Africa to be sacrificed on the alter of climate change by the Tories?

In a sense the title of this post meant I had to blog on it. Nothing like a good anti-Tory story to start the week.

Whatever the politics there will always be these sorts of tradeoffs. Helping Africa is fine but the money will be wasted if climate change kills off whatever projects are invested in. It is right to think of climate change and aid/

development together. To do otherwise would be madness.

This is a bit of a none story really. I almost have sympathy for the Tories on this one.

Tories may sacrifice Africa to fund climate change fight [Independent]

A draft Tory policy statement, leaked to The Independent, reveals that a Tory Government would give the Department for International Development (DFID) a bigger role in helping developing countries meet the cost of combating climate change. But aid groups fear this would be a cover for cutting funds to Africa.

The Tories' green paper, which will be launched on Monday by David Cameron, will reiterate the party's pledge to match Labour's commitment to spend 0.7 per cent of national income on aid by 2013. Aid and National Health Service budgets are the only two budgets which would be protected by an incoming Cameron Government as it sought deep public spending cuts to balance the nation's books.

But the promise on aid has been called into question, with suspicions that the party plans to funnel funds away from aid towards spending to fight global warming. The Tory paper says: "Action to tackle and adapt to climate change will permeate international development policy under a Conservative Government. It requires a multi-faceted approach. We will mainstream adaptation to the impacts of climate change throughout DFID's work by supporting development activities that reflect the changing nature of the climate."

Pressure groups are deeply concerned about the "mainstreaming" policy because the document makes no mention of a ceiling on how much of the DFID budget could be spent on climate change. Gordon Brown has promised a 10 per cent cap if Labour retains power. He has proposed a £100bn climate change adaptation fund as part of the negotiations on a new global deal to be discussed at a summit in Copenhagen in December. There has been persistent speculation in Tory circles that the party would try to spend less on helping the world's poorest countries.

Andrew Mitchell, the shadow Secretary of State for International Development, said: "The Conservative Party is fully committed to tackling both the causes and consequences of climate change, and the Department for International Development has an important role to play in this. Above all we will push for an ambitious international agreement that limits emissions and sees substantial financial resources made available to help developing countries adapt to the changing climate."

Kevin Watkins, a director at UNESCO, said that the spending on climate change could see the amount spent on traditional aid fall below the 2013 target. "The 0.7 per cent commitment is not unequivocal," he said. "The money spent on climate change could take a big chunk of the department's budget, meaning aid will be hit." Another aid agency head said yesterday: "It seems that the Tories would divert a lot of money from aid to climate change, while keeping the headline pledge on aid spending. That would mean a lot less help for Africa."

Aid groups are also worried about a Tory plan to offer "vouchers" to people in poor countries so they could shop around for schools. They fear this could undermine attempts to build up the state education system in developing nations and help "middle class" children rather than the poorest. One aid worker said this would boost private schools, describing it as "as assisted places scheme for Africa." Mr Watkins said that the Tory focus on vouchers was "an absurdity" that would set back progress. "The idea that you can trot around slums and dish out vouchers is so far fetched that it shouldn't be taken seriously."

The Tory paper also suggests a key role for the private sector in improving health care. Pressure groups say this could threaten a global drive towards health care being free at the point of use. "Rather than aiming to replace or eliminate the private sector from healthcare, we will seek to work with governments and the private sector to help them achieve the Millennium Development Goals," the document states. "This could involve regulating providers and creating a framework that allows both private and public provision to grow in a coherent way, until ultimately people have access to affordable healthcare.

"There are many different ways to provide healthcare. All health systems feature a mixture of private and public provision. We will not insist that developing countries follow the exact path that we in Britain have taken—that is a choice for them to make."

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Welcome "Carbon space" to the negotiating table

I cannot remember how many times the "globalisation and environment" debate returns to the elephant in room. Developed and developing countries are simply miles apart on climate change.

We all agree that there is a problem and we all know that CO2 emissions must fall but there is simply a massive gulf when it comes to the solution.

We grew by polluting so we have no right to stop others.

The Economist sum up the current debate on this old problem is a good article. I like the Indian use of the term "carbon space" which provides a useful way to think about this issue (even if it brings us no closer to a solution).

The old "per capita" emissions is again on the table. I am on the side of developing countries on this - it is hypocritical of the west to demand pollution reductions from countries without enough to eat or with millions below the $1 poverty threshold.

The trade-environment implications of the new US legislation open up a whole new area for research. I smell an academic paper.

However, the implications of per capita emissions targets are dire for the future of the planet. Ironically, it is the developing countries such as India and China that will suffer the most from climate change.

That is why in true dismal scientist speak - "we are all doomed".

Wanted: fresh air [Economist]

WHEN argument fails, try metaphor. Shyam Saran, who heads India’s international negotiating team on climate change, says that greenhouse gases are taking up “carbon space” in the atmosphere. Past emissions of carbon dioxide and other gases from rich countries have taken up much of that space. Now the poor countries are standing up for their right to a little bit of that space too.

Put in those terms, it seems a matter of plain justice. Mr Saran is merely defending India’s right to industrialise. But as a negotiating position, it is one of the reasons why the talks on climate change at the G8 meeting in Italy this week have proved so fractious. Mr Saran says that the only limit India will accept on greenhouse-gas emissions is the same per-person amount enjoyed by citizens of developed countries. From the planet’s point of view that would mean a huge, and possibly catastrophic, increase in overall emissions.

India’s tough approach is supported by other developing countries. China, now the world’s biggest greenhouse-gas emitter, is particularly annoyed about a provision in America’s new cap-and-trade legislation on carbon emissions that would let America impose tariffs on goods from countries that do nothing to control emissions. The bill’s drafters reckon that China and similarly energy-thirsty countries are in effect subsidising their exports by allowing their firms to dodge costly environmental standards. But the Chinese say the measure could lead to a trade war.

Brazil takes a similar position. The cutting down of trees in the Amazon alone releases 700m tonnes of carbon dioxide into the air annually, fully half of the country’s total emissions. Brazil says it wants to curb deforestation, but it is reluctant to let outsiders’ rules tie its hands on the management of its sovereign territory.

The rich countries think they have already done a lot to meet the poor world halfway. At the G8 meeting in L’Aquila they proposed a “vision” in which the industrialised countries would by mid-century cut their emissions by 80% (against which base year is unclear), as part of a global effort to reduce emissions by half. The developing countries could burn more carbon as they got richer, but far less than the rich countries did in the 20th century. If the sums are correct, this would cap the rise in average global temperatures at 2°C (though that may still cause a lot of harm). If the poor countries do nothing, the rich countries argue, their own expensive efforts will be in vain. But with no interim targets, by mid-week the “vision” was fading from the draft deal at the summit.

This failure threatens to unravel a flimsy diplomatic consensus that dates back to the 1997 Kyoto protocol. Signed by most rich countries, this spoke of “common but differentiated” responsibilities for cutting emissions. This was diplomatic language that required nothing binding of developing countries and was the main reason why America never signed up for Kyoto. Barack Obama’s green-minded administration has changed that. So the spotlight is now on the poor countries. Their past position, of denouncing the previous American administration for inaction and hypocrisy, was enjoyable while it lasted but looks flimsy now. Instead they are being pressed to explain what if anything they are willing to do to save the planet.

The rich-world coalition is getting rickety too. America’s new seriousness turns unwelcome attention on countries such as Canada, Japan and Australia. They are seen as having fallen behind by the Europeans, the leaders (relatively speaking) in clean green growth

A dose of Mr Obama’s eloquence may bring a breakthrough by the end of the week. But the departure of the Chinese leader, Hu Jintao, to deal with unrest at home, seemed set to jinx the meeting’s chances. If the L’Aquila summit fails, the deadlock will threaten the climate summit to be held in Copenhagen in December. Governments’ efforts to deal with what many voters see as the world’s biggest problem will look pretty feeble.

Fresh thinking, instead of stale arguments, has rarely been so badly needed. A new paper published in the Proceedings of the National Academy of Sciences this week offered a contribution, based on the idea that it is rich people, rather than rich countries, who need to change the most. The authors suggest setting a cap on total emissions, and then converting that cap into a global per-person limit. This would be low enough that if everyone stuck to it, the worldwide target would be met.

Each country would then have the task of reducing its national consumption according to its number of “high emitters”—people with an extravagant output of carbon. Such individuals are scarce in India, more common in China, and common in America. If the goal were to cap emissions at 30 billion tonnes in 2030, say, that would mean squeezing the behaviour of some 1.1 billion “high emitters” worldwide. So the high-living, carbon-guzzling rich minority in India and China would not be able to hide behind their poor and carbon-thrifty compatriots.

The paper suggests that the personal emissions target would be set at around 10.8 tonnes of CO2 per year. China would have 300m emitters over this level by 2030, meaning that the country’s 4 billion tonnes of carbon emissions in 2003 should rise to no more than 8.5 billion in 2030, as opposed to a predicted 11.4 billion if China does nothing. The cuts required in Brazil and India would be far smaller, as they have fewer rich people. America’s cuts would have to be greater than those in the administration’s cap-and-trade bill.

It sounds a rather elegant idea—if implausibly complex to carry out. But as a thought experiment, it shows how even Mr Saran’s definition of “fair” falls short of the mark.

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Future King of England talks "environmental economics"

Has Price Charles been sneaking into Environmental Economics 101 lectures?

He actually uses the word "economic" and demonstrates some decent joined up thinking.

"...a new economic model must be found because the Earth can no longer support the demands of a growing "consumerist society" where growth is an end in itself."

Time to wheel out the theorists. He could do worse than reading Copeland and Taylor's Green Solow paper.

Nature Can't Take Unrestrained Economic Growth: Prince Charles [PlanetArk]

LONDON - The quest for unlimited economic growth is unsustainable and could bankrupt the environment through climate change and depleted natural resources, Britain's Prince Charles said Wednesday.

Charles, next-in-line to succeed Queen Elizabeth, said a new economic model must be found because the Earth can no longer support the demands of a growing "consumerist society" where growth is an end in itself.

People must realize they are not "the masters of creation," rather just one part of a fragile natural world, he added.

"Just as our banking sector is struggling with its debts... so Nature's life-support systems are failing to cope with the debts we have built up there too," Charles said at a BBC lecture at St James's Palace in central London.

"If we don't face up to this, then Nature, the biggest bank of all, could go bust.

"That is the challenge we face, it seems to me -- to see Nature's capital and her processes as the very basis of a new form of economics."

Charles, the former husband of the late Princess Diana, has long campaigned on the environment.

His own farm went organic in the 1980s, he publishes details of his estate's annual carbon emissions and has developed a sustainable village in western England called Poundbury.

"Our ability to adapt to the effects of climate change...depends on us adapting our pursuit of unlimited economic growth to that of sustainable growth," he said.

While conceding that industrialization had brought benefits such as better education, prosperity and higher life expectancy, the future king said that progress had come at a price.

Consumption has grown so much in the last 30 years that demands on natural resources now exceed the planet's capacity for renewal by a quarter each year, he added.

By 2050, the world's population will swell to about 9 billion people, from more than 6 billion currently, and a higher proportion will expect Western levels of consumption.

Modern farming methods that use fertilizers and pesticides that have helped feed a growing population have taken a "huge and unsustainable" toll on ecosystems, he added.

"Our current model of progress was not designed of course to create all this destruction," Charles said. "However, given the overwhelming evidence from so many quarters, we have to ask ourselves if it any longer makes sense or whether it is actually fit for purpose."

Economic growth has failed to end poverty, stress, ill health and social tensions, he added. A reformed economy must give more weight to the environment and local communities.

Incentives and Mosquitos

I have always wondered whether anti-virus software detection companies employ hundreds of people to write virus' so that customers then have to buy and renew ant-virus software. If not, why not (apart from the moral issue).

News from Sri Lanka at least shows such perverse incentives exist this time for mosquitoes.

Mosquito Repellent Firm In Dock For Mosquito Breeding [PlanetArk]

COLOMBO - A Sri Lankan court threatened a mosquito repellent factory manager with six months in jail for failing to destroy mosquito breeding areas on company premises to stop the spread of dengue fever, an official said Tuesday.

The Indian Ocean island nation is battling an outbreak of the mosquito-borne viral infection that has killed more than 150 people this year and infected 13,479 people, according to Health Ministry figures.

"The court fined the superintendent of a mosquito coil company for failing to destroy mosquito breeding places after we found larvae in several empty cans inside the premises," said Rohana De Silva, Attagalla public health inspector.

The court Monday fined the superintendent 1,500 rupees ($13) and imposed a suspended sentence of six months hard labor, which can be reinstated if the company does not keep its premises free of breeding grounds, De Silva said.

To fight the spread of dengue, police and health officials have started a campaign to destroy mosquito breeding grounds through insecticide spraying and the removal of standing fresh water from public and private property.

Those who do not comply face fines and punishments including imprisonment.

Sri Lanka's public health infrastructure and services suffered during a quarter-century war with Tamil Tiger separatists, when the health budget was cut to help bear the cost of fighting. The government declared victory on May 18.

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Waxman-Markey - Stavins summarises

I appear to have missed some serious climate change action over the pond.

Stavins provides a good overview of what actually happened. It is a good start.

National Climate Change Policy: A Quick Look Back at Waxman-Markey and the Road Ahead[Belfer Centre]

Like any legislation, the Waxman‑Markey bill has its share of flaws, but its cap-and-trade system has medium and long‑term targets for reducing greenhouse gas emissions that are sensible, and the cap‑and‑trade system is — for the most part — well designed. With some exceptions, the bill’s cap‑and‑trade system will achieve meaningful reductions of carbon dioxide and other greenhouse gas emissions at minimal cost to the economy.

There has been much lamenting about the corporate give-away in the bill, but this is unfounded, as I explained in detail in my May 27th post on The Wonderful Politics of Cap-and-Trade: A Closer Look at Waxman-Markey. Concerns have also been expressed — such as by a number of Republican members of Congress during last Friday’s floor debate in the House of Representatives — about negative impacts on the international competitiveness of U.S. firms. The only real solution to the international competitiveness issue in the long term is to bring non‑participating countries within an international climate regime in meaningful ways. (On this, please see the work of the Harvard Project on International Climate Agreements.) But that solution is fundamentally outside of the scope of the domestic policy action of any individual nation, including the United States.

In the meantime, the Waxman‑Markey approach of combining output‑based updating allocations in the short term for select sectors with the option in the long term of a Presidential determination (under stringent conditions) for import allowance requirements for specific countries and sectors was sensible and pragmatic (see my June 18th post on Worried About International Competitiveness? Another Look at the Waxman-Markey Cap-and-Trade Proposal).

That’s the good news. But the bad news is that last-minute changes in the bill changed what was a Presidential option regarding long-term back-up border adjustments (tariffs) to a requirement that the President put such tariffs in place under specified conditions. This moved the legislation considerably closer to risky protectionism, as President Obama rightly noted in comments to the press on Sunday.

Also, the compromise amendments with the House agriculture committee that provide for generous numbers of potential offsets from the agricultural sector (regulated not by EPA, but by USDA!) are troubling — not in terms of driving up compliance costs, but in terms of reducing the real environmental performance of the system. This is because of the general problem of limited additionality of claimed reductions under offset (or emission-reduction-credit) systems, as opposed to cap-and-trade systems, plus the well-known difficulties of measuring non-point emissions, let alone emissions reductions, from agriculture.

These and other design issues will be important topics when the Senate takes up its own climate legislation, although the debate in that body on some of these issues will likely be quite different. For example, there is likely to be more interest in the Senate in the use of a “price collar,” a mechanism to constrain both the maximum and the minimum market price of allowances over time. This would be a move beyond the safety-valve mechanism that is provided in the House legislation.

When the action moves to the Senate, the greatest attention and the greatest skepticism should be directed not to the cap‑and‑trade mechanism, which is — for the most part — well designed in Waxman‑Markey, but rather to other elements of the legislation, some of which are highly problematic. While the titles of Waxman‑Markey that create the cap‑and‑trade system are ‑‑ on balance ‑‑ sensible, and will result in meaningful emissions reductions cost effectively, the other titles of the bill include a host of conventional standards and subsidies, many of which (under the cap‑and‑trade umbrella) will have minimal or no environmental benefits, but will limit flexibility and thereby have the unintended consequence of driving up compliance costs. That’s the soft under‑belly of this legislation that needs to be selectively, surgically repaired.

It is the fault of economists — myself included — that we have given so much attention to the cap-and-trade system that we have ignored these other important elements of the legislation, elements that unfortunately can degrade significantly the cost-effectiveness of the package while providing little if any incremental benefits to the environment. Even the Congressional Budget Office, in its excellent economic analysis of HR 2454, focused exclusively on the bill’s cap-and-trade program. Going forward, CBO, EPA, and independent analysts need to examine the bill’s other elements, and assess what those elements provide at what incremental cost.

A broader question — also raised by House Republicans in the floor debate — is whether the United States should be moving towards the enactment of a domestic climate policy before a sensible, post‑Kyoto international agreement has been negotiated and ratified. Such an international agreement should include not only the countries of the industrialized world, but also the key, rapidly‑growing economies of the developing world ‑‑ China, India, Brazil, Korea, Mexico, South Africa, and Indonesia ‑‑ which are and will increasingly be major contributors to emissions.

It’s natural for such a question to be raised about the very notion of the U.S. adopting a policy to help address what is fundamentally a global problem. The environmental benefits of any single nation’s reductions in greenhouse gas emissions are spread worldwide, unlike the costs. This means that for any single country, the costs of action will inevitably exceed its direct benefits, despite the fact that the global costs of action will be less than global benefits. This is the nature of a global commons problem, and this is the very reason why international cooperation is required.

The U.S. is now engaged in international negotiations, and the credibility of the U.S. as a participant, let alone as a leader, in shaping the international regime is dependent upon our demonstrated willingness to take actions at home.

Europe has put its climate policy in place, and Australia, New Zealand, and Japan are moving to have their policies in place within a year. If the United States is to play a leadership role in international negotiations for a sensible post‑Kyoto international climate regime, the country must begin to move towards an effective domestic policy ‑ with legislation that is timed and structured to coordinate with the emerging post‑Kyoto climate regime.

Without evidence of serious action by the U.S., there will be no meaningful international agreement, and certainly not one that includes the key, rapidly‑growing developing countries. U.S. policy developments can and should move in parallel with international negotiations.

So, the Waxman‑Markey bill has its share of flaws, but it represents a reasonable starting point for Senate deliberation on what can become a national climate policy that will place the United States where it ought to be -‑ in a position of international leadership to help develop a global climate agreement that is scientifically sound, economically rational, and politically acceptable to the key nations of the world.

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"environmentally induced migration"

Apologies for the lay off from blogging - academia can be a tough taskmaster.

I have no doubt that climate change induced migration is on the rise and will cause significant tensions across the globe. The Economist provide a nice introduction. Academics will follow.

I predict a value closer to the top end of estimates - 700m by 2050.

This article is "classic" journalism. Keep it personal about a small tribe in a small region and they go global with the dull science stuff.

Lovelock stars yet again - now we are talking:

James Lovelock, an environmental guru, posits a collapse in human population, in part related to migration, with a few “lifeboat” regions surviving.

Here is the article in full.

A new (under) class of travellers [Economist]

THE airstrip at Lokichoggio, in the scorched wastes of north Kenya, was once ground zero for food aid. During Sudan’s civil war, flights from here kept millions of people alive. The warehouses are quieter now, but NGOs keep a toehold, in case war restarts—and to deal with what pundits call the “permanent emergency” of “environmentally induced” migration.

Take the local Turkana people. Their numbers have surged in recent decades, and will double again before 2040. But as the area gets hotter and drier, it has less water, grazing and firewood. The drought cycle in northern Kenya has gone from once every eight years to every three years and may contract further. That means no recovery time for the Turkana and their livestock; the result is an increasingly frantic drift from one dry place to another.

A local crisis with local causes? Only partly. Scientists think it is part of a global phenomenon: people across the world on the move as a result of environmental degradation. Just how many are moving, or about to move, is maddeningly unclear.

The International Organisation for Migration thinks there will be 200m climate-change migrants by 2050, when the world’s population is set to peak at 9 billion. Others put the total at 700m.

These startling numbers may conjure up a picture of huge, desperate masses, trekking long distances and if necessary overrunning border defences because their homelands have dried up or been submerged. But at least initially, the situation in Kenya and other parts of east Africa is likely to be more typical: an already poor population whose perpetual search for adequate pasture and shelter grows harder and harder. In such conditions, local disputes—even relatively petty ones between clans and extended families—can easily worsen, and become embroiled in broader religious or political fights. And that in turn makes it harder for everybody in the area to survive, and more desperate to find new places to live, even if they are not far away.

A new report—“In Search of Shelter”—by the United Nations University, the charity CARE and Columbia University in New York lists the eco-migration “hot spots”: dry bits of Africa; river systems in Asia; the interior and coast of Mexico and the Caribbean; and low islands in the Indian and Pacific Oceans.

A one-metre rise in sea levels could displace 24m people along the Ganges, Brahmaputra, Irrawaddy, Salween, Mekong, Yangtze and Yellow rivers—which together support a quarter of humanity. A two-metre rise could uproot 14m people on the Mekong alone and swamp much of its farmland. Meanwhile, the melting of the Himalayan glacier will cause floods and erosion upstream, boosting the price of rice and other staples. And many regional conflicts could be exacerbated.

The scale of the likely population shift raises big questions. Will climate-change migrants be recognised? The classic definition of refugees—tossed between states by war or tyranny—is outdated. Eco-migrants will be paperless paupers, whose multiple woes are hard to disentangle.

Poverty campaigners want a revised legal regime to protect the new migrants. However, this looks tricky. America resists calling them “environmental refugees”: the word “refugee” implies guarantees that cannot realistically be given to the coming torrent of migrants. As American diplomats quietly admit, their rich country is still reeling from Hurricane Katrina in 2005, which killed 1,800 people and displaced hundreds of thousands.

Can the United Nations High Commissioner for Refugees (UNHCR) expand to cope with eco-migrants? It has already struggled to widen its remit to include the internally displaced (26m at the end of 2008) as well as strictly-defined refugees (10m, excluding the Palestinians who come under another agency). A tenfold surge in the numbers within its orbit would push the agency out of control, says James Milner, a professor at Ottawa’s Carleton University. Meanwhile some aid workers see signs of a competition between institutions to take ownership of the eco-migration issue, perhaps by oversimplifying it.

Charles Ehrhart of CARE thinks UNHCR will remain central, but wonders how it or anybody can now distinguish between “forced” and “voluntary” migration. He says climate change may cut agricultural output by half in lowland Africa by 2020. “In such a context, does migration constitute a choice or a necessity?”

Migrants’ rights may be easy to assert for islanders whose homes are drowned—but hard in the case of big, messy movements across Africa and Asia. Most of the displaced will drift to the next-most-liveable place, as the poor do anyway.

“Many states are already overwhelmed by internally displaced populations,” says Mr Ehrhart. “Will they be able to support even more people on the move? If not, whose duty is it to make up the difference?”. At the least, the gap between carbon usage and climate change’s effects portends angry North-South rows.

Meles Zenawi, who as Ethiopia’s prime minister will speak for Africa at several global gatherings this year, predicts that some parts of the continent will become uninhabitable and “those who did the damage will have to pay.” At the December summit on climate change in Copenhagen, he hopes that Africa will “aggressively” demand compensation for environmental damage as well as help with migrants and the mitigation of climate change: in his view a demand of $40 billion would be reasonable.

Many agree that more research is needed to pinpoint the reasons why migrants pick up sticks. People concur that climate change fuels conflict in Darfur, but nobody knows how big a factor it is. Drought helped jihadist fighters seize bits of south Somalia, but was it the main reason?

Gloom abounds. James Lovelock, an environmental guru, posits a collapse in human population, in part related to migration, with a few “lifeboat” regions surviving. Then there is the pace of social change. The number of “megacities”—with populations in the tens of millions—may grow to several hundred by the middle of the 21st century. Most are poorly planned.

Would a migrant from a collapsed city receive aid? “We’ve not experienced anything of this kind, where whole regions, whole countries, may well become unviable,” says Jeffrey Sachs, head of Columbia University’s Earth Institute.

No wonder strategists see vast new security risks, and a big expansion in the world’s “ungoverned spaces”. But much can be done before the exodus turns biblical. In West Africa subsistence farming is badly irrigated. Improve that, throw in some seeds and fertiliser, scrap tariffs, build warehouses and roads, and the region may beat the worst of climate change.

Geographers at UN Habitat, a city-planning agency, say conurbations must adapt to the needs of climate-change migrants. “You can’t just stockpile people,” says Alex de Sherbinin of Columbia University. The pressure is tangible in Addis Ababa, which already has teeming slums. The price of teff, a staple, has surged after a famine that is still pushing people to the city. Mr Meles is not alone in his wrath.

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The End of the Line: Overfishing on video

Good video looking at EU overfishing and why we will be "fishless" by 2050.

A useful video for my "economics of fishery students".

http://www.babelgum.com/html/clip.php?clipId=3020495

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Spatially disaggregated analysis of pollution

A must read paper for the pile. Apologies for using this blog as an online repository of papers I need to read but it helps me keep a record.

The abstract does not make for very interesting reading I am afraid. It is the techniques that are important in my view.

Measuring the effects of the Clean Air Act Amendments on ambient PM10 concentrations: The critical importance of a spatially disaggregated analysis

Maximilian Auffhammer, Antonio M. Bento and Scott E. Lowec

Abstract

We examine the effects of the 1990 Clean Air Act Amendments (CAAAs) on ambient concentrations of PM10 in the United States between 1990 and 2005. We find that non-attainment designation has no effect on the “average monitor” in non-attainment counties, after controlling for weather and socioeconomic characteristics at the county level. In sharp contrast, if we allow for heterogeneous treatment by type of monitor and county, we do find that the 1990 CAAAs produced substantial effects. Our best estimate suggests that PM10 concentrations at monitors with concentrations above the national annual standard dropped by between 7 and View the MathML source, which is roughly equivalent to a 11–14% drop. We also show that monitors which were in violation of the daily standard experience two fewer days in violation of the daily standard the following year. Empirical results suggest that this treatment effect is independent of whether the Environmental Protection Agency (EPA) has finalized the non-attainment designation.

Keywords: Air pollution; Clean air act; Spatial modeling

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Pigs in Space

The geographical location of hog farms in the US and the impact of environmental regulations led to this inevitable blog title. I can only apologise.

However, the abstract does draw you in. What is the answer? Which of the three options won out? Now I have to also read the paper.

Environmental Regulations and the Structure of U.S. Hog Farms

Date: 2009
By: Nene, Gibson
Azzam, Azzeddine M.
Schoengold, Karina

URL: http://d.repec.org/n?u=RePEc:ags:aaea09:49395&r=env

The U.S hog production industry has been continually subjected to rapid structural changes since the early 1990s. The industryâs move towards more concentrated large hog farms and geographical concentration of such farms, have triggered public concerns over the dangers such big animal feeding operations are likely to pose to the waters of the country. This study investigates the implications of state-level environmental regulations on the structure of hog farms. The results of this study suggest that environmental regulations will result in one of three possible scenarios: (1) a more competitive industry in which small hog operations are not adversely affected which will allow more small operations to enter rather than exit the industry; (2) a more concentrated hog production industry in which large operations survive while small operations exit the industry; (3) no change in the structure of the industry where both sizes of operations are not significantly affected by environmental stringency.

Research fellow position - economy, energy and climate

For recent environmental economics PhDs. Living in either Milan or Venice sounds great.

FONDAZIONE ENI ENRICO MATTEI
Research Programme on Sustainable Development
Research fellow position

The Fondazione Eni Enrico Mattei (FEEM), an Italian research institute that carries out research on sustainable development, encourages to submit applications for a Research Fellow position. The successful candidate will join one of the two modelling teams at FEEM that are engaged in frontier research on the connections between the economy, energy and climate. An outline of the modelling done so far is available at http://www.feem-web.it/witch/ and http://www.feem-web.it/ices/. Duties will be carried out at the FEEM offices in Milan or Venice, Italy.

The candidate is expected to have a good general background in applied and theoretical economics, with previous experience in applied modelling work. Candidates must have a Ph.D. or be near its completion. The Ph.D should be preferably in economics; Ph.Ds in energy engineering/mathematics coupled with a solid economic background are also accepted. Experience in modelling, and proficiency in GAMS are important requisites.

The selected candidate will interact with researchers of different nationalities, and will write and present scientific papers. Part of the activities are realized in the context of European research projects. An excellent command of written and spoken English is essential for this position.

FEEM offers a truly international and interdisciplinary workplace. The strong ties with a world-wide network of research institutions engaged in environmental research and in particular on the analysis of climate change issues allows a continuous fruitful exchange of experiences. A full range of the activities of FEEM is available at http://www.feem.it/.

The successful candidate is expected to begin his/her assignment in September 2009. The appointment period will be at least one year long. Gross salary will be based on qualification and working experience (indicatively from 27,000 to 35,000 Euro/yearly). Higher salaries may be considered for particularly experienced candidates.

Applicants should send a detailed curriculum vitae with a full list of publications and at least one letter of recommendation to: Monica Eberle, monica.eberle@feem.it.

Deadline for applications: FEEM will begin considering candidates in June 2009 and will continue until the position is filled.

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The EU Emissions Trading Scheme: assessment and outlook

After setting this question to my Econ 211 students as part of their assessment I was interested to come across an academic answer to the question. I hope this paper does not "too" closely resemble the answers given by my students for their sakes.

The EU Emissions Trading Scheme: assessment and outlook

Sébastien E. J. Walker

The Queen's College, University of Oxford

ABSTRACT

In this article I assess the design of the EU Emissions Trading Scheme and the performance of its first Phase. The article argues that, contrary to common belief, Phase I fulfilled its objectives. It then discusses the changes that have been made to the Scheme's framework for Phase II, and those that are planned for Phase III, covering the latest developments and the recent price trends for emissions allowances. I conclude that the aforementioned changes constitute substantial improvements to the Scheme, while unwelcome uncertainties nevertheless remain over long-term price signals.

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"Pollution, Health, and Avoidance Behavior: Evidence from the Ports of Los Angeles"

I have a forthcoming paper the Journal of Risk and Uncertainty looking at the relationship between pollution exposure and wages.

Dirty Money: Is there a Wage Premium for Working in a Pollution Intensive Job? [PDF old working paper version]

This paper is part of a growing literature looking at the health and the environment by economists. We argue that individuals demand higher wages to compensate for the negative health implications. These authors argue that individuals act to reduce exposure.

This appears to be a great natural experiment that gets to the heart of the matter without many of the measurement problems that are associated with studies of this type.

"Pollution, Health, and Avoidance Behavior: Evidence from the Ports of Los Angeles"

NBER Working Paper No. w14939

ENRICO MORETTI, University of California, Berkeley - Department of Economics, National Bureau of Economic Research (NBER), Institute for the Study of Labor (IZA)
Email: moretti@econ.berkeley.edu
MATTHEW NEIDELL, University of Chicago - Department of Economics and CISES
Email: mneidell@uchicago.edu

A pervasive problem in the literature on the health costs of pollution is that optimizing individuals may compensate for increases in pollution by reducing their exposure to protect their health. This implies that estimates of the health effects of pollution may vastly understate the full welfare effects of pollution, particularly for individuals most at risk who have the greatest incentive to adopt compensatory behavior. Furthermore, using ambient monitors to approximate individual exposure to pollution may induce considerable measurement error. We overcome these issues by estimating the short run effects of ozone on respiratory related health conditions using daily boat arrivals and departures into the two major ports of Los Angeles as an instrumental variable for ozone levels. While daily variation in boat traffic is a major contributor to local ozone pollution, time-varying pollution due to port activity is arguably a randomly determined event uncorrelated with factors related to health. Instrumental variable estimates are significantly larger than OLS estimates, indicating the importance of accounting for avoidance behavior and measurement error in understanding the full welfare effects from pollution.

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Climate Change Articles

New blog to check out. Nice layout and a good place to get information.

Climate Change Articles

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The End of Civilisation

Nothing better than a good "end of the world" story for a Monday morning. This should appeal to economists everywhere.

'Earth 2100': the Final Century of Civilization? [ABC News]

It's an idea that most of us would rather not face -- that within the next century, life as we know it could come to an end. Our civilization could crumble, leaving only traces of modern human existence behind.

To change the future, first you have to imagine it.

It seems outlandish, extreme -- even impossible. But according to cutting edge scientific research, it is a very real possibility. And unless we make drastic changes now, it could very well happen.

Experts have a stark warning: that unless we change course, the "perfect storm" of population growth, dwindling resources and climate change has the potential to converge in the next century with catastrophic results.

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"Economists in the Pits?"

Apologies for the low posting rate - academics occasionally have to take a holiday and when that location is "internetless" even the most ardent blogger has to admit defeat.

In UK academia the pressure to publish in "A" journals is immense. However, with a large increase in the number of economists and the pressure to publish increasing from all directions it is no surprise that this is difficult to achieve (not least if you are an environmental economist).

This paper is of interest to any academic trying to pin down that "A" publication and perhaps even more interesting to those who have accepted that this is a dream not worth pursuing.

The abstract definitely sucks you in. How do the losers react and why is it harmful. Any "losers" reading this post should think how they have or are reacting to see if it matches. How can the system be changed from rewarding those who are able to publish in the top journals? How can that not be a good thing?

Economists in the Pits? [SSRN]

Bruno S. Frey
University of Zurich - Institute for Empirical Research in Economics (IEW); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Swiss Federal Institute of Technology Zurich

March 2009

CESifo Working Paper Series No. 2594

Abstract:
Academic economists today are caught in a "Publication Impossibility Theorem System" or PITS. To further their careers, they are required to publish in A-journals, but this is impossible for the vast majority because there are few slots open in such journals. Such academic competition is held to provide the right incentives for hard work, but there may be serious negative consequences: the wrong output may be produced in an inefficient way, the wrong people may be selected, and the losers may react in a harmful way. The paper suggests several ways for improvement.

Keywords: academia, economists, publication, journals, incentives, economic methodology

JEL Classifications: A1, D02, I23
Working Paper Series

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Lobby groups killing the planet?

US politics is an ugly place. You have to wonder about the future of democracy and the planet when big oil and other lobby groups can have such an influence on the democratic decision making process.

This is a sad state of affairs.

Barack Obama's key climate bill hit by $45m PR campaign [Guardian]

America's oil, gas and coal industry has increased its lobbying budget by 50%, with key players spending $44.5m in the first three months of this year in an intense effort to cut off support for Barack Obama's plan to build a clean energy economy.

The spoiler campaign runs to hundreds of millions of dollars and involves industry front groups, lobbying firms, television, print and radio advertising, and donations to pivotal members of Congress. Its intention is to water down or kill off plans by the Democratic leadership to pass "cap and trade" legislation this year, which would place limits on greenhouse gas emissions.

A defeat for the bill would have global consequences. The international community is depending on America, as the world's biggest per capita polluter, to set out a firm plan for getting off dirty fuels in the months before crucial UN negotiations in Copenhagen in December.

Without such action, the chances of getting a deal that scientists say is vital to limiting dangerous climate change are much reduced.

Those high stakes have intensified the fight for control over America's energy future. "There are an awful lot of people who have an awful lot to gain and lose and they have been acting accordingly," said Evan Tracey, founder of the Campaign Media Analysis Group (CMAG), who has tracked the proliferation of climate change ads.

But it is an unequal contest. Liberal and environmental organisations, as well as the major corporations that support climate change legislation, say they are being vastly outspent by fossil fuel interests.

"These guys are spending a billion dollars this year convincing Americans that they are clean, green, cuddly and warm," said Bob Perkowitz, founder of the eco- America PR firm. Perkowitz is to brief the White House yesterday on a new environmental messaging strategy. "The enviros are getting their message out, but they are being outspent by 10 to one." he said.On advertising, the ratio is about three to one. The oil and coal industry spent $76.1m on ads from 1 January to 27 April, according to CMAG data seen by the Guardian. Environmental groups, led by Al Gore's Alliance for Climate Protection, the Environmental Defence Fund and the Sierra Club, spent $28.6m on ads in the same period, Tracey said.

Despite its global significance, the fate of the draft "cap and trade" bill now lies in the hands of just a dozen Democrats, who have yet to back Obama's energy transformation. The Democratic leadership cannot take their support for granted. Seven of those pivotal Democrats received campaign donations in excess of $100,000 from the oil and gas industry, coal producers, and electricity firms during last year's elections, according to an analysis provided to the Guardian by the Centre for Responsive Politics. Another two received more than $90,000 last year.

Environmentalists say those Democrats, who hold the balance of power on the committee, pose a far greater threat to the chances of passing climate change legislation than a full vote in the House of Representatives. "If they can get that bill through the subcommittee what is going to emerge is a piece of legislation," said Tony Kreindler of the Environmental Defence Fund. "So this is ground zero for the vote."

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"Economic Instruments to Enhance the Conservation and Sustainable Use of Biodiversity"

Call for papers:

"Economic Instruments to Enhance the Conservation and Sustainable Use of Biodiversity"

The Fondazione Eni Enrico Mattei, in association with Conservation International, DEFRA, Department of Land Economy of Cambridge University and European Investment Bank, announces the Eleventh International BIOECON Conference on "Economic Instruments to Enhance the Conservation and Sustainable Use of Biodiversity". The Conference will be held at the Centro Culturale Don Orione Artigianelli, in Venice, Italy, on September 21st-22nd, 2009.

The Conference is targeted to researchers, environmental professionals, international organizations and policy makers who are interested in working in the management and conservation of biodiversity. The Conference is focused on identifying the most effective and efficient instruments for biodiversity conservation, such as auctions of biodiversity conservation contracts, payment-for-services contracts, taxes, tradable permits, voluntary mechanisms and straightforward command and control. Special emphasis will be given to policy reforms aimed at increasing the commercial rewards for conserving biodiversity, increasing the penalties for biodiversity loss and circulating information on the biodiversity performance requirements of firms. An increasing number of businesses, which were responsible for biodiversity loss in the past, are now supporters of biodiversity conservation. Markets for organic agriculture and sustainably-harvested timber are developing at double-digit rates, while rapid growth is observed in the demand for climate mitigation services, such as the protection of forests and wetlands to absorb carbon dioxide. Bio-prospecting, the search for new compounds, genes and organisms in the wild, is another biodiversity business on the rise.

Papers are specifically invited on the themes of:

* Assessment of the effectiveness and efficiency of biodiversity conservation instruments, taking into account spatial and governmental considerations;
* Development of new, incentive-compatible instruments to conserve biodiversity;
* Evaluation of the costs of conservation policies versus the costs of 'business-as-usual' within an existing policy framework (e.g. agriculture, fisheries, infrastructure, climate change, etc) that causes ongoing losses of ecosystems and biodiversity.
* Determination of the factors - including the choice of policy instruments - that increase or decrease a farmer's or public body's motivation to conserve biodiversity on their land;
* Application to strategies and projects of the ecosystem services approach for assessing and valuing environmental impacts;
* Benefit transfer methodologies to assess the socio-economic and monetary value of ecosystems services;
* Applications of economic instruments to enhance the conservation and sustainable use of biodiversity, with particular emphasis on case studies in biodiversity hotspots.

We are particularly interested in papers documenting practical applications and experiences on the above themes. Theoretical contributions are welcome (e.g., using computer artificial intelligence approaches), but also more applied work (e.g. how public bodies - managing for example flood risks - can innovatively deliver wider ecosystem benefits, or how private landowners can be encouraged to conserve biodiversity on their land). We are also interested in multi-disciplinary papers that combine scientific and economic assessments. However, we will also accept papers on a range of other issues related to renewable resources and biodiversity management.

The Conference will cover two days. Leading international environmental economists will present their latest research in two plenary sessions. The keynote speakers are: Professor Anil Markandya (University of Bath, UK and BC3, Spain) and Professor Edward Barbier (University of Wyoming, USA). Two special panel discussions are also scheduled. These are characterized by a round table and shall be focused on climate change, biodiversity management issues. One shall be co-organized with the European Investment Bank and the second by Conservation International, giving to the audience an interesting perspective that is the link between theory and practice.

Full/draft papers may be submitted for presentation and will be considered by the programme committee. Electronic copies (in WORD or PDF format) should be sent to Ughetta Molin Fop (ughetta.molin@feem.it) no later than May 20th, 2009. Acceptance of papers will be notified by email in June 2009.

The Conference will open with an evening reception at the Centro Culturale Don Orione Artigianelli on September 20th. Conference sessions will commence in the morning of September 21st and end in the afternoon of September 22nd. A Conference dinner will be organised on the evening of September 21st. Lunches and refreshments will also be provided. All the participants will be offered lunches and refreshments, the opening reception, the social dinner and the Conference package (program brochure with the book of abstracts, five hours of Internet connection, folder, bag, pen, badge, logistical information, Venice map). There is no registration fee.
Travel and accommodation expenses remain the responsibility of all the participants.

In order to register to the Conference and the your accommodation booking participants are invited to fill in the downloadable form at the BIOECON web-site and send it to the Conference Secretariat (Ughetta Molin Fop, e-mail ughetta.molin@feem.it, fax +39.041.2711461) by July 15th, 2009.

Further information about the Conference will be posted in the BIOECON web-site at http://www.bioecon.ucl.ac.uk/.

"Pollution and International Trade in Services"

Arik Levinson and his latest trade and the environment paper.

The bottom line is that services are relatively small polluters so Arik was never going to find much of real economic significance. Good to cover all bases though.

"Pollution and International Trade in Services"

NBER Working Paper No. w14936

ARIK LEVINSON, Georgetown University - Department of Economics, National Bureau of Economic Research (NBER)
Email: AML6@georgetown.edu

Two central topics in recent rounds of international trade negotiations have been environmental concerns, and services trade. While each is undoubtedly important, they are unrelated. In this paper I show that the services-environment link is small, for two reasons. First, services account for only a small fraction of overall pollution. For none of five major air pollutants does the service sector account for even four percent of total emissions; for three of the five services account for less than one percent. Second, those service industries that do pollute are the least likely to be traded internationally. Those services for which the U.S. collects and publishes international trade data - presumably those services that are traded internationally - are less polluting than services for which trade data do not exist - presumably because the services are not traded. Even if we limit attention to the services that are traded across borders, the service industries most intensively traded are the ones that pollute the least. The bottom line is simple. International services trade bears little relation to the environment, because services in general contribute relatively little to overall pollution, and those industries that are traded internationally are among the least polluting.

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The World According to Monsanto

I am on a "hammering big business roll" - first Chevron and now Monsanto.

Up the revolution.

The World According to Monsanto - Full Documentary [Twilight Earth]



The post above has the entire documentary for all to view.

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Big Oil and "Environmental Atrocity"

A good read and watch.

“60 Minutes” Exposes Chevron’s Environmental Atrocity in the Amazon

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Wind farms in Sicily made an offer they cannot refuse

You know that alternative energy has gone mainstream when the Cos Nostra get involved.

This is yet another unintended consequence of sky high EU subsidies for wind power. The question is whether the finely named "operation wind" will be a rip roaring success.

The idea that companies were given money to build wind farms that produce no electricity shows the distortionary effect of both the mafia and EU subsidies.

The FT reports as part of a special investigation.

Mafia link to Sicily wind farms probed [FT]

Anti-Mafia magistrates in Sicily have opened a sweeping investigation into the wind power sector where local officials, entrepreneurs and crime gangs are suspected of collusion in the construction of lucrative wind farms before their eventual sale to multinational companies.

Italian and EU subsidies for the building of wind farms and the world’s highest guaranteed rates, €180 ($240, £160) per kwh, for the electricity they produce have turned southern Italy into a highly attractive market exploited by organised crime.

Roberto Scarpinato, a veteran anti-Mafia prosecutor in the regional capital Palermo, told the Financial Times that his investigation, which began last week, was focused on the three large provinces of Palermo, Trapani and Agrigento.

An earlier investigation into a case near Trapani in western Sicily resulted in eight arrests in February, leading to accusations of a suspected nexus between a leading Mafia family that offered money and votes in exchange for permits to construct wind farms.

“Operation Wind” revealed Mafia promises to local officials in Mazara del Vallo of money and votes in exchange for help in approving wind farm projects.

The Mafia suspects were alleged to be linked to Matteo Messina “Diabolik” Denaro, a fugitive clan boss on ltaly’s most wanted list.

Prosecutors suspect the hand of the Mafia in fixing permits and building wind farms that are then sold on to Italian and eventually foreign companies.

In an effort to assert its control over the sector, the Mafia is suspected of destroying two wind towers that were in storage in the port of Trapani after their delivery by ship from northern Europe, local officials told the FT.

“It is a refined system of connections to business and politicians. A handful of people control the wind sector. Many companies exist but it is the same people behind them,” said Mr Scarpinato, whose investigations have focused on the evolution of the Mafia into a modern business organisation.

Sicily’s Cosa Nostrais evolving and finding new business opportunities, including the renewable energy sector, by exploiting its historic grip over territory, construction and ability to corrupt local officials.

Several wind farms built by companies suspected of being linked to the Mafia have not functioned for one or two years, in some cases because of shoddy construction. “This is the amazing thing, that developers got public money to build wind farms which did not produce electricity,” the prosecutor said.

The regional governments in Sicily, as well as Calabria and Basilicata on the mainland, have suspended the authorisation of new wind farms in part because of suspected criminal involvement and confusion over the real ownership of the ventures.

Most, if not all, of Sicily’s wind farms began as projects by local developers, some of whom speculated in a secondary market for permits. Once built, the majority were sold on through Italian intermediaries to multinationals. International Power of the UK is the largest wind power operator in Italy. Others include Italy’s Enel and Germany’s Eon through its purchase of part of Endesa of Spain in 2007. France’s EDF also has assets. While the international companies knew the identity of their Sicilian developers, there is no evidence they were aware of Mafia involvement.

Although Italy is lagging badly in meeting its EU 2020 emissions targets, the renewable energy sector is growing strongly and attracting considerable foreign investment. International Power became the single largest operator in 2007 with its purchase of the Maestrale portfolio of mostly Italian wind farms, including five in Sicily, for €1.8bn

Italy ranks fourth in Europe in terms of installed wind power capacity.

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Foreign Direct Investment and the Pollution Haven Hypothesis"

Having written extensively on the pollution haven hypothesis I need to keep up to speed. This looks like a promising approach but for a single sector (one that is most likely to result in a positive effect.

"Agglomeration Effects in Foreign Direct Investment and the Pollution Haven Hypothesis"

Environmental and Resource Economics, Forthcoming
Economic Research Initiatives at Duke (ERID) Research Paper No. 22

ULRICH J. WAGNER, Universidad Carlos III de Madrid - Department of Economics, London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)
Email: uwagner@eco.uc3m.es
CHRISTOPHER TIMMINS, Duke University - Department of Economics
Email: christopher.timmins@duke.edu

Does environmental regulation impair international competitiveness of pollution-intensive industries to the extent that they relocate to countries with less stringent regulation, turning those countries into "pollution havens"? We test this hypothesis using panel data on outward foreign direct investment (FDI) flows of various industries in the German manufacturing sector and account for several econometric issues that have been ignored in previous studies. Most importantly, we demonstrate that externalities associated with FDI agglomeration can bias estimates away from finding a pollution haven effect if omitted from the analysis. We include the stock of inward FDI as a proxy for agglomeration and employ a GMM estimator to control for endogenous, time-varying determinants of FDI flows. Furthermore, we propose a difference estimator based on the least polluting industry to break the possible correlation between environmental regulatory stringency and unobservable attributes of FDI recipients in the cross-section. When accounting for these issues we find robust evidence of a pollution haven effect for the chemical industry.

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"Discounting for Climate Change"

Discounting remains controversial.

David Anthoff, Tol, Richard and Gary Yohe provide a good summary of the problem.

The bottom line is that the social cost of carbon could be pretty much anything.

Discounting for Climate Change

Date: 2009
By: Anthoff, David
Tol, Richard S. J.
Yohe, Gary W.

URL: http://d.repec.org/n?u=RePEc:zbw:ifwedp:7539&r=env

It is well-known that the discount rate is crucially important for estimating the social cost of carbon, a standard indicator for the seriousness of climate change and desirable level of climate policy. The Ramsey equation for the discount rate has three components: the pure rate of time preference, a measure of relative risk aversion, and the rate of growth of per capita consumption. Much of the attention on the appropriate discount rate for long-term environmental problems has focussed on the role played by the pure rate of time preference in this formulation. We show that the other two elements are numerically just as important in considerations of anthropogenic climate change. The elasticity of the marginal utility with respect to consumption is particularly important because it assumes three roles: consumption smoothing over time, risk aversion, and inequity aversion. Given the large uncertainties about climate change and widely asymmetric impacts, the assumed rates of risk and inequity version can be expected to play significant roles. The consumption growth rate plays four roles. It is one of the determinants of the discount rate, and one of the drivers of emissions and hence climate change. We find that the impacts of climate change grow slower than income, so that the effective discount rate is higher than the real discount rate. The differential growth rate between rich and poor countries determines the time evolution of the size of the equity weights. As there are a number of crucial but uncertain parameters, it is no surprise that one can obtain almost any estimate of the social cost of carbon. We even show that, for a low pure rate of time preference, the estimate of the social cost of carbon is indeed arbitrary – as one can exclude neither large positive nor large negative impacts in the very long run. However, if we probabilistically constrain the parameters to values that are implied by observed behaviour, we find that the social cost of carbon, corrected for uncertainty and inequity, is 61 US dollar per metric tonne of carbon.

Keywords: Social cost of carbon, climate change, pure time preference, risk aversion, inequity aversion, income elasticity, time horizon, uncertainty
JEL: Q54

"An Elaborated Global Climate Policy Architecture"

New paper from Jeffery Frankel. It is interesting to see how many mainstream economists are turning their hand to environmental issues.

This plan might have legs if taken seriously.

An Elaborated Global Climate Policy Architecture: Specific Formulas and Emission Targets for All Countries in All Decades"

NBER Working Paper No. w14876

JEFFREY A. FRANKEL, Harvard University - John F. Kennedy School of Government, National Bureau of Economic Research (NBER)
Email: jeffrey_frankel@harvard.edu

This paper analyzes a detailed plan to set quantitative national limits on emissions of greenhouse gases, following along the lines of the Kyoto Protocol. It is designed to fill in the most serious gaps: the absence of targets extending as far as 2100, the absence of participation by the United States and developing countries, and the absence of reason to think that countries will abide by commitments. The plan elaborates on the idea of a framework of formulas that can assign quantitative limits across countries, one budget period at a time. Unlike other century-long paths of emission targets that are based purely on science (concentration goals) or ethics (equal rights per capita) or economics (cost-benefit optimization), this plan is based partly on politics. Three political constraints are particularly important. (1) Developing countries are not asked to bear any cost in the early years. (2) Thereafter, they are not asked to make any sacrifice that is different in kind or degree than was made by those countries that went before them, with due allowance for differences in incomes. (3) No country is asked to accept an ex ante target that costs it more than, say, 1% of GDP in present value, or more than, say, 5% of GDP in any single budget period. They would not agree to ex ante targets that turned out to have such high costs, nor abide by them ex post. An announced target path that implies a future violation of these constraints will not be credible, and thus will not provide the necessary signals to firms today.

The idea is that (i) China and other developing countries are asked to accept targets at BAU in the coming budget period, the same in which the US first agrees to cuts below BAU; and (ii) all countries are asked to make further cuts in the future in accordance with a formula which sums up a Progressive Reductions Factor, a Latecomer Catch-up Factor, and a Gradual Equalization Factor. The paper tries out specific values for the parameters in the formulas (parameters that govern the extent of progressivity and equity, and the speed with which latecomers must eventually catch up). The resulting target paths for emissions are run through the WITCH model. It does turn out to be possible to achieve the carbon abatement goal (concentrations of 500 PPM in 2100) while simultaneously obeying the economic/political constraint (no country suffers a disproportionate loss in GDP). Preliminary efforts to achieve a target of 450 ppm have so far been unable to do so without violating the cost constraint.

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Krugman on climate change economics

As someone with a dust covered PhD with Krugman's name all over it, it is good to see that he has also seen the light and that "trade and the environment" is the future.

Krugman is still da man.

H/T: Env-econ

Anti-green economics [NY Times]

Clearly, opposition to doing something about climate change has fallen back to a new position: claims that attempting to limit greenhouse gas emissions would be incredibly costly. Yet the most careful studies, like the big MIT study of Congressional proposals, find only modest costs. Pay no attention, say the critics.

Via Pete Davis, I found Robert Samuelson’s latest, which Davis thinks was wonderful; all I can say is, huh?

Here’s the key graf in which Samuelson tries to deny the results of the studies:

The trouble is that these models embody wildly unrealistic assumptions: There are no business cycles; the economy is always at “full employment”; strong growth is assumed, based on past growth rates; the economy automatically accommodates major changes — if fossil fuel prices rise (as they would under anti-global-warming laws), consumers quickly use less and new supplies of “clean energy” magically materialize.

I don’t think there’s a single thing there that’s right. What on earth do business cycles have to do with it? The models may assume growth based on past trends, but they DO ask whether emissions policy would greatly slow growth — and the answer is no. Consumers aren’t assumed to “quickly” use less — the time frame in these models is decades long. And new supplies don’t “magically” appear — they respond to price incentives, which is what economics usually says.

I don’t especially mean to pick on Samuelson, but this column exemplifies a strange thing about the climate change debate. Opponents of a policy change generally believe that market economies are wonderful things, able to adapt to just about anything — anything, that is, except a government policy that puts a price on greenhouse gas emissions. Limits on the world supply of oil, land, water — no problem. Limits on the amount of CO2 we can emit — total disaster.

Funny how that is.

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Norway sees a silver lining to climate change

A recent PlanetArk article highlights the fact that not everyone loses from climate change. Norway is looking at the opportunities that it might throw up.

I suspect the thawing in the ice will lead to a freezing in relations between the large number of countries who have claims to the land and resources currently under the ice.

A military build up is inevitable and Norway may be uncomfortable being stuck between the Russians and Americans.


"Plenty Of Opportunities" From Arctic Thaw - Norway" [PlanetArk]

OSLO - A thaw of Arctic ice will open "plenty of opportunities" in oil and gas exploration and shipping even though the overall impact of global warming will be damaging for the region, Norway's Foreign Minister said.

Jonas Gahr Stoere, who will host a meeting of the eight-nation Arctic Council in the Norwegian city of Tromsoe on Wednesday, said now was the time to work out rules to head off potential disputes over resources in the polar region.

"I think there are plenty of opportunities," Stoere said of businesses looking to the Arctic. Arctic summer sea ice shrank in 2007 to its smallest since satellite records began.

"The resources, the new sailing lanes, these are all opportunities," he said in an interview with Reuters. The Arctic Council talks will be preceded on Tuesday by a meeting about melting ice, including a speech by former US Vice President Al Gore.

But Stoere said the Arctic thaw was damaging overall and would harm the hunting cultures of indigenous peoples. "They experience profound changes in the foundations of their livelihoods," he said.

Among new opportunities, an official US study last year estimated the Arctic had 90 billion barrels of untapped oil, enough to meet current world demand for three years.

And in 2007, the Northwest Passage between the Pacific and Atlantic Oceans opened for a first time in memory. Mining firms could also find new deposits.

The Arctic is warming far faster than the global average, according to the UN Climate Panel. Darker ocean or ground, once exposed, soaks up far more heat than reflective ice.

An ice-free Arctic Ocean could in turn accelerate climate change from Africa to Asia, Stoere said. Among those attending the meeting in Tromsoe will be Russian Foreign Minister Sergei Lavrov and US Deputy Secretary of State Jim Steinberg.

Stoere said he hoped that worries about the melt of the Arctic would help spur governments to work out a strong UN accord to fight climate change at a meeting in Copenhagen in December.

NORTH POLE FLAG

Among emerging disputes, both Russia and Denmark say the North Pole is part of their territory -- Moscow even planted a flag beneath the pole in 2007. Norway agreed northern limits to its territorial waters with a UN commission this month.

"Everybody can make easy predictions that when there are resources and there is a need for resources there will be conflict and scramble," Stoere said. "It need not be that way."

"All Arctic coastal states share an interest in stability," he said. The Arctic Council states are the United States, Russia, Canada, Finland, Sweden, Norway, Denmark and Iceland.

Stoere also said Arctic states might need more of a military presence. "The more activity there is, the more responsibility of the coastal states to ensure there is order," he said.

"Yes, we may need coastguard, we may need presence of military, naval forces...not as a threat (but) as a tool to settle disputes and to maintain order."

An oil spill, more tourism or industrial activity, for instance, demanded search and rescue ability and surveillance.

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Waterworld and the growing crisis

The Economist does water. Some interesting statistics for those of us that like that sort of thing.

There are stormy waters ahead that is for sure.

What is the difference between a brownout and a blackout?

It does seem remarkable that a growing number of the worlds great rivers never reach the sea. That must be bad right?

The world's meat eating frenzy is also costly. This quote is also impressive:

So the shift from vegetarian diets to meaty ones—which contributed to the food-price rise of 2007-08—has big implications for water, too. In 1985 Chinese people ate, on average, 20kg of meat; this year, they will eat around 50kg. This difference translates into 390km3 (1km3 is 1 trillion litres) of water—almost as much as total water use in Europe.

Things will only get worse.

Sin aqua non [Economist]

THE overthrow of Madagascar’s president in mid-March was partly caused by water problems—in South Korea. Worried by the difficulties of increasing food supplies in its water-stressed homeland, Daewoo, a South Korean conglomerate, signed a deal to lease no less than half Madagascar’s arable land to grow grain for South Koreans. Widespread anger at the terms of the deal (the island’s people would have received practically nothing) contributed to the president’s unpopularity. One of the new leader’s first acts was to scrap the agreement.

Three weeks before that, on the other side of the world, Governor Arnold Schwarzenegger of California declared a state of emergency. Not for the first time, he threatened water rationing in the state. “It is clear,” says a recent report by the United Nations World Water Assessment Programme, “that urgent action is needed if we are to avoid a global water crisis.”

Local water shortages are multiplying. Australia has suffered a decade-long drought. Brazil and South Africa, which depend on hydroelectric power, have suffered repeated brownouts because there is not enough water to drive the turbines properly. So much has been pumped out of the rivers that feed the Aral Sea in Central Asia that it collapsed in the 1980s and has barely begun to recover.

Yet local shortages, caused by individual acts of mismanagement or regional problems, are one thing. A global water crisis, which impinges on supplies of food and other goods, or affects rivers and lakes everywhere, is quite another. Does the world really face a global problem?



Not on the face of it. There is plenty of water to go around and human beings are not using all that much. Every year, thousands of cubic kilometres (km3) of fresh water fall as rain or snow or come from melting ice. According to a study in 2007, most nations outside the Gulf were using a fifth or less of the water they receive—at least in 2000, the only year for which figures are available. The global average withdrawal of fresh water was 9% of the amount that flowed through the world’s hydrologic cycle. Both Latin America and Africa used less than 6% (see table). On this evidence, it would seem that all water problems are local.

The trouble with this conclusion is that no one knows how much water people can safely use. It is certainly not 100% (the amount taken in Gulf states) because the rest of creation also has to live off the water. In many places the maximum may well be less than one fifth, the average for Asia as a whole. It depends on how water is returned to the system, how much is taken from underground aquifers, and so on.

But there is some admittedly patchy evidence that, given current patterns of use and abuse, the amount now being withdrawn is moving dangerously close to the limit of safety—and in some places beyond it. An alarming number of the world’s great rivers no longer reach the sea. They include the Indus, Rio Grande, Colorado, Murray-Darling and Yellow rivers. These are the arteries of the world’s main grain-growing areas.

Freshwater fish populations are in precipitous decline. According to the World Wide Fund for Nature, fish stocks in lakes and rivers have fallen roughly 30% since 1970. This is a bigger population fall than that suffered by animals in jungles, temperate forests, savannahs and any other large ecosystem. Half the world’s wetlands, on one estimate, were drained, damaged or destroyed in the 20th century, mainly because, as the volume of fresh water in rivers falls, salt water invades the delta, changing the balance between fresh and salt water. On this evidence, there may be systemic water problems, as well as local disruptions.

Two global trends have added to the pressure on water. Both are likely to accelerate over coming decades.

The first is demography. Over the past 50 years, as the world’s population rose from 3 billion to 6.5 billion, water use roughly trebled. On current estimates, the population is likely to rise by a further 2 billion by 2025 and by 3 billion by 2050. Demand for water will rise accordingly.

Or rather, by more. Possibly a lot more. It is not the absolute number of people that makes the biggest difference to water use but changing habits and diet. Diet matters more than any single factor because agriculture is the modern Agasthya, the mythical Indian giant who drank the seas dry. Farmers use about three-quarters of the world’s water; industry uses less than a fifth and domestic or municipal use accounts for a mere tenth.

Different foods require radically different amounts of water. To grow a kilogram of wheat requires around 1,000 litres. But it takes as much as 15,000 litres of water to produce a kilo of beef. The meaty diet of Americans and Europeans requires around 5,000 litres of water a day to produce. The vegetarian diets of Africa and Asia use about 2,000 litres a day (for comparison, Westerners use just 100-250 litres a day in drinking and washing).

So the shift from vegetarian diets to meaty ones—which contributed to the food-price rise of 2007-08—has big implications for water, too. In 1985 Chinese people ate, on average, 20kg of meat; this year, they will eat around 50kg. This difference translates into 390km3 (1km3 is 1 trillion litres) of water—almost as much as total water use in Europe.

The shift of diet will be impossible to reverse since it is a product of rising wealth and urbanisation. In general, “water intensity” in food increases fastest as people begin to climb out of poverty, because that is when they start eating more meat. So if living standards in the poorest countries start to rise again, water use is likely to soar. Moreover, almost all the 2 billion people who will be added to the world’s population between now and 2030 are going to be third-world city dwellers—and city people use more water than rural folk. The Food and Agriculture Organisation reckons that, without changes in efficiency, the world will need as much as 60% more water for agriculture to feed those 2 billion extra mouths. That is roughly 1,500km3 of the stuff—as much as is currently used for all purposes in the world outside Asia.

The other long-term trend affecting water is climate change. There is growing evidence that global warming is speeding up the hydrologic cycle—that is, the rate at which water evaporates and falls again as rain or snow. This higher rate seems to make wet regions more sodden, and arid ones drier. It brings longer droughts between more intense periods of rain.

Climate change has three big implications for water use. First, it changes the way plants grow. Trees, for example, react to downpours with a spurt of growth. During the longer droughts that follow, the extra biomass then dries up so that if lightning strikes, forests burn more spectacularly. Similarly crops grow too fast, then wilt.

Second, climate change increases problems of water management. Larger floods overwhelm existing controls. Reservoirs do not store enough to get people or plants through longer droughts. In addition, global warming melts glaciers and causes snow to fall as rain. Since snow and ice are natural regulators, storing water in winter and releasing it in summer, countries are swinging more violently between flood and drought. That is one big reason why dams, once a dirty word in development, have been making a comeback, especially in African countries with plenty of water but no storage capacity. The number of large dams (more than 15 metres high) has been increasing and the order books of dam builders are bulging.

Third, climate change has persuaded western governments to subsidise biofuels, which could prove as big a disaster for water as they already have been for food. At the moment, about 2% of irrigated water is used to grow crops for energy, or 44km3. But if all the national plans and policies to increase biofuels were to be implemented, reckons the UN, they would require an extra 180km3 of water. Though small compared with the increase required to feed the additional 2 billion people, the biofuels’ premium is still substantial.

In short, more water will be needed to feed and heat a world that is already showing signs of using too much. How to square that circle? The answer is by improving the efficiency with which water is used. The good news is that this is possible: vast inefficiencies exist which can be wrung out. The bad news is it will be difficult both because it will require people to change their habits and because governments, which might cajole them to make the changes, are peculiarly bad at water policy.



Improving efficiency is doable and industrial users have done it, cutting the amount of water needed to make each tonne of steel and each extra unit of GDP in most rich countries (see first chart). This can make a difference. The Pacific Institute reckons that, merely by using current water-saving practices (ie, no technological breakthroughs) California, a water-poor state, could meet all its needs for decades to come without using a drop more.

Still, industry consumes less than a fifth of the world’s water and the big question is how to get farmers, who use 70-80%, to follow suit. It takes at least three times as much water to grow maize in India, for example, as it does in America or China (see second chart). In some countries, you need 1,500 litres of water to produce a kilo of wheat; in others, only 750 litres. It does not necessarily follow that water is being used unsustainably in the one place and not the other; perhaps the high-usage places have plenty of water to spare. But it does suggest that better management could reduce the amount of water used in farming, and that the world could be better off if farmers did so. Changing irrigation practices can improve water efficiency by 30%, says Chandra Madramootoo, of the International Commission on Irrigation and Drainage. One can, for example, ensure water evaporates from the leaves of the plant, rather than from the soil. Or one can genetically modify crops so they stop growing when water runs dry, but do not die—they simply resume growth later when the rains return.



The world might also be better off, at least in terms of water, if trade patterns more closely reflected the amount of water embedded in traded goods (a concept called “virtual water” invented by Tony Allan of King’s College London). Some benign effects happen already: Mexico imports cereals from America which use 7 billion cubic metres (m3) of water. If it grew these cereals itself, it would use 16 billion m3, so trade “saves” 9 billion m3 of water. But such beneficial exchanges occur more by chance than design. Because most water use is not measured, let alone priced, trade rarely reflects water scarcities.

To make water use more efficient, says Koichiro Matsuura, the head of UNESCO, the main UN agency dealing with water, will require fundamental changes of behaviour. That means changing incentives, improving information flows, and improving the way water use is governed. All that will be hard.

Water is rarely priced in ways that reflect supply and demand. Usually, water pricing simply means that city dwellers pay for the cost of the pipes that transport it and the sewerage plants that clean it.

Basic information about who uses how much water is lacking. Rainwater and river flows can be measured with some accuracy. But the amount pumped out of lakes is a matter of guesswork and information on how much is taken from underground aquifers is almost completely lacking.

The governance of water is also a mess. Until recently, few poor countries treated it as a scarce resource, nor did they think about how it would affect their development projects. They took it for granted.

Alongside this insouciance goes a Balkanised decision-making process, with numerous overlapping authorities responsible for different watersheds, sanitation plants and irrigation. To take a small example, the modest town of Charlottesville in Virginia has 13 water authorities.

Not surprisingly, investment in water has been patchy and neglected. Aid to developing countries for water was flat in real terms between 1990 and 2005. Within that period, there was a big shift from irrigation to drinking water and sanitation—understandable no doubt, but this meant less aid was going to the main users of water, farmers in poor countries. Aid for irrigation projects in 2002-05 was less than half what it had been in 1978-81. Angel Gurría, the head of the Organisation for Economic Co-operation and Development, talks of “a crisis in water financing”.

As is often the way, business is ahead of governments in getting to grips with waste. Big drinks companies such as Coca Cola have set themselves targets to reduce the amount of water they use in making their products (in Coke’s case, by 20% by 2012). The Nature Conservancy, an ecologically-minded NGO, is working on a certification plan which aims to give companies and businesses seals of approval (a bit like the Fairtrade symbol) according to how efficiently they use water. The plan is supposed to get going in 2010. That sort of thing is a good start, but just one step in a long process that has barely begun.

US and Green Protectionism

The US move to become "greener" may have wider political implications. Such protests were not unexpected but China has a point.

Chinese official warns US on protectionism [FT]

A top adviser to the Chinese government on Tuesday warned that a proposed US border tax on carbon sensitive materials “smells of protectionism” and could spark retaliation from developing countries.

During a speech at New York University about how the US and China can forge a closer partnership, Tung Chee-hwa, vice-chairman of the Chinese People’s Political Consultative Conference (CPPCC), the Chinese government’s official advisory, said that a proposed “border adjustment” programme could be challenged through the World Trade Organisation and that he was “distressed” by the new bill introduced to Congress.

The programme in question was introduced earlier this month by two powerful Democrats in the House of Representatives. The bill includes aggressive climate targets to be met through a green house gas emissions cap and trade programme, where companies would be eligible for rebates to compensate for cost they incur. More controversially, the US government would be able to levy import taxes on foreign manufacturers to cover carbon contained in US-bound products.

“This is particularly unfair to China,” Mr Tung, who was chief executive of Hong Kong from 1997 until 2005, said.

In March, Steven Chu, US energy secretary, told Congress that a carbon border tax would help “level the playing field” with countries with looser carbon standards.

The legislation, introduced by Henry Waxman, California Democrat and chairman of the Energy and Commerce Committee and Edward Markey, Democrat from Massachusetts and Chairman of the Energy and Environment Subcommittee, aims to cut green house gas emissions by 20 per cent by 2020 and by more than 80 per cent by 2050, from 2005 levels.

The draft proposal would require electricity suppliers to get 25 per cent of their power from renewable sources, such as wind and solar, by 2025. It would establish a national renewable energy standard and an energy efficiency standard aimed at cutting power demand by 15 per cent by 2020 and natural gas demand by 10 per cent.

On Tuesday Mr Tung said that China was taking its own aggressive measures to combat climate change but that he was concerned about the US taking a more protectionist stance.

“The lesson from 1929 was that we went to protectionism and the whole world collapsed,” he said. “China and America are on the same boat.”

A vote could on the border tax bill could come as early as June, with the Senate expected to make its proposal in the autumn.

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"Controversies in the Economics of Climate Change." Geoffrey Heal at the LSE 6th May 2009

From the inbox:

I am delighted to invite you to a Grantham Research Institute public lecture, to be given by Professor Geoffrey Heal on Wednesday 6 May 2009. The lecture is entitled Controversies in the Economics of Climate Change.

The Stern Review stirred up the controversy surrounding the economics of climate change. This lecture will review these issues and give an assessment of the debate – where it is leading and what issues remain open.

Geoffrey Heal is a visiting professor at the Grantham Research Institute on Climate Change and the Environment at LSE, Paul Garrett Professor of Public Policy and Business Responsibility, and professor of finance and economics at Columbia Business School.

This event will take place from 6.30-8pm in the Hong Kong Theatre, Clement House, LSE, Aldwych. If you would like to attend this event, please email me on V.Pavey@lse.ac.uk

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The truth about energy saving. Is it really so pointless?

From the inbox:

Cambridge University physicist, David MacKay, in a passionate, personal analysis of the energy crisis in the UK, in which he comes to some surprising conclusions about the way forward. The film is based on his new book ‘Sustainable Energy – without the hot air’, in which Prof MacKay has crunched the numbers, comparing renewables such as wind, wave, tide, and solar, and nuclear power with our current consumption of fossil fuels like coal, gas and oil.

A few interesting stats:

All the energy saved in switching off your charger for one day is used up in one second of car-driving. The energy saved in switching off the charger for one year is equal to the energy in a single hot bath.

To provide one quarter of our current energy consumption by growing energy crops would require 75% of Britain to be covered with biomass plantations. To provide 4% of our current energy consumption from wave power would require 500 km of Atlantic coastline to be completely filled with wave farms.

If you fly to Cape Town and back once per year, the energy you use in that trip is nearly as big as the energy used by driving an average car 50 km per day, every day, all year.

Driving an average car 50 km per day uses 40 kWh per day. Covering 10% of the country with wind farms would yield 20 kWh per day per person on average.

MacKay takes a hard look at what we need to do to overcome our fossil fuel addiction: “There’s no shortage of advice on how to ‘make a difference,’ but the public is confused, uncertain whether these schemes are fixes or figleaves. Numbers are chosen to impress, to score points in arguments, rather than to inform. In contrast, my aim here is to present honest, factual numbers in such a way that the numbers are comprehensible, comparable, and memorable. The numbers are made accessible by expressing them all in everyday personal units.”

For more information – go to David MacKay’s website: www.withouthotair.com



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