Economist - special report on "Forests"

The always excellent economist has a great "special report" on forests. It is a fact filled and well written report.

The implications are serious and it is about time this was highlighted. The dynamic and feedback loops are crucial and deforestation is one reasons why climate change could speed up far beyond that by which we could do anything to further increases.

Think "tipping points". This is an impressively gloomy report and well timed.

What is interesting is the issue of paying forest owners not to deforest. Is this a good use of money? Should the West be paying developing countries not to deforest?

I have picked out just a few of the more choice quotes to provide a taster.

Seeing the wood [Economist]

This is the latest reason—and it is a big one—why destroying forests is a bad idea. Roughly half the dry weight of a tree is made up of stored carbon, most of which is released when the tree rots or is burned. For at least the past 10,000 years man has been contributing to this process by hacking and burning forests to make way for agriculture. About half the Earth’s original forest area has been cleared. Until the 1960s, by one estimate, changes in land use, which mostly means deforestation, accounted for most historic man-made emissions. And its contribution to emissions is still large: say 15-17% of the total, more than the share of all the world’s ships, cars, trains and planes.

Stopping deforestation would appear easier that weening us off oil and cars.

The outlook for the Amazon is also grave. Recent modelling suggests that the mutually reinforcing effects of increasing temperatures and aridity, forest fires and deforestation could bring the rainforest far closer than previously thought to “tipping points” at which it becomes ecologically unviable. So far 18% of the rainforest has been cleared. The loss of another 2%, according to a World Bank study last year, could start to trigger dieback in the forest’s relatively dry southern and south-eastern parts. A global temperature increase of 3.5%, comfortably within the current range of estimates for the end of this century, would put paid to half the rainforest. This would release much of the 50 gigatonnes of carbon it is estimated to contain—equivalent to ten years of global emissions from burning fossil fuels.

Only 2% to go until we reach the point of no return. We may get there a lot sooner that you think and then it will be too late.

The Earth’s need for forests to soak up carbon emissions is almost limitless. Saving the forest that is left should therefore be considered a modest aim. But even that will require huge improvements in forest management, such as reforming land registries and tightening up law enforcement. Above all, it will require governments to prize forest very much more highly than they do now. Otherwise there will be no chance of the many reforms required outside the forestry sector: in land-use planning and rural development, in agriculture, energy and infrastructure policies, and much else. It will also require politicians to get serious about climate change. All that amounts to a revolution, which is a lot to hope for. But if anything can help bring it about, forests might.

They are crucial in all sorts of ways because of the manifold services they provide. Western taxpayers need the Amazon rainforest to control their climate. Brazil needs it to help feed its rivers and generate hydro-power. Amazonian soya farmers need it to guarantee them decent rainfall. Yet policies at every level conspire to wreak its destruction. Changing them, in Brazil and across the tropical world, is a daunting task. But it is not impossible—and it must be done. The cost of failure would simply be too great.

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China seeks binding deal "with principles"

China was unhappy with the post-Copenhagen reviews some of which squarely blamed China for the failure to come up with a deal that could be considered anywhere close to a "good deal for the climate".

China will not attempt to take the moral high ground and to put the pressure back on the US. My understanding is that China does accept its obligations and is making considerable progress to reduce per-capita emissions even in the face of continued economic growth.

Of course China has a strong incentive with China likely to experience significant discomfort from climate change induced whether events and rising sea levels.

What is interesting is China is blaming US politics for the failure at Copenhagen. It is hard to argue against this claim. Obama is well meaning but will find it hard to fight against the lobbying powers of big industry in the US.

What is more interesting from this small news item is the following quote:

Li Gao, a senior Chinese negotiator on climate change, said his government would remain unyielding on issues of "principle" in the talks aimed at forging a successor to the Kyoto Protocol.

What this means is that China will require a deal along the lines of the 80:20 that has been previously mooted. The West reduces emissions by 80% and the developing world by 20%. After all, the vast majority of CO2 in the atmosphere was put there by us.

What does this posturing really mean? It means that chances of a deal are close to zero and our expectations for Cancun should be low. Mine never got off "low" before Copenhagen and are certainly no higher. Chinese "principles" are hard to change.


China Seeks Binding Climate Treaty Late 2011: Report [Planet Ark]

China wants the world to seal a binding climate change treaty by late 2011, a Chinese negotiator said in a newspaper on Friday, blaming U.S. politics for impeding talks and making a deal on global warming impossible this year.

Li Gao, a senior Chinese negotiator on climate change, said his government would remain unyielding on issues of "principle" in the talks aimed at forging a successor to the Kyoto Protocol. The first period of that key treaty on fighting global warming expires at the end of 2012.

Li also vowed to keep pressing rich countries to promise deeper cuts to carbon dioxide and other greenhouse gases from human activity that are stoking global warming, said the China Economic Times, which reported his comments.

Many governments and experts have already dismissed hopes for a full climate change treaty at the next major negotiation meeting, to be held in Cancun, Mexico at the end of this year.

Li underscored that gloom, but also said his government hoped Cancun could be a stepping stone to negotiations next year that will culminate in a meeting in South Africa in November.

"China hopes that based on the outcomes from Cancun, we'll be able to settle on a legally binding document at the meeting in South Africa," Li said, according to the Chinese-language newspaper.

"After the South Africa meeting, we'll move to concrete implementation."

Li oversees the international climate change negotiations office at China's National Development and Reform Commission, a sprawling agency that steers economy policy.

The deadline for a new binding global pact was originally set for late 2009, but a final round of negotiations in Copenhagen ended in acrimonious failure, with some Western politicians saying China was not willing to compromise.

China will be a crucial player in the follow-up talks.

With its 1.3 billion people, it is the world's biggest emitter of greenhouse gases from human activity, but is also a developing country with average emissions per capita well below those of wealthy economies.

The United States, European Union and other governments want China to take on stronger commitments to control and eventually cut its emissions.

But Li said it was U.S. political uncertainty that had stymied any hope of the Cancun meeting agreeing on a treaty to succeed Kyoto.

"The biggest obstacle comes from the United States," he said. "Without any (climate change) legislation, it can't possibly join in a legally binding international document."

The U.S. Senate has dropped efforts to put emissions curbs in an energy bill now focused on reforming offshore drilling.

Negotiators from nearly 200 nations are haggling over a complex draft accord on climate change, and a further round of talks at the northern Chinese port of Tianjin opens on October 4.

Li said Beijing would keep pressing for certain principles, including that developing countries like China should not shoulder the same absolute caps on emissions that rich countries must take on.

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Is There a Green Paradox?

This is a good question. Can it really be the case that an increase in carbon taxes could lead to an increase in emissions? Theoretically this is possible.

What about in the real world? I can see the intuition. If I owned a dirty coal field and I could see that the world was turning green and that carbon taxes were likely to increase to such an extent that power stations would be forced to switch to natural gas then my incentive would be to get that coal out and sold as quick as possible.

I could then reinvest the profits in a wind farm somewhere to take advantage of the uneconomic subsidies and feed in tariffs that encourage me to build wind farms where there is very little wind.

A new paper Michael Hoel looks at this issue. One of his conclusions is:

If a sufficiently high carbon tax is introduced, emissions will for sure decline. The possibility of a green paradox is therefore not an argument against the use of a carbon tax, but rather an argument against setting the carbon tax too low.

Perhaps there is some hope. This is an interesting topic for debate.

It should be noted that Professor Peter Sinclair (University of Birmingham) published a paper on the "Green paradox" as early as 1992.

High Does Nothing and Rising Is Worse: Carbon Taxes Should Keep Declining to Cut Harmful Emissions

Peter J N Sinclair

The Manchester School of Economic & Social Studies, 1992, vol. 60, issue 1, pages 41-52

Abstract: It is often that greenhouse gas emissions should be curbed by taxes on activities that generate them. This paper continues the case for taxes on fossil fuels in the context of an infinite-horizon growth model. Under simple conditions, a constant tax rate on energy use is found to exert no real effect: energy taxes just squeeze rents and have no impact on the time-profile of extraction. Expectations of falling energy taxes are what is needed to reduce extraction rates and postpone such adverse consequences that carbon emissions induce.

Here is the new paper:

Is There a Green Paradox?

Michael Hoel
University of Oslo; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

September 20, 2010

CESifo Working Paper Series No. 3168

Abstract:
A sufficiently rapidly rising carbon tax may increase near-term emissions compared with the case of no carbon tax. Even so, such a carbon tax path may reduce total costs related to climate change, since the tax may reduce total carbon extraction. A government cannot commit to a specific carbon tax rate in the distant future. For reasonable assumptions about expectation formation, a higher present carbon tax will reduce near-term carbon emissions. Moreover, whatever the expectations about future tax rates are, near-term emissions will decline for a sufficiently high carbon tax. However, if the near-term tax rate for some reason is set below its optimal level, increased concern for the climate may change taxes in a manner that increases near-term emissions.

Keywords: climate change, exhaustible resources, green paradox, carbon tax

JEL Classifications: Q31, Q38, Q41, Q48, Q54, Q58
Working Paper Series

Collapse - "the inevitable destruction of industrialised civilisation as we know it".

It is difficult for economists to resist documentaries about the collapse of industrial civilisation (as we know it).

As a blogger I am happy to fan the flames of publicity for this doomsday tale (even if it is the old "peak oil" doomsday tale).

DVD out soon apparently. To some, watching a man in a room for 82 minutes talking about "his apocalyptic vision of the future, spanning the crisis in economics, energy, environment and more" might appear to lack a certain something.

However, please note, it has (1) economics (2) environment (3) crisis.

What more could you want from a film?

Filmed in a room that looks like a bunker, Ruppert sits alone in a chair, chain-smoking cigarettes and waxing lyrical on his belief that the world is doomed and we must be prepared. With his practiced and commanding rhetorical style, he recounts his career and spells out the disaster he sees ahead with his unnervingly persuasive world-view. He spouts forth passionately over the issue of ‘peak oil’ the concern raised by scientists since the 1970s that the world will eventually run out of oil and that life will change beyond all recognition. Using news reports and data that’s available on the internet he applies a unique interpretation, portraying a future that resembles apocalyptic science fiction.

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The Russians are coming - "why Kyoto is useless"

Alexander Bedritsky, the Russian advisor on climate change, has come out to state what everyone else is thinking, already knows but is afraid to say clearly.

The revelation is that Kyoto will have "virtually no" impact on slowing global warming without the US, China and other developed countries.

There is the argument that something HAS to be better than nothing (surely) but there is an element on truth to his words.

The issue is whether 28% of the world can actually so something or should be just all give up and go home (preferably to a house on the top of a hill).

It is interesting to note that it took an environmental disaster (the summer fires in Russia) for the Russian's famed climate scepticism to change.

Kremlin Adviser Says Kyoto Can't Stop Climate Change[Planet Ark]

The Kyoto Protocol will have virtually no impact on slowing global warming unless it expands to take in the United States, China and more developing countries, Russia's chief climate negotiator said on Wednesday.

Russia is the world's fourth largest emitter of carbon dioxide and a key player in United Nations talks about whether to extend Kyoto when its first phase lapses in 2013, or replace it with a wider treaty that brings in poorer nations.

President Dmitry Medvedev's top climate change adviser, Alexander Bedritsky, said Russia is demanding a new deal as the 40 industrialized nations bound by Kyoto represent only 28 percent of global emissions.

"28 percent of the world cannot change anything," Bedritsky told journalists on the sidelines of an Arctic forum in Moscow.

"Countries can work and fulfill their targets, but nothing will change. The burden on the climate will grow."

Instead, the next round of U.N. climate talks in Cancun, Mexico in December should develop a non-binding agreement between countries representing 81 percent of emissions agreed at a U.N. climate summit in Copenhagen last year, he said.

The Kyoto Protocol was agreed at a 1997 U.N. conference to reduce greenhouse gases emitted by developed countries by an average of 5.2 percent below 1990 levels during 2008-2012. A total of about 190 nations have ratified the pact.

"We want cooperation in the period after 2012 to be all inclusive," Bedritsky said. The United States, which refused to ratify Kyoto, agreed to the Copenhagen deal.

Bedritsky said no binding agreement would be signed at the conference in Cancun but that he expected progress toward a deal. At the top of Russia's list of demands is recognition for the role its vast forests play in absorbing carbon dioxide.

While many Western nations are struggling to meet their Kyoto obligations, in 2008 Russia was 33 percent below its Kyoto target of keeping emissions below 1990 levels, mostly due to the collapse of high-polluting Soviet industries after 1991.

Moscow plans to let emissions rise from current levels to between 15 and 25 percent bellow 1990 levels by 2020, Bedritsky said, despite pleas by many nations for a tougher goal.

RUSSIAN DOUBTS RECEED

Russia developed a reputation as a climate skeptic after several senior officials suggested global warming might help Russia by easing its harsh winters, with Prime Minister Vladimir Putin saying Russia could save money on fur coats.

But a deadly heat wave this summer broke all temperature records, killed dozens in wildfires and destroyed a quarter of Russia's grain crop, prompting Medvedev to publicly acknowledge that the country's climate was changing.

Bedritsky said Russia had decided the threats from global warming outweigh the potential benefits, which include saving on heating costs and increasing the amount of arable land.

"But this does not counterbalance the need to act to decrease the human burden on climate and the ecosystem, the need to adapt to the changes and the need to neutralize the dangerous consequences."

He said scientists cannot say unequivocally there is a direct link between climate change and the heat wave in Russia and the flooding in Pakistan, but that they are obvious changes. "But I think of course you can consider them as signs of changes," he added.

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Malthus is back - in a petri dish

A new book on the evolution and future of mankind by "Lawrence Wood, Ph.D., a retired physicist" paints a grim picture. The original article is HERE. [From the inbox].

His breakthrough is to use a petri dish:

“Bacteria in a Petri dish will grow until they fill the dish, consume all the nutrients within it, and then die,” he says. “Earth is mankind’s Petri dish and we don’t really know how big it is. But we do know that it is finite and thus our population cannot grow indefinitely. Either we will control our population, or it will be controlled for us.” That latter scenario is one filled with mass starvation and violence as individuals and societies fight for their survival.

A cheery start to the day but there is more.

In his book, Wood details the cause of man’s exponential population growth. “Behavioral modifications were introduced by the process that caused evolution to occur early in the development of multi-celled life in order to ensure species survival,” he says. “These are the root cause of our propensity for excess population.” By their nature, he explains, these modifications cannot be de-selected or species survival would be imperiled

Wood, and many scientists, see population control as mankind’s only hope for survival. “It’s the elephant in the room,” he says. “We know Earth can not continue to sustain us. People discuss what to do about it, but are afraid to look at the only real answer, population control—family planning—because it is so controversial.” It is especially abhorrent to many religions.

The retired physicist dedicates much of his new book to a detailed explanation of evolution as well as an exploration of why humans first embraced creationism and then later intelligent design. He says he wrote his controversial book because he believes if people understand why we have the population explosion, we are more likely to take action to control it.

Just as evolution provided humans with the drive to reproduce, it also provided us with the cerebral cortex, enabling higher brain functions including reasoning. “Humans have the means for coping with the problem,” says Wood. “What is uncertain is whether we will use it. The fate of the human race is going to be determined by whether science wins, or superstition does.”

His conclusion could be considered in some quarters to be controversial - does science winning mean Malthus winning eventually?

The fate of the human race is going to be determined by whether science wins, or superstition does.

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The UK's "Climate Change" department goes up in smoke

Is the department for climate change is about to become a victim of the fiscal cuts and be swallowed up by that venerable green department - the Treasury of Stern Review fame?

I particularly like Chris Huhnes argument that he worries his climate change department staff will "go native" if relocated to the treasury. It paints an interesting picture.

Does this mean the sandal wearing hippies in the climate change department will suddenly cut their hair and start wearing pin stripe suits and bowler hats?

Predictably the head of Greenpeace calls the proposal "sheer insanity".

Is this just another example of "green issues" being the first to go when real economic pain kicks in? Is climate change concern a luxury good?

Chris Huhne fights Treasury to save his climate department [Guardian]

Climate change secretary Chris Huhne is fighting to defend his department's funding and independence, fending off a suggestion that his civil servants should be moved to the Treasury to cut costs.

Huhne is having to resist the Treasury on numerous policy fronts. He has rejected the relocation idea, fearing his department's civil servants would "go native" if they moved into offices in the Treasury.

The Department of Energy and Climate Change (Decc) was created in 2008 by combining responsibilities which had been part of the previous business and environment departments. The move was praised at the time as an attempt to connect two areas of policy that had sometimes acted in competition.

But when all government departments were asked to model the effect of 40% cuts over the summer, officials at Decc told ministers that cuts of that level to its £3.2bn budget would make it unable to stand alone as a viable entity. At that time it was suggested it merge with the business department, but that was never formally suggested to the Treasury. Instead the Treasury renewed a push to get Decc relocated.

Decc and the Treasury would not be the only ministries sharing. The permanent secretary at the department for culture, media and sport is making plans to move in to the department for international development.

The news came today as Huhne gave his speech to the Liberal Democrat conference. His pitch was that the government wanted to foster a "third industrial revolution" in low-carbon technology. But the techno-optimism of the speech sat awkwardly with the news that he has been forced to contemplate breaking up his department.

Observers are concerned about the relationship between Decc and the Treasury in the run-up to the forthcoming spending review, which will decide all departments' funding for the next five years.

Within a reduced budget, the climate change secretary is pushing to secure money for a green investment bank and the four carbon capture and storage (CCS) demonstrations to pioneer cleaner coal power stations, brought in by the former climate change secretary, Ed Miliband. Senior civil servants at Decc say the Treasury does not want to provide the upfront costs of the demonstrations, known as CCS4. Senior sources concede the money for CCS4 was in jeopardy but insist that it is now safe.

The bank is a coalition pledge to create an institution supporting the development of low-carbon technologies. Huhne is in negotiations with the economic secretary to the Treasury, Justine Greening, and business secretary, Vince Cable, and their officials over whether the bank would be able to lend money – which Huhne believes to be vital – and the level of public money the Treasury will put into it.

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The coalition has stated it will be the "greenest government in history", and Huhne has told MPs that the department is fostering a "third industrial revolution".

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John Sauven the head of Greenpeace called the proposal "sheer insanity". "I think it would now be inconceivable for the government to back down after promising so much only a couple of months ago."

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Are volcanoes the answer to our energy problems?

Volcanoes are hot - an obvious place to start when thinking about how to solve the world's energy problems.

I am currently working on issues related to hydro power - volcanoes could make a useful addition. Geothermal has massive potential to supply our energy needs.

With improvements in technology geothermal and great potential (and it is a relatively green source of energy).

The problems with hydroelectric are well documented but there is a nice summary in this article.

Hydroelectricity depends on rainfall and is vulnerable to hurricanes that can wash mud and debris into rivers and clog dams. Such storms are expected to increase in the frequency and intensity as the planet warms.

"With climate change there's uncertainty over the future behavior of water resources," said Eduardo Noboa, a renewables expert at the Latin American Energy Organization, or OLADE. "We're going to see a vulnerability in hydroelectric systems."

Dams, which can flood vast areas of land during their construction, are unpopular in rural areas where families rely on farming and have trouble finding arable land.

In Guatemala, hydroelectric projects have a haunted past after hundreds of Mayan villagers protesting the building of a dam on the Chixoy river were massacred by security forces in 1978 at the height of the country's civil war.

The dam and its reservoir, which now generates around 15 percent of Guatemala's electricity, displaced thousands of people in the country's central highlands.

The question then is why the World Bank are so keen to push for additional hydroelectric power in Africa?

Watch this space.

Central America Taps Volcanoes For Electricity [planetark]

Dotted with active volcanoes, Central America is seeking to tap its unique geography to produce green energy and cut dependence on oil imports as demand for electricity outstrips supply.

Sitting above shifting tectonic plates in the Pacific basin known to cause earthquakes and volcanic eruptions, the region has huge potential for geothermal power generated by heat stored deep in the earth.

Geothermal power plants, while expensive to build, can provide a long-term, reliable source of electricity and are considered more environmentally friendly than large hydroelectric dams that can alter a country's topography.

Guatemala, Central America's biggest country, aims to produces 60 percent of its energy from geothermal and hydroelectric power by 2022.

The government is offering tax breaks on equipment to set up geothermal plants and electricity regulators are requiring distributors buy greater proportions of clean energy.

Some 1,640 feet below the summit of Guatemala's active Pacaya volcano, which exploded in May, pipes carrying steam and water at 347 degrees Fahrenheit (175 degrees Celsius) snake across the mountainside to one of two geothermal plants currently operating in the country.

MOLTEN ROCK

Run by Israeli-owned Ormat Technologies Inc, the plant harnesses energy from water heated by chambers filled with molten rock deep beneath the ground.

The company has been operating two plants in Guatemala for three years and wants to expand but is weighing the risks of drilling more costly exploratory wells.

"There's a phase where you just have to drill and see," Ormat's representative in Guatemala, Yossi Shilon, told Reuters. "The problem is that you risk a very expensive investment and are not always satisfied with the results."

Ormat's project is only a 20 MW station but Guatemala says the country has the potential to produce up to 1000 MW of geothermal energy, a third of projected energy needs in 2022.

Other Central American countries are already forging ahead in this emerging technology.

More than a fifth of El Salvador's energy needs come from two geothermal plants with installed capacity of 160 MW and investigations are being carried out to build a third.

Costa Rica, which has 152 megawatts of capacity in four geothermal plants, is due to bring a fifth plant online in January 2011 and is looking into building two more.

Nicaragua generates 66 MW from geothermal energy and in the next five years plans an increase to 166 MW.

Guatemala only produces a tiny amount of its own oil and spends about $2 billion a year on imports. The aim is to save money on energy costs and join international efforts to cut green house gas emissions, issues that will be on the table at global climate change talks this November in Cancun, Mexico.

BETTER THAN DAMS

Central America, heavily dependent on agriculture, is feeling the effects of extreme weather. Tropical Storm Agatha killed nearly 200 people in the region earlier this year.

The largely poor countries are highly reliant on hydroelectricity, the number two source of energy after oil, but environmental activists and energy experts say harnessing geothermal energy has distinct advantages over dams.

Hydroelectricity depends on rainfall and is vulnerable to hurricanes that can wash mud and debris into rivers and clog dams. Such storms are expected to increase in the frequency and intensity as the planet warms.

"With climate change there's uncertainty over the future behavior of water resources," said Eduardo Noboa, a renewables expert at the Latin American Energy Organization, or OLADE. "We're going to see a vulnerability in hydroelectric systems."

Dams, which can flood vast areas of land during their construction, are unpopular in rural areas where families rely on farming and have trouble finding arable land.

In Guatemala, hydroelectric projects have a haunted past after hundreds of Mayan villagers protesting the building of a dam on the Chixoy river were massacred by security forces in 1978 at the height of the country's civil war.

The dam and its reservoir, which now generates around 15 percent of Guatemala's electricity, displaced thousands of people in the country's central highlands.

Geothermal plants by contrast are compact and companies, learning from the mistakes of the past, say they are making an effort to provide nearby towns with easy power access.

How to track "climate finance pledges" - who are the laggards?

The WRI have an excellent new website that allows the reader to check on how much each developed country is coughing up to fight climate change.

The last update is 12th August 2010.

The numbers are a little higher than I expected actually with $28 billion already pledged.

Any questions you might have are addressed at the website.

Japan and the EU are leading the way - Japan has currently pledged around 5 times as much as the US ($3,029million) with the UK just a little behind ($2,800 million).

Interesting numbers.

Summary of Developed Country ‘Fast-Start’ Climate Finance Pledges [WRI]

The Copenhagen Accord commits developed countries to collectively provide resources “approaching USD 30 billion for the period 2010 - 2012” to support developing countries’ climate efforts. This so-called “fast-start” finance will help developing countries, particularly the poorest and most vulnerable, mitigate (reduce) their greenhouse gas emissions, and adapt and cope with the effects of climate change. These pledges also present an opportunity to build trust between developed and developing countries in the international climate arena, in turn fostering progress towards a comprehensive post-2012 international climate agreement.

WRI has carried out a preliminary analysis based on available information on countries’ immediate pledges announced thus far. The accompanying table sets out both the amounts and the mechanisms by which funding would be delivered. WRI has also looked at whether these pledges will provide “new and additional” funds compared to what developed countries already provide through official development assistance.

This table will be continuously updated as more information becomes available.

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Equity in Climate Change

The stumbling block to progress on climate changes hinges on different countries with different perceptions of what is fair. It is all about "equity" and "justice" - terms economists often struggle with.

I believe the developing world will settle for the 80/20 split on who pays - the developed world paying the lions share.

The US is unlikely to play ball.

The following paper provides an analytical approach

Equity in Climate Change: An Analytical Review [PDF]
Aaditya Mattoo
Arvind Subramanian

Abstract

How global emissions reduction targets can be achieved equitably is a key issue in climate change discussions. This paper presents an analytical framework to encompass contributions to the literature on equity in climate change, and highlights the consequences—in terms of future emissions allocations—of different
approaches to equity. Progressive cuts relative to historic levels—for example, 80 percent by industrial countries and 20 percent by developing countries—in effect accord primacy to adjustment costs and favor large current emitters such as the United States, Canada, Australia, oil exporters, and China. In contrast, principles of equal per capita emissions, historic responsibility, and ability to pay
favor some large and poor developing countries such as India, Indonesia, and the Philippines, but hurt industrial countries as well as many other developing countries. The principle of preserving future development opportunities has
the appeal that it does not constrain developing countries in the future by a problem that they did not largely cause in the past, but it shifts the burden of meeting climate change goals entirely to industrial countries. Given the
strong conflicts of interest in defining equity in emission allocations, it may be desirable to shift the emphasis of international cooperation toward generating a low-carbon technology revolution. Equity considerations would then play a role not in allocating a shrinking emissions pie but in informing the relative contributions of countries to generating such a pie-enlarging revolution.

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Progress on a "green fund"

One "climate change" solution is the creation of a "green fund". There is some progress and this should be seen as low hanging fruit.

The following quote sums up my view on this issue.

Connie Hedegaard, the European Union's climate commissioner, said that there was "some convergence" on the Green Fund but little sign of movement on underlying issues from China and the United States, the top greenhouse gas emitters.

Progress Seen On "Green Fund" For Climate Deal

Almost 50 nations made progress on Friday toward a "Green Fund" to help poor countries fight global warming but hosts Mexico and Switzerland said a full U.N. climate treaty was out of reach for 2010.

Environment ministers and senior officials meeting in Geneva also examined how to raise a promised $100 billion a year in climate aid from 2020 -- perhaps from carbon markets, higher plane fares or taxes on shipping -- to be managed by the Fund.

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Mexico will host an annual U.N. climate meeting in Cancun from November 29-December 10. A Green Fund is meant to help poor nations shift from fossil fuels and cope with projected floods, droughts, mudslides and rising seas caused by climate change.

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"We created a lot of expectations in Copenhagen that we would get a comprehensive, legally binding solution. We are no longer fixated on that," Swiss Environment Minister Moritz Leuenberger told a news conference with co-host Espinosa.

FORESTS, CLEAN TECH

Espinosa said a Green Fund would only be agreed as part of a broad package in Cancun, including ways to share clean-energy technologies or protect carbon-absorbing forests. She said all elements of the package had to be agreed, or none.

U.S. climate envoy Todd Stern told a news conference that the meeting had been "pretty constructive."

"The biggest issue is...this has to be part of a package. We are not going to move on the Green Fund, and the $100 billion, if issues central to the Copenhagen Accord, including mitigation and transparency, don't also move," he said.

Stern also reiterated that President Barack Obama was committed to cutting U.S. greenhouse gas emissions by 2020 even though the Senate has failed to pass legislation. The United States is the only major developed nation with no legal cap.

Connie Hedegaard, the European Union's climate commissioner, said that there was "some convergence" on the Green Fund but little sign of movement on underlying issues from China and the United States, the top greenhouse gas emitters.

"We've seen nothing new coming out of the U.S., nothing new coming out of China. So we have to be very practical," she said of a focus on steps that fall short of a treaty.

Earlier, the Netherlands launched a U.N.-backed website (www.faststartfinance.org) to try to track how far rich nations, struggling with austerity, are able to keep a pledge made in Copenhagen to give poor nations $30 billion in "new and additional" climate aid from 2010-12.

Christiana Figueres, the U.N.'s climate chief, said the cash was a "golden key" to convince poor nations that the rich were serious in taking the lead to curb global warming. Under the Copenhagen Accord, flows would surge to $100 billion a year from 2020.

So far, the website lists cash promises by 6 European donors including Germany and Britain and 27 recipients from Bangladesh to the Marshall Islands. Stern said Washington would submit U.S. data in coming weeks.

Many of the developing nations' sites, listing cash received, are blank.

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But a commentary in the Beijing Daily last week said that an increased frequency of disasters meant that "climate change presents a real threat to China's natural ecological systems and economic and social development."

Here is the academic research follow-up to the previous post.  The modelling of low probability of extreme events is a useful exercise (as the recent financial crisis also proves).

Global Warming and Extreme Events: Rethinking the Timing and Intensity of Environmental Policy

Yu-Fu Chen
University of Dundee - Department of Economic Studies

Michael Funke
University of Hamburg - Department of Economics and Business Administration; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)


July 29, 2010

CESifo Working Paper Series No. 3139

Abstract:     
The possibility of low-probability extreme events has reignited the debate over the optimal intensity and timing of climate policy. In this paper we therefore contribute to the literature by assessing the implications of low-probability extreme events on environmental policy in a continuous-time real options model with “tail risk”. In a nutshell, our results indicate the importance of tail risk and call for foresighted pre-emptive climate policies.
Keywords: climate policy, extreme events, real options, Levy process
JEL Classifications: D81, Q54, Q58
Working Paper Series

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Extreme Weather - no help to climate talks

The deadlock over who pays for mitigating against the ravages of climate change is no closer to a solution.

I keep meaning to post my own slides on this topic and will do one day.

The standard newspaper reporting correctly paints a pretty hopeless scenario despite heatwaves in Russia and floods in Pakistan.

Even if the Russian president and the leaders in Islamabad are blaming their current woes on climate change there will be the usual cry from climate change sceptics that it is all a coincidence right. These are just the usual fluctuations in the weather that could have happened with or without 100 years of man made pollution.

So is Russia (the third largest emitter) going to do anything - not likely.

At least China is opening its eyes to the very real possibility that environmental degradation and climate change could impact growth in the future.

"But a commentary in the Beijing Daily last week said that an increased frequency of disasters meant that "climate change presents a real threat to China's natural ecological systems and economic and social development.""

They are correct although China is fully aware of its responsibilities but it cannot act alone. Without US cooperation there will be no deal.

Extreme Weather Unlikely To Help Climate Talks [Planet Ark]

Extreme weather in 2010 will spur more strident calls for action to combat global warming but is unlikely to break a deadlock at U.N. climate talks about sharing the burden between rich and poor.

Islamabad, for instance, has blamed mankind's emissions of greenhouse gases for devastating floods that have killed up to 1,600 people. And Russian President Dmitry Medvedev similarly directly linked the summer heat wave on global warming.

But there is no sign so far that major emitters -- Moscow is the number three greenhouse gas emitter behind China and the United States -- are offering to do more to combat climate change to overcome gridlock at U.N. talks.

One delegate at the last U.N. talks, in Bonn in early August, said there was a "huge sense of inertia" despite worries about extreme weather and U.N. projections that 2010 would be the warmest year since records began in the 1850s.

And there are risks that extreme weather will add to rather than resolve tensions between rich nations, historically most to blame for global warming, and poor countries most vulnerable to floods, droughts and cyclones.

Climate change might even supplant decades-old debate about the legacy of colonial rule as a cause of friction between rich and poor nations.

"Global warming could turn into the post-colonial argument, which could destroy much of the negotiating possibilities," said Johan Rockstrom, head of the Stockholm Resilience Center at Stockholm University.

MORE REAL

"Climate change is becoming a much more firm reality on the ground for many countries," said Saleemul Huq, a senior fellow at the International Institute for Environment and Development in London.

He said that would bring a greater sense of urgency at the next annual U.N. climate talks of environment ministers in Mexico, from November 29-December 10, after the Copenhagen summit last December agreed only a non-binding deal to slow climate change.

Rich and poor nations are already split about how to share out needed curbs on greenhouse gas emissions. Developing nations say the rich must make far deeper cuts while the rich want poor nations to do more to limit their growing emissions.

Experts doubt major breakthroughs at the Cancun talks, partly because the United States has not joined other developed nations in capping emissions.

Russia and Pakistan have squarely linked extreme weather to global warming -- going beyond the views of most climate scientists that climate change merely loads the dice in favor of extreme weather but cannot be linked to individual events.

Pakistan's Environment Minister Hameed Ullah Jan Afridi said global warming was the "main cause" of floods and noted that Pakistan emits just 0.4 percent of world greenhouse gases. Up to 1,600 people have been killed and two million made homeless in Pakistan's worst floods in decades.

Medvedev said of wildfires and Russia's drought on August 4: "Unfortunately, what is happening now in our central regions is evidence of this global climate change, because we have never in our history faced such weather conditions in the past."

"That's a very good sign for the Russian public, which still has a lot of doubts about climate change," said Alexei Kokorin of the WWF conservation group in Russia. He said many Russians doubted that global warming was caused by mankind.

Arild Moe, an expert on Russian climate policy at the Fridtjof Nansen Institute in Oslo, said Medvedev had sometimes failed to carry out hints of tougher policies in the past.

"Medvedev has said many correct things on many issues, from corruption to the role of NGOs, but they have not got embedded in a legal process," Moe said.

And Moscow's goal for greenhouse gas emissions in 2020 foresees a rise from current levels. Russia's emissions tumbled after the 1991 collapse of the Soviet Union and were still 33 percent below 1990 levels in 2008.

China, the top greenhouse gas emitter ahead of the United States, has not directly blamed climate change for floods and landslides that have killed more than 2,000 people.

But a commentary in the Beijing Daily last week said that an increased frequency of disasters meant that "climate change presents a real threat to China's natural ecological systems and economic and social development."

China's Xie Zhenhua, head of the powerful National Development and Reform Commission, called in January for an "open attitude" to climate science, saying some believed change was caused by "a cyclical element of the nature itself."

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A lighter side to CO2

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"Mappiness"

Is this the future of academic research? It would be good to see this working. As a poor academic I cannot afford a iPhone but I am sure many of you out there can.

I link the idea although I remain sceptical about how useful this data will be from an environmental economics context.

From the inbox:

At the happiness & environment workshop in Stirling in April I spoke briefly about an upcoming project called 'mappiness'. It's a free iPhone app that rather simply implements the Experience Sampling Method, including use of GPS (linked to environmental data using GIS at the analysis stage).

mappiness is now live, with its own website: http://www.mappiness.org.uk/

First, I'd be very grateful for any feedback on the website, the app, and/or the broader methodology.

Second, since recruitment to the study is entirely opportunistic, I'd be thrilled if you'd pass on the details to any individuals, mailing lists, blogs, etc. which you think might be interested.

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Climate Change and the Spread of Tropcial disease: a fuss about nothing?

There is considerable debate about the impact of climate change on the spread of tropical diseases.

Tropical diseases are typically a list of infectious diseases found in developing countries and includes such hard to spell words as "malaria, schistosomisasis, dengue, trypanosomiasis, leprosy, cholera and leishmaniasis".

Insects usually carry the can for spreading these diseases.

What do these diseases have in common? Whilst the disease itself is happy to spread in any climate the insects tend to like hot countries.

So, the planet warms up, insects can live in hitherto uninhabitable regions and the next thing you know those of us in colder countries (such as the UK) are coming down with some pretty nasty diseases.

The WTO estimate the diseases above cause about 250 million "acute illness" cases and 880,000 deaths a year.

So this is something to worry about right? An increase in the global temperature of 3 degrees will spell economic and social catastrophe right?

Not according to a new paper by Gollin and Zimmerman. Using a heterogeneous agent dynamic general equilibrium model they show there is really not much to be worried about.

I have a feeling some readers remain skeptical. In which case I suggest you read this free to download paper and see for yourself. I like this paper and there is some truth in the conclusion that there will only be modest GDP effects and that improvements in disease prophylaxis will have significant welfare effects.

Meaning, as soon as these diseases start threatening rich people the West will go out and find a cure (throwing lots of R&D money at the problem) thus having large knock on benefits for those in developing countries.

Global Climate Change and the Resurgence of Tropical Disease: An Economic Approach

Douglas Gollin
Yale University

Christian Zimmermann
University of Connecticut; Institute for the Study of Labor (IZA)

July 15, 2010

CESifo Working Paper Series No. 3122

Abstract:
We study the impact of global climate change on the prevalence of tropical diseases using a heterogeneous agent dynamic general equilibrium model. In our framework, households can take actions (e.g., purchasing bednets or other goods) that provide partial protection from disease. However, these actions are costly and households face borrowing constraints. Parameterizing the model, we explore the impact of a worldwide temperature increase of 3°C. We find that the impact on disease prevalence and especially output should be modest and can be mitigated by improvements in protection efficacy.

Keywords: DSGE models, climate change, tropical diseases, incomplete markets

JEL Classifications: E13, E21, I10, O11, Q54
Working Paper Series

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Climate Change and Trade Policy: From Mutual Destruction to Mutual Support

The relationship between trade, development and the environment is increasingly important and incidently the subject of a recent presentation that I did at the University of Nottingham (a future blog post will include the slides).

This paper was not part of my literature review but appears to cover some of the same issues.

The success of the GATT and WTO rounds have a number of lessons for future climate change negotiations.

Climate Change and Trade Policy: From Mutual Destruction to Mutual Support

Patrick A. Messerlin
Groupe d'Economie Mondiale at Sciences Po (GEM Paris)

World Bank Policy Research Working Paper No. 5378

Abstract:

Contrary to what is still often believed, the climate and trade communities have a lot in common: a common problem (a global "public good"), common foes (vested interests using protection for slowing down climate change policies), and common friends (firms delivering goods, services, and equipment that are both cleaner and cheaper). They have thus many reasons to buttress each other. The climate community would enormously benefit from adopting the principle of "national treatment," which would legitimize and discipline the use of carbon border tax adjustment and the principle of "most-favored nation," which would ban carbon tariffs. The main effect of this would be to fuel a dual world economy of clean countries trading between themselves and dirty countries trading between themselves at a great cost for climate change. And the trade community would enormously benefit from a climate community capable of designing instruments that would support the adjustment efforts to be made by carbon-intensive firms much better than instruments such as antidumping or safeguards, which have proved to be ineffective and perverse. That said, implementing these principles will be difficult. The paper focuses on two key problems. First, the way carbon border taxes are defined has a huge impact on the joint outcome from climate change, trade, and development perspectives. Second, the multilateral climate change regime could easily become too complex to be manageable. Focusing on carbon-intensive sectors and building "clusters" of production processes considered as having "like carbon-intensity" are the two main ways for keeping the regime manageable. Developing them in a multilateral framework would make them more transparent and unbiased.

Keywords: Climate Change Mitigation and Green House Gases, Climate Change Economics, Emerging Markets, Carbon Policy and Trading, Debt Markets

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China to introduce an "environmental tax"

While the rest of the world sit around and endlessly debates how to control emissions China just gets on and does it. There is no doubt that China is aware of its environmental obligations.

Actual implementation and enforcement of this tax will be the subject of a future post I am sure. It will not be easy.

China May Launch Environmental Tax Trial: Report

Three Chinese ministries will soon submit a proposal for an environmental tax on a trial basis, the China Business News reported on Thursday.

The tax would be tested in four largely rural provinces, Hubei, Hunan, Jiangxi and Gansu, the newspaper said. The finance ministry, environmental protection ministry and tax administration were set to make the proposal to the State Council, or cabinet, it added.

An environmental tax, likely to be levied on emissions of carbon dioxide and discharges of polluted water, would form part of Beijing's drive to make its economic growth cleaner.

China has pledged to cut its carbon intensity -- the amount of CO2 produced per unit of GDP -- by 40-45 percent by 2020. Beijing has already taken steps to crack down on highly polluting industries and many expect it to get progressively tougher in the coming years.

In the past month, a toxic gold mine discharge in China's southeast and an oil spill in its northeast have underscored how much work the government has ahead of it.

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Economics in everything: "School Shootings and Student Performance"

Occasionally an economics paper is written that transcends the limited remit of "globalisation and the environment". This paper appears to say alot about the thinking of economists - I make no further comment.

I can imagine many members of the general public up in arms shouting "how could they" and other similar phrases.

The results seem reasonable though. In a seminar I would be tempted to ask for the "policy implications" of these results. Given the relatively infrequent number of school shootings, knowing the impact on exam results may not be considered of the utmost importance.

Why would young men be affected more than young women?

"School Shootings and Student Performance"

CESifo Working Paper Series No. 3114
PANU POUTVAARA, University of Helsinki - Department of Economics, Helsinki Center of Economic Research (HECER), CESifo (Center for Economic Studies and Ifo Institute for Economic Research), Institute for the Study of Labor (IZA)

OLLI TAPANI ROPPONEN, University of Helsinki - Department of Economics

In this paper, we study how high school students reacted to the shocking news of a school shooting. The shooting coincided with national high-school matriculation exams. As there were exams both before and after the shooting, we can use a difference-in-differences analysis to uncover how the school shooting affected the test scores compared to previous years. We find that the average performance of young men declined due to the school shooting, whereas we do not observe a similar pattern for women.

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"The undeniables": Top Ten Climate Change Indicators

Top ten lists are always good for a "google hit or two" so here is a new one from the Bulletin of the American Meteorological Society who sound like they should know what they are talking about.

Ten Key Indicators Show Global Warming "Undeniable"[PlanetArk]

Melting glaciers, more humid air and eight other key indicators show that global warming is undeniable, scientists said on Wednesday, citing a new comprehensive review of the last decade of climate data.

Without addressing why this is happening, the researchers said there was no doubt that every decade on Earth since the 1980s has been hotter than the previous one, and that the planet has been warming for the last half-century.

This confirms the findings of the U.N. Intergovernmental Panel on Climate Change, which reported in 2007 with 90 percent certainty that climate change is occurring. The IPCC also said that human activities contribute to this phenomenon.

The new report was released after U.S. Senate Democrats delayed any possible legislation to curb climate change until September at the earliest. Prospects for U.S. climate change legislation this year are considered slim.

Released by the U.S. National Oceanic and Atmospheric Administration as "The 2009 State of the Climate Report," the new report draws on the work of 303 scientists from 48 countries, including data from last year.

The 10 key planet-wide indicators of a warming climate identified by the report are:

1. Higher temperatures over land

2. Higher temperatures over oceans

3. Higher ocean heat content

4. Higher near-surface air temperatures (temperatures in the troposphere, where Earth's weather occurs)

5. Higher humidity

6. Higher sea surface temperatures

7. Higher sea levels

8. Less sea ice

9. Less snow cover

10. Shrinking glaciers

The seven indicators expected to rise in a warming world rose over the last decade, the report said; the three indicators expected to decline did so over that same period.

With an almost daily flood of data on climate change, Peter Thorne of the Cooperative Institute for Climate and Satellites in Asheville, North Carolina, saw the need for a comprehensive look at the information to pick the most obvious signs of planetary warming.

"These are indicators from the top of the atmosphere to the bottom of the ocean that we would expect to be changing in a warming world," Thorne said at a telephone briefing for reporters.

"Each indicator is changing as we would expect if the world truly were warming," he said. "Not a single analysis disagrees that the global climate is changing. The bottom line conclusion that the world's been warming is simply undeniable."

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The demise of the Phytoplankton - the beginning of the end?

The Independent are renowned for their environmental front pages. Today they report on the recent Nature paper that shows that phytoplankton levels are down 40% and that this will ultimately lead to the collapse of fish stocks and eventually life on earth as we know it.

The dead sea: Global warming blamed for 40 per cent decline in the ocean's phytoplankton [Independent]

The microscopic plants that support all life in the oceans are dying off at a dramatic rate, according to a study that has documented for the first time a disturbing and unprecedented change at the base of the marine food web.

Scientists have discovered that the phytoplankton of the oceans has declined by about 40 per cent over the past century, with much of the loss occurring since the 1950s. They believe the change is linked with rising sea temperatures and global warming.

If the findings are confirmed by further studies it will represent the single biggest change to the global biosphere in modern times, even bigger than the destruction of the tropical rainforests and coral reefs, the scientists said yesterday.

Phytoplankton are microscopic marine organisms capable of photosynthesis, just like terrestrial plants. They float in the upper layers of the oceans, provide much of the oxygen we breathe and account for about half of the total organic matter on Earth. A 40 per cent decline would represent a massive change to the global biosphere.

"If this holds up, something really serious is underway and has been underway for decades. I've been trying to think of a biological change that's bigger than this and I can't think of one," said marine biologist Boris Worm of Canada's Dalhousie University in Halifax, Nova Scotia. He said: "If real, it means that the marine ecosystem today looks very different to what it was a few decades ago and a lot of this change is happening way out in the open, blue ocean where we cannot see it. I'm concerned about this finding."

The researchers studied phytoplankton records going back to 1899 when the measure of how much of the green chlorophyll pigment of phytoplankton was present in the upper ocean was monitored regularly. The scientists analysed about half a million measurements taken over the past century in 10 ocean regions, as well as measurements recorded by satellite.

They found that phytoplankton had declined significantly in all but two of the ocean regions at an average global rate of about 1 per cent per year, most of which since the mid 20th Century. They found that this decline correlated with a corresponding rise in sea-surface temperatures – although they cannot prove that warmer oceans caused the decline.

The study, published in the journal Nature, is the first analysis of its kind and deliberately used data gathered over such a long period of time to eliminate the sort of natural fluctuations in phytoplankton that are known to occur from one decade to the next due to normal oscillations in ocean temperatures, Dr Worm said. "Phytoplankton are a critical part of our planetary life support system. They produce half of the oxygen we breathe, draw down surface CO2 and ultimately support all of our fishes." he said.

But some scientists have warned that the Dalhousie University study may not present a realistic picture of the true state of marine plantlife given that phytoplankton is subject to wide, natural fluctuations.

"Its an important observation and it's consistent with other observations, but the overall trend can be overinterpreted because of the masking effect of natural variations," said Manuel Barange of the Plymouth Marine Laboratory and a phytoplankton expert.

However, the Dalhousie scientists behind the three-year study said they have taken the natural oscillations of ocean temperatures into account and the overall conclusion of a 40 per cent decline in phytoplankton over the past century still holds true.

"Phytoplankton are the basis of life in the oceans and are essential in maintaining the health of the oceans so we should be concerned about its decline.

"It's a very robust finding and we're very confident of it," said Daniel Boyce, the lead author of the study.

"Phytoplankton is the fuel on which marine ecosystems run. A decline of phytoplankton affects everything up the food chain, including humans," Dr Boyce said.

Phytoplankton is affected by the amount of nutrients the well up from the bottom of the oceans. In the North Atlantic phytoplankton "blooms" naturally in spring and autumn when ocean storms bring nutrients to the surface.

One effect of rising sea temperatures has been to make the water column of some regions nearer the equator more stratified, with warmer water sitting on colder layers of water, making it more difficult for nutrients to reach the phytoplankton at the sea surface.

Warmer seas in tropical regions are also known to have a direct effect on limiting the growth of phytoplankton.

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Floods and explosive chemicals in China

If floods were not bad enough (the current flood related death toll in China this year is around 1,000 and counting) the leaking of 1,000 barrels containing explosive chemicals into a major river is rather unfortunate.

It is reassuring that officials are testing the water quality which would strike me as a wise precaution.

China Floods Wash Explosive Chemicals Into River

Flooding in northeastern China has washed more than 1,000 barrels containing explosive chemicals into a major river, state media said on Wednesday, as the death toll from flooding nationally this year neared 1,000.

The incident happened along the flood-swollen Songhua River in Jilin city in Jilin province in the late morning, the official Xinhua news agency said.

Residents contacted by telephone said water supplies had been cut off for a time in parts of the city, but were starting to return to normal.

The containers, from a chemical plant, held more than 160,000 kg (352,700 lb) of explosive chemical fluids, Xinhua said, citing local officials.

"Emergency workers have been trying to recover the containers and local environmental protection authorities were closely monitoring the water quality of the river," the report said.

China periodically faces spills into rivers that result in water supplies being cut off, most seriously in 2005 when an explosion at an industrial plant sent toxic chemicals streaming into the Songhua River further upstream, in Harbin.

The incident forced the shut-down of water supplies to nearly 4 million people.

Rains so far this year across large swathes of central and southern China have killed 928 people and left 477 missing, causing around 176.5 billion yuan ($26.04 billion) in damage, Xinhua said.

A total of 875,000 homes have collapsed, 9.61 million people have been evacuated and 8.76 million hectares of crops ruined, it added.

Northeastern China has also been lashed by torrential rains over the past few days.

"Rat in the kitchen - unleash the foxes of war" - fur farm externalities

It is always good to read of a positive environmental externality related to an otherwise distasteful activity.

To quench the demand of rich people for real fox fur coats China has a number of silver fox farms. Instead of living a rather dull life before being murdered for their fur to drape over the shoulders of the elites the foxes have been sold on to actually do something useful - catching rats.

It is interesting to learn that close rat catching substitutes for foxes are chickens and ducks. The ducks I know do not strike me as the most efficient rat killers but perhaps these are especially trained ducks.

This story reminds me of the old woman and the fly. I fully expect to read in a year or so that China has unleashed a load of farmed tigers to kill off the plague of silver foxes.

China Trains Fur Farm Foxes To Combat Rat Plague

Authorities in China's far west have bred and trained "an army" of silver foxes bought from a fur farm to fight a plague of rats threatening a huge expanse of grasslands, state media said on Wednesday.

The Xinjiang government bought 20 foxes in 2004 and they have since increased to 284 and been released into the wild, the official Xinhua news agency said.

"Foxes are excellent natural predators of the rodent. One fox can catch about 20 rats per day. There has been a decline in the rat population in several counties where the measure has been adopted," it quoted official Ni Yifei as saying.

Rat numbers have exploded due to unusually dry conditions and threaten more than 5.5 million hectares of grasslands, the report said.

In one of the areas where the foxes have been released, rat numbers have dropped 70 percent, it added.

"The silver fox was chosen to be the rat fighter for its distinctive ability to run, hunt and live under the harsh living conditions on the prairie," Ni said.

Silver foxes are more normally bred in Xinjiang for their rich fur, used to make clothing.

Other parts of Xinjiang are using wolves, eagles and even chickens and ducks to control rat numbers, Xinhua said.

"It is a green way to tackle the rat problem," added another official, Lin Jun.

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"Resource Rents; When to Spend and How to Save"

Professor Tony Venables (Oxford) is a world renowned trade economist with previous papers and books that are scattered liberally throughout my PhD and trade papers. He led the "new economic geography" revolution alongside Paul Krugman back in the early 1990s.

He has now seen the "green" light and is working on environmental issues. His career therefore mirrors my own albeit at a much higher academic level :-(

I still object to the CEPR $5 a shot money making machine for working papers. Outdated and frustrating for those economists for whom the cost is prohibitive (PhD students, academics in developing countries etc.) Seems to me to be against the spirit of academia and dissemination of ideas and results.

"Resource Rents; When to Spend and How to Save"

CEPR Discussion Paper No. DP7875
ANTHONY J. VENABLES, University of Oxford - Department of Economics, Centre for Economic Policy Research (CEPR)

Countries with substantial revenues from renewable resources face a complex range of revenue management issues. What is the optimal time profile of consumption from the revenue, and how much should be saved? Should saving be invested in foreign funds or in the domestic economy? How does government policy influence the private sector, where sustainable growth in the domestic economy must ultimately be generated? This paper develops the issues in a simple two-period model, and argues that analysis must go well beyond the simple permanent income approach sometimes recommended. In developing countries resource revenues relax constraints on the supplies of capital and of government funds. The level of saving should be somewhat lower than under the permanent income hypothesis because of the low income of the current generation. The composition of investment should be tilted to the domestic economy rather than foreign assets. Government prudence can be undermined by private sector expectations, so high levels of spending on public infrastructure may be appropriate as a commitment to invest.

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WTO and natural resource cooperation

I could have called this post - "globalisation and the environment".

Next week I will be lecturing to Chevening scholars on "Climate Change, Trade and Development" that will consider the increasingly complex relationship between trade negotiations and environmental post 2012 negotiations.

How much overlap is there? Should there be any overlap?

The Doha round needs a considerable section on environmental compliance given the increasing use of environmental regulations that act as "secondary trade barriers". The WTO is central to progress in this area.

A forthcoming World Bank report by De Melo and Mathys will look at this issue is much more detail.

It is interesting therefore to see that WTO pushing forward on this issue.

WTO Seeks More Cooperation In Natural Resource Trade [PlanetArk]

The World Trade Organization called on Friday for countries to work together more closely in trade in natural resources -- an area often seen as exempt from many international commerce rules.

Governments must cooperate more intensively to deal with the challenges for both importing and exporting countries in trade in natural resources, such as export restrictions and import tariffs, it said in its annual World Trade Report.

"In a world where scarce natural resource endowments must be nurtured and managed with care, uncooperative trade policies could have a particularly damaging effect on global welfare," the report said.

The report defines natural resources as fuels, forestry, mining and fisheries -- goods that are found naturally and can be used with minimal processing. It excludes agriculture, where products are cultivated not extracted, and industrial goods employing minerals that require a high level of processing.

Trade in such goods in 2008 was $3.7 trillion in 2008, or nearly 24 percent of total world trade in merchandise goods, a share that has been rising by 20 percent a year for the last decade, reflecting rising commodity prices.

"I believe not only that there is room for mutually beneficial negotiating trade-offs that encompass natural resources trade, but also that a failure to address these issues could be a recipe for a growing tension in international trade relations," WTO Director-General Pascal Lamy said in a foreword to the report.

EXHAUSTIBLE RESOURCES

WTO rules allow countries to restrict exports of natural resources to preserve an exhaustible resource.

Zhao Hong, a diplomat at China's mission to the WTO, said at the launch of the report in Geneva that WTO members had inalienable rights to the resources on their territory, while WTO rules allowed them to pursue goals such as environmental protection or sustainable development.

The United States, European Union and Mexico have complained to the WTO about China's restrictions on raw materials, and the WTO itself has questioned whether these are effective.

Such restrictions, as well as measures by importing countries, are open to legal challenge, said Joost Pauwelyn, professor of international law at Geneva's Graduate Institute for International Studies.

It was an "urban myth" that natural resources are not covered by the WTO, he said at the launch.

For instance a country could not claim to use export restrictions to preserve resources if it did not restrict domestic consumption.

Similarly production restrictions by a country that exports almost its entire output of a natural resource could be challenged as an export restraint, while consumption taxes on a country that relies on imports for a product could be seen as tariff open to challenge.

Still, trade in natural resources is not the same as other products, as it raises environmental issues and competition is limited as production cannot be switched to other locations.

"Natural resources and energy are unevenly distributed between countries as well as fixed. BP will confirm this: you cannot move an oil well," Pauwelyn said.

Pauwelyn said he could envisage negotiations where exporters agreed to curb their export restraints in exchange for importers limiting carbon tariffs.

The report shows that non-WTO member Russia was the biggest exporter of natural resources in 2008, with a value of $341 billion, while the United States is the biggest importer, taking in $583 billion.

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Determining the value of the planet: But who is buying?

Economists can pretty much put a value on anything which is why economists tend to be universally disliked. People tend not to take too kindly to having a monetary figure placed on their or their families lives for example.

Now the planet is to be valued. It is sure to cost a pretty penny that is for sure. Whether anyone can afford it is another matter. Even Bill Gates would have to take out a mortgage.

So, to the big question. Do we need a UN body to hire some fresh PhDs to grind out some meaningless numbers that everyone will ignore (except for me who will put them into Environmental Economics 201).

Analysis: New U.N. Body To Put Value On Planet [PlanetArk]

The world relies on a range of services nature provides -- water filtration by forests, pollination by bees and a supply of wild plant genes for new food crops or medicines.

If nature charged for these, how much would it cost?

Most such values are excluded from measures of national economies and from prices and markets which would force businesses and governments to recognize them, and the result has been a bias toward development over conservation.

U.N. states have proposed a new body, the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), to advise on valuing nature and conservation targets.

An early priority should be measurement, said Pavan Sukhdev, study leader for The Economics of Ecosystems and Biodiversity (TEEB) U.N. initiative, which published a business and biodiversity report this week.

"For a country to say 'let's increase biodiversity', it's quite difficult because it's not measuring biodiversity," Sukhdev said.

"That is a big challenge for the IPBES, to create a right set of metrics. The logical sequence is first establish what is biodiversity, what are you measuring, agree on it, so that countries are doing it pretty much the same way."

The U.N. General Assembly is expected officially to endorse IPBES later this year.

"It's bringing the world's best scientists together under an inter-governmental body, so governments can commission specific questions to that body, to provide them with guidance," said Achim Steiner, executive director of the United Nations Environment Program.

In a further political step, on the agenda at a U.N. meeting in October in Japan is an "access and benefit-sharing" regime for countries which are home to plants and other species valued by agriculture or the pharmaceutical industry.

The idea is to give such countries a share of profits from product development.

"It has major implications for the economic benefit of conserving biodiversity," said Steiner.

MARKETS

Damage to natural capital including forests, wetlands and grasslands is valued at $2-4.5 trillion annually, U.N. reports estimate, a figure excluded from measures of the global economy, or GDP.

Of 48,000 species assessed for extinction risk as of 2009, some 2 percent were already extinct or extinct in the wild, says the International Union for Conservation of Nature (IUCN).

Part of the difficulty in recognizing nature is the problem of assessing its various services using economic markets.

In the fight against climate change, a pure market approach has been devised to put a value on carbon-free air in the European Union's emissions trading scheme, by generating tradable carbon permits.

While some of nature's services could be similarly traded as commodities, such as proposed "rainforest bonds" which would pay for forests' wildlife, fresh water and carbon storage, most biodiversity cannot be valued or traded directly.

"We should probably be thinking about biodiversity less like the carbon market and more like a real estate market, these are very distinctive, unique assets, they can be graded and valued but they're not interchangeable," said Joshua Bishop, chief economist at the IUCN.

"It's not a commodity like carbon dioxide."

Less direct, private sector opportunities indirectly tied to conservation are booming, such as eco-tourism and organic food, UNEP argued this week in its business and biodiversity report.

And forest markets were still on track, said Sukhdev, pointing to a deal to raise about $4 billion to pay tropical forested countries not to chop their trees.

"It is complex but at the same time I think there is a huge willingness," said Sukhdev. "It will take time."

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The Shocking CO2 statistics (in picture form)

Nothing beats a good picture. The final line about happier cows is subject to the age old "is a none existent cow happier than a cow executed to feed our desire to eat the flesh of dead animals".

To see this poster in all it's glory please click on those clever "cheap flights" marketers over at fly.co.uk.

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4th World Congress papers

The following post is a list of the papers I attended at the World Congress. This post may be of limited interest to many readers but at least gives an insight into the papers that this humble blogger is interested in. A lot of trade, some catastrophes and a little valuation made up stuff.

I would hazard that this represents a way above average conference attendance record in case the powers that be are reading.

The overall quality of the papers was good to middling with the occassional paper of great quality and some papers that still required a little more polishing.

A book of abstracts can be found HERE.

The programme can be found HERE.

Tuesday June 29th 8.45-10.30

QUANTIFYING THE ECONOMIC DAMAGE DUE TO HURRICANE STRIKES: AN ANALYSIS FROM OUTER
SPACE FOR THE CARIBBEAN REGION
Presenter(s): Eric Strobl, Ecole Polytechnique
Co-author(s): Luisito Bertinelli

ECONOMIC VALUATION OF THE INFLUENCE OF INVASIVE ALIEN SPECIES ON THE ECONOMY OF THE
SEYCHELLES ISLANDS
Presenter(s): Paul Mwebaze, Australia National University
Discussant(s): Eric Strobl

TO TRADE OR NOT TO TRADE: FIRM-LEVEL ANALYSIS OF EMISSIONS TRADING IN SANTIAGO, CHILE
Presenter(s): Jessica Coria, University of Gothenburg
Co-author(s): Åsa Löfgren and Thomas Sterner

ISO 14001 ADOPTION IN MEXICO: DRIVERS AND IMPACTS
Presenter(s): Allen Blackman, Resources for the Future

KEYNOTE

THE ENVIRONMENT AND DIRECTED TECHNICAL CHANGE
Daron Acemoglu, Massachusetts Institute of Technology

14:00 - 15:45 Evaluating the Economic Impacts of Environmental
Regulation using Microdata (Special session)

LOCAL ENVIRONMENTAL REGULATION AND PLANT-LEVEL PRODUCTIVITY
Presenter(s): Randy Becker, U.S. Census Bureau

WHAT IS THE IMPACT OF EMISSIONS TRADING ON PRODUCTIVITY AND TECHNICAL CHANGE?
Presenter(s): Ronald Shadbegian, U.S. EPA - NCEE
Co-author(s): Cynthia Morgan and Carl Pasurka

THE EFFECTIVENESS OF QUASI-REGULATORY MECHANISMS ON POLLUTING BEHAVIOR: THE CASE OF
POLLUTION PREVENTION PROGRAMS AND TOXIC RELEASES
Presenter(s): Linda Bui, Brandeis University

ENERGY ABUNDANCE, TRADE AND INDUSTRY LOCATION
Presenter(s): Nicole Mathys, Swiss Federal Office of Energy and University of Neuchatel
Co-author(s): Reyer Gerlagh

16:15 - 18:00 Climate Change and Extreme Events: From Mere
Disasters to Mega-catastrophes (Special session)

RESPONDING TO THREATS OF CLIMATE CHANGE MEGA-CATASTROPHES
Presenter(s): Carolyn Kousky, Resources for the Future
Co-author(s): Olga Rostapshova, Mike Toman and Richard Zeckhauser

THE IMPACT OF CLIMATE CHANGE ON GLOBAL TROPICAL STORM DAMAGES
Presenter(s): Robert Mendelsohn, Yale University
Co-author(s): Shun Chonabayashi and Kerry Emanuel

CLIMATE TREATIES AND APPROACHING CATASTROPHES
Presenter(s): Scott Barrett, Columbia University

EXTREME WEATHER RISKS AND MIGRATION: TORNADOES
Presenter(s): Trudy Ann Cameron, University of Oregon
Co-author(s): Eric Duquette

GHG TARGETS AS INSURANCE AGAINST CATASTROPHIC CLIMATE DAMAGES
Presenter(s): Martin Weitzman, Harvard University

08:45 - 10:30 Environmental Valuation: Methodology II Room R-M140

TESTING THE THEORETICAL CONSISTENCY OF STATED PREFERENCES FOR TROPICAL WILDLIFE
CONSERVATION
Presenter(s): Ian Bateman, University of East Anglia and Silvia Ferrini, CSERGE, University of East Anglia
Co-author(s): Neil Burgess, Andreas Kontoleon, Sian Morse-Jones and R. Kerry Turner

WHEN ARE PREFERENCES CONSISTENT? A CLASSIFICATION OF CHOICE DOMAINS AND
EXPLORATION OF EMPIRICAL EVIDENCE
Presenter(s): Felix Schläpfer, ETH Zurich, Instiute for Environmental Decisions

KEYNOTE

EVALUATING POLICIES TO INCREASE THE USE OF RENEWABLE ENERGY
Richard Schmalensee, Massachusetts Institute of Technology

14:00 - 15:45 Demography and Environment Room R-M150

THE DEMOGRAPHIC TRANSITION AND THE ECOLOGICAL TRANSITION: ENRICHING THE
ENVIRONMENTAL KUZNETS CURVE HYPOTHESIS
Presenter(s): Marzio Galeotti, University of Milan, IEFE-Bocconi
Co-author(s): Alessandro Lanza

THE IMPACT OF LIFESTYLES ON CO2 EMISSIONS IN THE UK: AN INPUT-OUTPUT AND GEODEMOGRAPHIC
DATA APPROACH
Presenter(s): Giovanni Baiocchi, Durham University
Co-author(s): Klaus Hubacek and Jan Minx

IMPROVING EMPIRICAL ESTIMATION OF DEMOGRAPHIC DRIVERS: MALARIA ECOLOGY AND CHILD
MORTALITY
Presenter(s): Gordon McCord, Columbia University
Co-author(s): Dalton Conley and Jeffrey Sachs

LIFE EXPECTANCY AND THE ENVIRONMENT
Presenter(s): Agustín Pérez-Barahona, INRA & École Polytechnique
Co-author(s): Fabio Mariani and Natacha Raffin

16:15 - 18:00 Effectiveness of Voluntary Environmental Initiatives
for Pollution Reduction II (Special session)

RE-ASSESSMENT OF THE IMPACT OF EPA'S VOLUNTARY 33/50 PROGRAM ON TOXIC RELEASES
Presenter(s): Xiang Bi, University of Illinois
Co-author(s): Madhu Khanna

DOES SELF-REGULATION REDUCE POLLUTION? RESPONSIBLE CARE IN THE CHEMICALS INDUSTRY
Presenter(s): Shanti Gamper-Rabindran, University of Pittsburgh
Co-author(s): Stephen Finger

ECONOMIC AND INSTITUTIONAL FACTORS IN BUSINESS ENVIRONMENTAL MANAGEMENT
Presenter(s): David Ervin, Portland State University

DOES POLLUTION PREVENTION REDUCE TOXIC EMISSIONS? A DYNAMIC PANEL DATA MODEL
Presenter(s): Donna Harrington, University of Vermont
Co-author(s): George Deltas and Madhu Khanna

08:45 - 10:30 Special Session in Honour of Peter Bohm Room R-M510

THE TRUTH, THE WHOLE TRUTH AND NOTHING BUT THE TRUTH: A MULTI-COUNTRY TEST OF AN OATH SCRIPT
Presenter(s): Mitesh Kataria, U of Gothenburg
Co-author(s): Fredrik Carlsson, Susie Chung, Alan Krupnick, Elina Lampi, Asa Lofgren, Ping Qin and Thomas
Sterner

BUY COAL! DEPOSIT MARKETS PREVENT CARBON LEAKAGE
Presenter(s): Bard Harstad, Northwestern University

ECOLOGICAL INTUITION VERSUS ECONOMIC REASON
Presenter(s): Roger Guesnerie , College de France

KEYNOTE

LEARNING TO LIVE IN A GLOBAL COMMONS: SOCIOECONOMIC CHALLENGES FOR A SUSTAINABLE
ENVIRONMENT
Simon Levin, Princeton University

14:00 - 15:45 International Trade III Room DS-M220

HOW DOES INTRA-INDUSTRY TRADE AFFECT THE ENVIRONMENT?
Presenter(s): Sarma Aralas, Michigan State University
Co-author(s): John Hoehn

GLOBALIZATION OF THE CARBON MARKET: AN ECONOMIC EFFICIENCY AND INTERNATIONAL TRADE
ANALYSIS
Presenter(s): Victoria Alexeeva-Talebi, Centre for European Economic Research (ZEW), Mannheim
Co-author(s): Niels Anger

ENVIRONMENTAL REGULATIONS AND BILATERAL TRADE FLOWS
Presenter(s): Tetsuya Tsurumi, The University of Tokyo
Co-author(s): Akira Hibiki and Shunsuke Managi

DO NATIONAL BORDERS MATTER? INTRANATIONAL TRADE, INTERNATIONAL TRADE, AND THE
ENVIRONMENT
Presenter(s): Carol McAusland, University of British Columbia
Co-author(s): Daniel Millimet

16:15 - 18:00 Resource, Trade and Growth (Special session) Room DS-M220

FOREIGN DIRECT INVESTMENT AND NATURAL RESOURCES
Presenter(s): Frederick van der Ploeg, Oxford University
Co-author(s): Steven Poelhekke

RESOURCE WEALTH, INNOVATION AND GROWTH IN THE GLOBAL ECONOMY
Presenter(s): Pietro Peretto, Duke University
Co-author(s): Simone Valente

INTERNATIONAL TRADE, NATURAL RESOURCE ABUNDANCE AND ECONOMIC GROWTH
Presenter(s): Beatriz Gaitan, Dept. of Economics
Co-author(s): Terry Roe

ENDOGENOUS GROWTH, ASYMMETRIC TRADE AND RESOURCE DEPENDENCE
Presenter(s): Simone Valente, ETH Zurich
Co-author(s): Lucas Bretschger

08:45 ‐ 10:30 International Trade IV: Empirics Room DS‐M220

THE POLLUTION TERMS OF TRADE AND MANUFACTURING
Presenter(s): Joel Bruneau, University of Saskatchewan

POLLUTION HAVENS: EMPIRICAL EVIDENCE FOR GERMANY
Presenter(s): Wilhelm Althammer, HHL‐Leipzig Graduate School of Management
Co‐author(s): Christine Mutz

TRADE IN ‘VIRTUAL CARBON’: EMPIRICAL RESULTS AND IMPLICATIONS FOR POLICY
Presenter(s): Giovanni Ruta, LSE
Co‐author(s): Giles Atkinson, Kirk Hamilton and Dominique Van Der Mensbrugghe

UNRAVELING THE SIMULTANEITY OF ENVIRONMENT AND TRADE IN INDIA
Presenter(s): Badal Mukhopadhyay, The Energy Research Institute (TERI)
Co‐author(s): Kanupriya Gupta

KEYNOTE

CLIMATE POLICY: TOWARD A NEW INTERNATIONAL INFRASTRUCTURE?
Jean Tirole, Toulouse School of Economics

14:00 ‐ 15:45 International Trade V Room DS‐M220

SUBGLOBAL CLIMATE AGREEMENTS AND THE COPPER MINING INDUSTRY
Presenter(s): Bruno Lanz, ETH Zurich and MIT
Co‐author(s): Thomas Rutherford and John E. Tilton

TRADE, ENVIRONMENTAL REGULATIONS AND INDUSTRIAL MOBILITY: AN INDUSTRY‐LEVEL STUDY FORJAPAN
Presenter(s): Robert Elliott, University of Birmingham
Co‐author(s): Matthew Cole and Toshi Okubo

CAN CARBON BASED IMPORT TARIFFS EFFECTIVELY REDUCE CARBON EMISSIONS?
Presenter(s): Michael Huebler, Potsdam Institute for Climate Impact Research

THE TRADE BIAS OF TAX REBATES FOR HYBRID VEHICLES
Presenter(s): Sumeet Gulati, University of British Columbia
Co‐author(s): Nisha Malhotra and Carol McAusland

Note the graveyard shift for my paper although there was a good turn out and some excellent environmental economists in the audience.

More reports later.

Back in Action

After a long lay off due to travels to China and the the World Congress in Montreal I am back blogging. One can lose the blogging habbit quite quickly I have discovered and bogging is also highly negatively correlated with the amount of real work one has to do.

We return with an interesting picture of the Gulf Oil spill superimposed onto London. Wow - it looks quite big now.

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IPCC panel of "experts" to be audited

It will be very interesting to read the results of the IPCC review by none other than Economist Harold Shapiro who is a youthful 74 years of age.

I have often wondered how the IPCC was set up given the inclusion of a rather motley crue of academics.

Clearly there were too few economists (hint hint to Harold).

Former Princeton Head To Review U.N. Climate Panel [PlanetArk]

A former president of Princeton University will lead a review of the U.N. panel of climate scientists after errors in a 2007 report used as a guide for fighting global warming, science academies said on Monday.

Economist Harold Shapiro, 74, will chair the 12-member committee that is due to report by August 30 on the United Nations' Intergovernmental Panel on Climate Change (IPCC).

The IPCC shared the 2007 Nobel Peace Prize with former U.S. Vice President Al Gore.

"We approach this review with an open mind," Shapiro said in a statement of the committee appointed by the Amsterdam-based InterAcademy Council (IAC), which groups national science academies.

Canadian-born Shapiro is a former president both of Princeton and the University of Michigan. Other committee members include Mario Molina, a Nobel Chemistry Prize winner and Maureen Cropper, a former lead economist at the World Bank.

In January, the IPCC acknowledged that its latest report in 2007 exaggerated the pace of melt of Himalayan glaciers by saying they might all disappear by 2035. In February, it said it also over-stated how much of the Netherlands was below sea level.

U.N. Secretary General Ban Ki-moon announced the review in March after controversy around the IPCC mistakes eroded trust. People who doubt human activities are warming the planet say the reports are biased to exclude alternative views.

Ban has reaffirmed key IPCC conclusions that it is at least 90 percent certain that human activities are the main cause of climate change in recent decades that is set to bring more heatwaves, floods, droughts and rising sea levels.

The review committee will have its first meeting in Amsterdam on May 14-15. Roseanne Diab, executive officer of the Academy of Science of South Africa, will serve as vice chair. Other members will be from countries including China, India, Brazil, Germany, Britain, the Netherlands and Malaysia.

Issues to be reviewed include "data quality assurance and control; the type of literature that may be cited in IPCC reports; expert and government review of IPCC materials; handling of the full range of scientific views; and the correction of errors," it said.

The committee would also review "other processes, including management functions and communication strategies."

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Carbon induced trade wars

A story right up Globalisation and the environment's street. Trade wars are always ugly and often fiendishly complicated.

It is fine for the EU to rant about imposing tariffs on imports from polluting countries but one must ask who exactly is producing these products. Often it will be EU multinationals so the EU is taxing its own companies (who will lobby hard against such a policy).

Moreover, these imports are consumed by EU citizens. It is our quest for greater and greater material consumption that is causing part of the pollution in the first place.

I can say now categorically that this scheme will not work and should be abandoned as soon as possible. There are other solutions.

Carbon Tariffs On Imports Risk Trade War: EU Study [PlanetArk]

The European Union is considering border tariffs on imports from more polluting countries, but an initial assessment shows such levies could spark trade wars, draft reports show.

Two European Commission reports do not explicitly reject a push for border tariffs by France and Italy, but say they would be fiendishly complex to calculate, create a huge administrative burden and risk trade conflict.

"Border measures risk clashing with the obligations under the WTO (World Trade Organization)," said one study looking at the cost of increasing EU curbs on climate-warming emissions.

France and Italy are worried that their industries, which pay for EU permits to emit carbon dioxide, will lose out to cheaper imports from countries that impose no such charges.

The Commission said it would continue to look at how imports might be included in the Emissions Trading Scheme, the EU's carbon market and its main tool against climate-warming emissions. But the prospect of such measures looks dim.

"The introduction of border measures may also trigger retaliatory measures and even hinder international negotiations," added the document, seen by Reuters. "The system could at best only be envisaged for a very limited number of standardized commodities, such as steel or cement."

Sanjeev Kumar at environmental think-tank E3G said: "This is pretty much the death of the border-tax adjustment discussions in Europe. We've known for a long time it would put the whole European economy at risk."

ECO-IMPERIALISM

Border tariffs on countries that do not play their part in fighting climate change are a hot topic in the United States, where legislators are weighing up their own climate laws.

"Similar proposals are also being discussed in the U.S., and obviously any further political and operational steps taken in this direction should be taken together," said a related EU draft.

Folker Franz, of industry group BusinessEurope, said: "In a theoretical world where Japan, the U.S. and Europe could move together, then it might work. But if Europe imposed tariffs alone it would not."

Germany, as one of the EU's biggest exporters, is worried about retaliation. Berlin last year criticized the idea of carbon tariffs as "eco-imperialism.

French President Nicolas Sarkozy and Italian Prime Minister Silvio Berlusconi wrote to the European Commission two weeks ago calling for trade levies, but said they should respect WTO rules.

The Commission draft says that although levies could be made WTO-compliant, in theory, it would be almost impossible to tailor them to individual imports without knowing the carbon emissions up and down the manufacturing process -- and monitoring those emissions "may be unfeasible."

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