork. "I think presently the price limit is about $100."

For those who have painted alarming pictures of civil unrest as the world economy is forced to move away from conventional fuel and pay high prices for it in the interim, an inbuilt price mechanism to limit demand and move the world to other forms of energy should be a good thing.

"We have no alternative but to go green," Campbell said.

But he does not think reduced demand is enough to offset the gravity of peaking supply. He still sees a possibility of social anger as millions are forced to change their lifestyles in a too-sudden structural shift from economic growth driven by cheap conventional fuel.


Campbell's theory, which he developed from studying first Colombia's oil reserves and then analyzing global data on the world's oilfields, applies to conventional oil.

The peak for difficult-to-extract, non-conventional sources, including oil sands and polar oil -- for instance, in Arctic regions of Russia -- is three years later, in 2008. The problem is non-conventional oil only "ameliorates the decline" and relies on high oil prices to be viable.

"They are no substitutes for what we have built the economy on so far," said Campbell, whose oil depletion theory has been published in books and through the Association for the Study of Peak Oil, which gave its first workshop in 2002.

Since then, the peak oil theory has nudged its way further into the mainstream and was widely publicized around the 2008 price spike, but it is hotly contested by many in the oil industry, including OPEC, which argues the world will rely on fossil fuels for decades to come.

Campbell's analysis of data questioned reporting of reserves by the Organization of the Petroleum Exporting Countries, whose members' upward revisions, he said, were not credible.

"It's absolutely implausible new discoveries would absolutely match that produced," he said.

He takes the view the reporting of higher reserves was designed to ensure higher output targets for individual OPEC members -- targets, he said, were increasingly irrelevant.

As OPEC heads toward its 50th anniversary in September this year, for Campbell the producer club has lost its "raison d'etre."

Prices, he argued, were likely to stay sufficiently high as supplies dwindled naturally and the danger for OPEC was the market would embark on another rally that could further focus attention on the pursuit of alternatives to oil.

"OPEC's purpose is to limit production to hold prices up. It no longer has any need to do so," he said.

Now try the Peak Oil survivors guide "Life after Gridcrash" great title. This new Amazon blogger widgit is great.