Stiglitz and Stern on "Obama’s chance to lead the green recovery"

The FT reports on Obama’s chance to lead the green recovery. Stiglitz and Stern and to be commended for continuing to bang the climate drum in the face of the current financial crisis that is rapidly turning into a fully blown depression.

Green jobs are part of the solution but the effect should not be exaggerated.

The problem as the authors understand all too clearly is that the negative effects from climate change will occur is the relatively distant future. The financial crisis is happening now.

The article has some good environmental economics 101 material that is worth reading. The carbon price is what will let them down I am afraid. A strong price for carbon will be hard to achieve in the current recession.

Obama’s chance to lead the green recovery [FT]

We face two crises: a deep global financial crisis, caused by inadequate management of risk in the financial sector; and an even deeper climate crisis, the effects of which may seem more distant but will be determined by the actions we take now.

The scale of risk from climate change is altogether of a different and greater magnitude, as are the consequences of mismanaging or ignoring it. The US, in particular, has a window of opportunity to act on the financial crisis and, at the same time, lay the foundations for a new wave of growth based on the technologies for a low-carbon economy.

President Barack Obama, in his speech to Congress and budget last week, explained that we need to address both of these challenges, and outlined a broad approach. US leadership could generate a powerful response from across the world, making possible an agreement at the United Nations climate change conference in Copenhagen in December on a scale necessary to manage the risks involved.

We will eventually emerge from the financial crisis, although mistakes in management can affect its depth and duration. However, mistakes in managing the risks of the climate crisis may be irreversible. As noted in Making Globalization Work*, if we had a thousand planets we might continue with the reckless experiment on which we are embarked, and if the likely disaster occurred we could move on to another. Unfortunately we do not have that luxury: we have only one planet.

The financial crisis originated from the housing market bubble and was preceded by the dotcom boom. We cannot replace these with yet another bubble. The investments necessary to convert our society to a low-carbon economy – investments that can change the way we live and work – would drive growth over the next two or three decades. They would ensure that growth, with accompanying improvements in standards of living, was sustainable. The path that we have been on is not.

The economic crisis will leave the US and other economies greatly weakened and it will be imperative to increase efficiency. One area in which there is ample room for improvement is in the energy efficiency of businesses, consumers and the government.

According to a recent paper by the Peterson Institute, spending $10bn (€7.9bn, £7.1bn) to insulate US homes and federal buildings could create and sustain up to 100,000 jobs between 2009 and 2011, while saving the economy from $1.4bn to $3.1bn a year between 2012 and 2020.

This type of investment and those in green technology and infrastructure would not only provide a short-term stimulus but also improve the US competitive position. As the world moves to a low-carbon economy, there will be a competitive advantage for those who embrace these technologies.

Private investments are driven by market signals. These signals are distorted because we have been pricing one of the world’s scarcest resources – a “good” atmosphere; or the societal costs of emissions, which lead to a “bad” atmosphere – at zero. Not surprisingly, this has led to inefficient outcomes, with emissions levels too high and too little effort devoted to energy conservation and research.

Providing a strong, stable carbon price is the single policy action that is likely to have the biggest effect in improving economic efficiency and tackling the climate crisis. Clarity on policy and prices is all the more important now, with companies facing such uncertainty because of the financial crisis: the two risks compound each other, damping investment. We may not be able fully to resolve the risks of the financial crisis quickly; but we can take actions now that will markedly reduce uncertainties about future carbon policies and prices.

As creative entrepreneurs turn their minds to the challenges posed by a low-carbon economy, the excitement and drive of innovation is evident. This can be the spur to real growth that has so long been missing. The problems of global warming cannot be attacked without the participation of all countries. The world has been waiting for the US: there is now reason to believe that it is ready to lead.

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Trees pay a high cost for soft toilet roll obsession

Forests are suffering at the hands of consumers who demand soft toilet rolls. Recycled toilet paper just isn't the same apparently.

Soft toilet roll could be seen as one of life's little luxuries. I expect that we need to get used to be bit of discomfort in the future. Luxury roll sales are down 7% in recent months as people learn to "rough it".

The New York Time (no less) reports:

Mr. Whipple Left It Out: Soft Is Rough on Forests [New York Times]

The national obsession with soft paper has driven the growth of brands like Cottonelle Ultra, Quilted Northern Ultra and Charmin Ultra — which in 2008 alone increased its sales by 40 percent in some markets, according to Information Resources, Inc., a marketing research firm.

But fluffiness comes at a price: millions of trees harvested in North America and in Latin American countries, including some percentage of trees from rare old-growth forests in Canada. Although toilet tissue can be made at similar cost from recycled material, it is the fiber taken from standing trees that help give it that plush feel, and most large manufacturers rely on them.

Customers “demand soft and comfortable,” said James Malone, a spokesman for Georgia Pacific, the maker of Quilted Northern. “Recycled fiber cannot do it.”

Grudge Match: "Grist vrs Env-Econ"

Ding ding, round one.

Its all kicking off over at the Gristmill and Environmental Economics Blog.

The problem as far as I can tell is over the definition of the word "snark" and the extent to which the said snark has substance or not.

As an economist I still like to see economists getting a good kicking and Dave Roberts does a decent job and raises some good points. Of course such abuse is like water of a ducks back to economists. I recommend all environmental economics students to read the Grist article by Dave Roberts and to formulate a defence (if there is one).


I particularly liked the first comment after the Grist article.

"economists are arrogant whores".

One certainly does not become an economist to be liked. TerraPass on the Env-Econ post suggests:

Greens also tend to oddly personalize the topic, dividing economists into “the good ones” and, I suppose, the hell-bound.

It would be interesting to know whether John and Tim and indeed myself are on a "highway to hell" or whether we sneak into the good category. I suspect Env-Econ have now been seen to have aligned themselves with the dark side.

High five anyone?

[Note: this post is entirely substance free]


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"Climate Policy and the Optimal Extraction of High- and Low-Carbon Fossil Fuels"

For my environmental economics students who were intimidated by the optimal extract path material this paper might either put these fears in perspective or make things a whole lot worse.

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"Climate Policy and the Optimal Extraction of High- and Low-Carbon Fossil Fuels"

Canadian Journal of Economics/Revue canadienne d'économique, Vol. 41, No. 4, pp. 1421-1444, November/novembre 2008

SJAK SMULDERS, Tilburg University - Center and Faculty of Economics and Business Administration, University of Calgary - Economics
Email: J.A.Smulders@uvt.nl
EDWIN VAN DER WERF, University of Oldenburg - Department of Economics and Statistics
Email: edwin.vanderwerf@uni-oldenburg.de

We study how restricting CO emissions affects resource prices and depletion over time. We use a Hotelling-style model with two non-renewable fossil fuels that differ in their carbon content (e.g., coal and natural gas) and in addition are imperfect substitutes in final good production. We show that an economy facing a CO flow-constraint may substitute towards the relatively dirty input. As the economy tries to maximize output per unit of emissions it is not only carbon content that matters: productivity matters as well. With an announced constraint the economy first substitutes towards the less productive input such that more of the productive input is available when constrained. Preliminary empirical results suggest that it is cost-effective to substitute away from dirty coal to cleaner oil or gas, but to substitute from natural gas towards the dirtier input oil.

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Debunking climate change deniers

Here are a series of small youtube videos for people who are less keen on reading.

The climate change denier claims rebuffed in style. H/T: Greenfyre

Happy viewing.


Medieval Warming?” (& the Hockey Stick).



Solar Schmolar: Debunking the “It’s the Sun” fable.



“Ice Area vs Volume“: Debunking the “Ice is back to 1979 levels” idiocy.



“It’s cold. So there’s no Climate Change“: Debunking the “It was cold in ….” Fable.

Laughing all the way to global disaster

CO2 is not the only greenhouse gas we need to be concerned about. The feedback mechanisms are kicking in now and it is no laughing matter.

Burp of Arctic laughing gas is no joke [New Scientist]

It seems the Arctic is belching out nitrous oxide – commonly known as laughing gas. Unfortunately, the punchline is that it is a powerful greenhouse gas.

Previously, emissions of N2O were thought to enter the atmosphere mainly from tropical forests and intensively managed farmland, with only a negligible amount from northerly environments.

Maija Repo and colleagues from the University of Kuopio, Finland, measured emissions from peat circles in northern Russia. These sit on peatland plateaux, which are widespread throughout the Arctic, covering 20% of the total land surface. The bare surfaces of peat circles develop because cycles of freezing and thawing churn up the peat, preventing plant growth.

During the snow-free season, they found the peat circles emitted 1.2 grams/m2 of N2O, which is just as much as tropical forests release in a year. The team reckons that a lack of plants decreases competition for the mineral nitrogen. This allows nitrate to accumulate in the soil which is then metabolised by bacteria to produce N2O.

Although this means N2O remains a small contributor to the greenhouse effect, compared with methane and carbon dioxide, the gas persists unaltered in the atmosphere for over 110 years, compared with around 10 years for methane – which is also periodically released by the tundra.

Unfortunately, global warming may promote churning, and expand bare areas. Since the flow of the gas from the peat circles is so high, even a small increase in bare surfaces would cause significant changes in N2O emissions, says Repo.

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"critical threshold" close according to Field

Already the IPCC report is out of date. Scientists are now warning that global warming is happening even more quickly than the IPCC report predicted. If true the current negotiations on the "new" Kyoto is the equivalent of rearranging the deck chairs on the titanic.

The arguments seem fine to me. If people thinks things are bad now with the global economic crisis just wait until half the UK is underwater.

This article is still based on a press release from the AAAS meeting so needs to be read with care. I expect Professor Field was not expecting such a big "splash" to be made of his speech.

Global warming nearing ‘critical threshold’ [Financial Times]

The world is warming far more quickly than scientists forecast just two years ago when the Intergovernmental Panel on Climate Change published its last reports, according to a series of assessments presented over the weekend.

Chris Field of Stanford University, a senior member of the IPCC, told the annual meeting of the American Association for the Advancement of Science that the unexpectedly rapid increase in the burning of fossil fuels, especially coal, since 2000 would have dire consequences because of “feedback loops” in the global ­climate.

“We are looking now at a future climate that’s beyond anything we’ve considered seriously in climate model simulations,” Prof Field said.

The IPCC’s fourth assessment in 2007 concluded that the average global temperature would increase by between 1.1°C and 6.4°C by 2100, depending how much carbon dioxide and other greenhouse gases were released into the atmosphere over the coming decades. Prof Field said that seriously underestimated the potential severity of global warming, based on the new evidence.

Prof Field warned that there were early signs of melting in the Arctic tundra and increased fires in tropical forests – over and above deliberate deforestation – that could add billions of tonnes of carbon dioxide to the atmosphere.

“There is a real risk that human-caused climate change will accelerate the release of carbon dioxide from forest and tundra ecosystems, which have been storing a lot of carbon for thousands of years,” Prof Field said.

“We don’t want to cross a critical threshold where this massive release of carbon starts to run on autopilot.”

Al Gore, the former US vice-president turned climate change campaigner, responded with a passionate plea to an audience of 1,600 scientists, urging them to become more politically active in the fight against global warming.

“Scientists can no longer in good conscience accept this division between the work you do and the civilisation in which you live. This is a historic struggle.”

Mr Gore focused particularly on the accelerating loss of Arctic ice and the global increase in coal burning.

However there was optimism at the AAAS meeting – based on the professed determination of the new US administration to promote effective action, both in its domestic energy policies and in taking a lead in international climate change negotiations.

James McCarthy, a climate change expert at Harvard University and this year’s AAAS president, said: “The scientific talent President [Barack] Obama has recruited is of extraordinary calibre. He could not have found anyone better to look after energy and the environment.”

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"DEATH FACTORIES"

Some headlines are irresistible. When journalists go overboard on an issue I am all too happy to cover the story. This quote is my favourite.

The trains carrying coal to power plants are death trains. Coal-fired power plants are factories of death.

So coal fire power stations are labeled as "death factories". It has a nice ring to it. Given that a realistic alternative to coal fire power stations is nuclear I wonder what label they would end up with?

Coal-fired power stations are death factories. Close them [Observer]

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The climate is nearing tipping points. Changes are beginning to appear and there is a potential for explosive changes, effects that would be irreversible, if we do not rapidly slow fossil-fuel emissions over the next few decades. As Arctic sea ice melts, the darker ocean absorbs more sunlight and speeds melting. As the tundra melts, methane, a strong greenhouse gas, is released, causing more warming. As species are exterminated by shifting climate zones, ecosystems can collapse, destroying more species.

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Coal is not only the largest fossil fuel reservoir of carbon dioxide, it is the dirtiest fuel. Coal is polluting the world's oceans and streams with mercury, arsenic and other dangerous chemicals. The dirtiest trick that governments play on their citizens is the pretence that they are working on "clean coal" or that they will build power plants that are "capture-ready" in case technology is ever developed to capture all pollutants.

The trains carrying coal to power plants are death trains. Coal-fired power plants are factories of death. When I testified against the proposed Kingsnorth power plant, I estimated that in its lifetime it would be responsible for the extermination of about 400 species - its proportionate contribution to the number that would be committed to extinction if carbon dioxide rose another 100 ppm.

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Resources, population growth and conflict

The extent to which resources are the cause of political conflict has long been debated.

With increasing populations and decreasing natural resources exacerbated by climate change means the potential for future conflict increases every year.

Lester Brown over at Grist provides an history perspective much more eloquently than I could. Whilst I am probably on the more dismal side of the economics profession this article offers little hope for the future ;-)

When population growth and resource availability collide [Gristmill]

As land and water become scarce, competition for these vital resources intensifies within societies, particularly between the wealthy and those who are poor and dispossessed. The shrinkage of life-supporting resources per person that comes with population growth is threatening to drop the living standards of millions of people below the survival level, leading to potentially unmanageable social tensions.

Access to land is a prime source of social tension. Expanding world population has cut the grainland per person in half, from 0.23 hectares in 1950 to 0.10 hectares in 2007. One-tenth of a hectare is half of a building lot in an affluent U.S. suburb. This ongoing shrinkage of grainland per person makes it difficult for the world's farmers to feed the 70 million people added to world population each year. The shrinkage in cropland per person not only threatens livelihoods, but in largely subsistence societies, it also threatens survival itself. Tensions within communities begin to build as landholdings shrink below that needed for survival.

The Sahelian zone of Africa, with one of the world's fastest-growing populations, is an area of spreading conflict. In troubled Sudan, 2 million people have died and over 4 million have been displaced in the long-standing conflict of more than 20 years between the Muslim north and the Christian south. The more recent conflict in the Darfur region in western Sudan that began in 2003 illustrates the mounting tensions between two Muslim groups -- camel herders and subsistence farmers. Government troops are backing Arab militias, who are engaging in the wholesale slaughter of black Sudanese in an effort to drive them off their land, sending them into refugee camps in neighboring Chad. At least some 200,000 people have been killed in the conflict and another 250,000 have died of hunger and disease in the refugee camps.

The story of Darfur is that of the Sahel, the semiarid region of grassland and dryland farming that stretches across Africa from Senegal in the west to Somalia in the east. In the northern Sahel, grassland is turning to desert, forcing herders southward into the farming areas. Declining rainfall and overgrazing are combining to destroy the grasslands.

Well before the rainfall decline the seeds for the conflict were being sown as Sudan's population climbed from 9 million in 1950 to 39 million in 2007, more than a fourfold rise. Meanwhile, the cattle population increased from fewer than 7 million to 40 million, an increase of nearly sixfold. The number of sheep and goats together increased from fewer than 14 million to 113 million, an eightfold increase. No grasslands can survive such rapid continuous growth in livestock populations.

In Nigeria, where 148 million people are crammed into an area not much larger than Texas, overgrazing and overplowing are converting grassland and cropland into desert, putting farmers and herders in a war for survival. Unfortunately, the division between herders and farmers is also often the division between Muslims and Christians. The competition for land, amplified by religious differences and combined with a large number of frustrated young men with guns, has created a volatile and violent situation where finally, in mid-2004, the government imposed emergency rule.

Rwanda has become a classic case study in how mounting population pressure can translate into political tension, conflict, and social tragedy. James Gasana, who was Rwanda's Minister of Agriculture and Environment in 1990-92, warned in 1990 that without "profound transformations in its agriculture, [Rwanda] will not be capable of feeding adequately its population under the present growth rate." Although the country's demographers projected major future gains in population, Gasana said that he did not see how Rwanda would reach 10 million inhabitants without social disorder "unless important progress in agriculture, as well as other sectors of the economy, were achieved."

In 1950, Rwanda's population was 2.4 million. By 1993, it had tripled to 7.5 million, making it the most densely populated country in Africa. As population grew, so did the demand for firewood. By 1991, the demand was more than double the sustainable yield of local forests. As trees disappeared, straw and other crop residues were used for cooking fuel. With less organic matter in the soil, land fertility declined.

As the health of the land deteriorated, so did that of the people dependent on it. Eventually there was simply not enough food to go around. A quiet desperation developed. Like a drought-afflicted countryside, it could be ignited with a single match. That ignition came with the crash of a plane on April 6, 1994, shot down as it approached the capital Kigali, killing President Juvenal Habyarimana. The crash unleashed an organized attack by Hutus, leading to an estimated 800,000 deaths of Tutsis and moderate Hutus in 100 days.

Many other African countries, largely rural in nature, are on a demographic track similar to Rwanda's. Tanzania's population of 40 million in 2007 is projected to increase to 85 million by 2050. In the Democratic Republic of the Congo, the population is projected to triple from 63 million to 187 million.

Africa is not alone. In India, tension between Hindus and Muslims is never far below the surface. As each successive generation further subdivides already small plots, pressure on the land is intense. The pressure on water resources is even greater. With India's population projected to grow from 1.2 billion in 2007 to 1.7 billion in 2050, a collision between rising human numbers and shrinking water supplies seems inevitable. The risk is that India could face social conflicts that would dwarf those in Rwanda. The relationship between population and natural systems is a national security issue, one that can spawn conflicts along geographic, tribal, ethnic, or religious lines.

Disagreements over the allocation of water among countries that share river systems is a common source of international political conflict, especially where populations are outgrowing the flow of the river. Nowhere is this potential conflict more stark than among Egypt, Sudan, and Ethiopia in the Nile River valley. Agriculture in Egypt, where it rarely rains, is wholly dependent on water from the Nile. Egypt now gets the lion's share of the Nile's water, but its population of 75 million is projected to reach 121 million by 2050, thus greatly expanding the demand for grain and water. Sudan, whose 39 million people also depend heavily on food produced with Nile water, is expected to have 73 million by 2050. And the number of Ethiopians, in the country that controls 85 percent of the river's headwaters, is projected to expand from 83 million to 183 million.

Since there is already little water left in the Nile when it reaches the Mediterranean, if either Sudan or Ethiopia takes more water, then Egypt will get less, making it increasingly difficult to feed an additional 46 million people. Although there is an existing water rights agreement among the three countries, Ethiopia receives only a minuscule share of water. Given its aspirations for a better life, and with the Nile being one of its few natural resources, Ethiopia will undoubtedly want to take more.

In the Aral Sea basin in Central Asia, there is an uneasy arrangement among five countries over the sharing of the two rivers, the Amu Darya and the Syr Darya, that drain into the sea. The demand for water in Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan already exceeds the flow of the two rivers by 25 percent. Turkmenistan, which is upstream on the Amu Darya, is planning to develop another half-million hectares of irrigated agriculture. Racked by insurgencies, the region lacks the cooperation needed to manage its scarce water resources. Geographer Sarah O'Hara of the University of Nottingham who studies the region's water problems, says, "We talk about the developing world and the developed world, but this is the deteriorating world."

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“I don’t want to be selling my soul”

Interesting titles for environmental economics papers are always to be encouraged however tenuous the link. There is something about the English in this title that I do not like but cannot put my finger on.

The results of the paper - people care about the environment. That's that sorted then. I would need to read the full paper to understand where the selling of mortal souls presumably, to the devil, comes into it.

“I don’t want to be selling my soul”: Two experiments in environmental economics

Natalia V. Ovchinnikovaa, Hans J. Czapa, Gary D. Lynneb and Christopher W. Larimerc

Abstract

We conducted two experiments in the context of environmental protection. We found that profit considerations and personality traits are among the essential determinants of individual contributions to the solution of environmental problems. The results show that environmental considerations are powerful motivators and subjects are willing to forgo pecuniary profits for the sake of “doing-the-right-thing”. The study shows that the environmental groups can purchase carbon offsets directly from the providers at a lower-than market price and still obtain a relatively large market share.

Keywords: Metaeconomics; Environmental experiment; Self-interest; Other-interest; Carbon offsets

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Recession and climate change

Over at ideas4development comes the plea that climate change should not be forgotten in the current global economic crisis that has destined millions to the unemployment scrap heap of life and lead to abject finanical misery and homelessness for others.

Whilst the plea might be heartfelt it is inevitable that climate change will be shoved off the front pages (even of the Independent). What is climate change again?

While The World Fights Recession, Let Us Not Forget Climate Change [Ideas4development]

The link between human activity and climate change is established. There is uncertainty as to how exactly the physical processes that mediate between greenhouse gases emissions and changes to our planet’s climate will unfold, but these processes are not easy to reverse, and may even be irreversible. Catastrophic effects are possible in the long-run and the more we wait the greater the risks. We must step up our efforts to mitigate climate change now as a form of insurance against these growing risks. At the same time, we now know with certainty that climate change will have a larger and more immediate negative impact on many of the world’s poor. Our concern for development and poverty reduction, as captured in the Millennium Development Goals, dictates that we mitigate climate change urgently to reduce the threats to the development prospects of the most vulnerable, as well as take action to help those already affected to adapt.

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An Economic View of the Environment - Stavins

The environmental economics blogosphere welcomes Robert Stavins. This blog is sure to provide a rich stream of blogging material for globalisation and the environment.

As always, the crunch will come in six months time when we will know if Professor Stavins has the stamina and personality defects that most bloggers appear to require to keep going through thick and thin.

In need to work on the visuals of this blog now I have seen Professor Stavins slick set up. This blog now feels cheapened.

Stavins has also made an effort to reply to comments on his most recent post. That won't last long ;-)

An Economic View of the Environment

The first post concerns Obama's entrance into the green arena.

Opportunity for a Defining Moment[An economic view of the environment]

The inauguration of Barack Obama as the forty-fourth President of the United States is a defining moment in American history. For most Americans and countless others around the world, this is an inspiring political transition. The question we must face, however, is whether compelling inspiration will lead to effective action. As I wrote in a Boston Globe op-ed (November 12, 2008) one week after election day, environment and energy issues — particularly climate change policy — provide a microcosm of the forces that are shaping and will shape the actions of the new Administration and Congress.

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Sweden goes nuclear - political fallout?

After acting as an "opponent" in Sweden recently examining a thesis that considers Sweden's energy alternatives it was clear that to hit their CO2 targets without nuclear and without more hydro it was next to impossible given the lack of a natural gas network.

It therefore comes as no surprise to hear that nuclear is again an option. This is the route that the UK has taken. When I mentioned this in Sweden it appeared not to even be a remote possibility.

Interesting how quickly things change when security of supply clashes with stringent CO2 targets.

I wonder how well this will go down with apparently left thinking Swedes.

Sweden scraps ban on nuclear power with plan to replace 10 reactors [Guardian]

The Swedish government plans to reverse a nearly 30-year-old ban on building nuclear power plants, giving the green light to a new generation of reactors.

The centre-right government wants the new reactors to be built to replace the country's 10 existing stations.

The decision reverses a 1980 referendum when the majority of voters backed an end to nuclear expansion and the government pledged to phase out nuclear power plants.

But public support has grown since nuclear power has been repositioned as a low carbon energy source and a weapon in the fight against climate change. The decision by Sweden to back nuclear power contrasts with the nation's careful cultivation of its green image. In 2006, Sweden pledged to replace the use of all fossil fuels by 2020, but nuclear was not part of that plan.

Finland is currently the only country in the EU building a nuclear reactor. Its new Olkiluoto plant is being built in partnership with a consortium led by France's state-owned energy company, Areva. The project has been beset by delays and cost overuns, however, and is unlikely to be completed until 2012, three years behind schedule.

In the UK Gordon Brown's government is enthusiastic about building a new generation of reactors, arguing that both tackling global warming and ensuring security of energy supply are critical. German power giants E.ON and RWE are jointly bidding to build three stations, while EDF's takeover of British Energy has paved the way for it to construct a fleet of new atomic stations in the UK.

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China needs developed countries to lead the way on climate change

There are going to be an increased number of articles on climate change in the run up to Copenhagen at the end of 2009 and all manner of posturing from participating countries.

China gets an early shot in. Nothing has changed though and same old entrenched views remain.

China urges developed countries to further fulfill commitment to greenhouse gas emissions cuts [China View]

China on Thursday urged developed countries to further fulfill their commitment to reduce greenhouse gas emissions after 2012, saying it is the key to the success for the meeting on the climate change to be held in Copenhagen, Denmark at the end of 2009.

Chinese Foreign Ministry spokesperson Jiang Yu stressed at a regular press briefing "the substantive difference" between the voluntary emissions cuts of the developing countries and compulsory emissions cuts of already developed countries.

The developed countries and developing countries shoulder different responsibilities and obligations. The results of negotiations in Copenhagen should reflect the consensus reached in the Bali Roadmap so as to fully implement the UN Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol, Jiang highlighted.

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China and some other developing countries have made great efforts to handle climate change, Jiang said, adding that if the developed countries "honor their commitment" on providing funds and transferring technology for the developing countries, "more contribution could be made by the developing countries".

The total volume of China's greenhouse gas emissions remains high because of its intense population, Jiang explained, citing the fact that the greenhouse gas emissions volume per capita and the volume of China's cumulative greenhouse gas emissions were at a very low level.

The spokesperson also pledged that China would continue to work with other developing countries and actively participate in the relevant international cooperation in aim to fulfill its due contribution on tackling climate change.

The Chinese government, which attaches great importance to climate change, has enacted policies to address issue of climate change. According to a five-year plan, the energy consumption per-unit GDP is expected to drop by about 20 percent by 2010 compared to that of 2005.

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Economists "do" climate change predictions

The scientists don't like it when economists move onto their patch.

I suspect in many cases economists can do it as well if not better than "real scientists".

The results tell us little more than common sense - uncertainty makes it hard to make exact prediction.

"Uncertainty, Climate Change and the Global Economy"

CEPR Discussion Paper No. DP7024
TORSTEN PERSSON, Stockholm University - Institute for International Economic Studies (IIES), London School of Economics & Political Science (LSE), National Bureau of Economic Research (NBER), Centre for Economic Policy Research (CEPR)
Email: torsten.persson@iies.su.se

DAVID VON BELOW, Stockholm University - Institute for International Economic Studies (IIES)
Email: belowd@iies.su.se

The paper illustrates how one may assess our comprehensive uncertainty about the various relations in the entire chain from human activity to climate change. Using a modified version of the RICE model of the global economy and climate, we perform Monte Carlo simulations, where full sets of parameters in the model's most important equations are drawn randomly from pre-specified distributions, and present results in the forms of fan charts and histograms. Our results suggest that under a Business-As-Usual scenario, the median increase of global mean temperature in 2105 relative to 1900 will be around 4.5 °C. The 99 percent confidence interval ranges from 3.0 °C to 6.9 °C. Uncertainty about socio-economic drivers of climate change lie behind a non-trivial part of this uncertainty about global warming.

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Does carbon trading risk becoming the new sub-prime?

This is a largely irrelevant question but one that the Guardian considers anyway. There is something inherently distasteful about speculators piling into or indeed selling short the price of carbon as the implications for the climate are very real.

This is an issue worth keeping an eye on.

Carbon trading may be the new sub-prime, says energy boss [Guardian]

The row over the working of the European Union's emissions trading scheme intensified last night when EDF Energy warned that speculators risked turning carbon into a new category of sub-prime investment.

Vincent de Rivaz, the chief executive of the UK arm of the French-owned gas and electricity group, said politicians and regulators needed to revisit the way the ETS was working and whether it was bringing the results they wanted. "We like certainty about a carbon price," he said. "[But] the carbon price has to become simple and not become a new type of sub-prime tool which will be diverted from what is its initial purpose: to encourage real investment in real low-carbon technology."

Green campaigners have long been critical of the way the emissions trading scheme was set up, but it is unusual for a leading industry figure to cast doubt on it, as power companies lobbied hard for a market mechanism to deal with global warming.

"We are at the tipping point where we ... should wonder if we have in place the right balance between government policy, regulator responsibility and the market mechanism which will deliver the carbon price," said de Rivaz.

De Rivaz's comments came as Tony Hayward, chief executive of BP, emphasised that a predictable global carbon price was important because it would make "vast numbers of alternative energy sources competitive". He told the World Economic Forum in Davos that certainty over carbon emissions would help "solve the world's energy problems".

Their comments came days after the Guardian revealed that steelmakers and hedge funds were cashing in ETS carbon credits obtained for free, causing the price of carbon to plunge. The price of carbon has slumped from €30 a tonne to below €12, leading to a tail-off in clean-technology offset projects in the developing world.

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De Rivaz said an over-reliance on markets without tougher safeguards was responsible for the financial turmoil that has sent banks into administration or forced sale. He believed there had been a "lost sense of values" and he was anxious that this should not extend into the energy sector, but was not prepared yet to call for a carbon tax to replace the ETS.

Point Carbon, an information provider and consultancy, claims the sell-offs are only one of a number of factors influencing carbon prices and argues it is "rational" for them to be selling off credits.

"Recession in Europe is bringing a slowdown in manufacturing, meaning less production and less emissions," said Henrik Hasselknippe, global head of carbon at Point Carbon. "Companies are doing exactly the rational thing in these circumstances, which is to sell if they are long on credits. If they are emitting less then they do not need the credits so much and the price of carbon will fall."

However, Bryony Worthington, an expert on climate change and founder of sandbag.org.uk, said: "What should have been a way to kick-start investment in much needed low-carbon, efficient technologies is now a cash redistribution exercise." A study commissioned by the WWF environmental organisation from Point Carbon, published in March last year, estimated that "windfall profits" of between €23bn and €71bn (£20.9bn-£64.4bn) would be made under the ETS between 2008 and 2012, on the basis that the price of carbon would be between €21 and €32. Up to €15bn could be made by British companies that were given credits they did not need.

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Institutionalized pollution havens

Hot off the press - a plug for two previous co-authors new paper just out in Ecological Economics.

Institutionalized pollution havens

Matthew A. Cole
Per G. Fredriksson

Abstract

A multiple-principal, multiple-agent lobby group model suggests that the effect of foreign direct investment (FDI) on environmental policies is conditional on the structure of host countries' political institutions such as the number of legislative units (veto players). The model also yields the novel concept of “aggregate honesty” which combines veto players and corruption. FDI raises environmental policy stringency where the number of legislative units are many (aggregate honesty is high), but reduces it where the legislative units are few (aggregate honesty is low). Our panel data evidence is fully consistent with these predictions. An additional contribution is to show the empirical importance of endogenizing environmental policy in Pollution Haven Hypothesis studies. Only when treated as endogenous does environmental policy have a significant negative effect on FDI.

Keywords: Political economy; Political institutions; Veto players; Pollution Haven Hypothesis; FDI

JEL classification codes: Q28; D72; D73; F18; F21

The Smart Globalist

Interesting new blog aggregation and news site.

Globalization Central - News and Views From Outside the Box

The Smart Globalist is an online magazine that covers economics, finance, public policy and international relations. Our aim is to educate and inform public opinion across a range of issues related to globalization - from international trade and investment to the financial markets, foreign policy and global development.

The Smart Globalist publishes a diverse array of contributors hailing from academia, print journalism, finance and the public policy community. Our original editorial content includes both short, timely commentary on the latest news and current events, as well as longer analytic pieces exploring the complex issues surrounding international trade, investment and foreign policy. We hope that our coverage and analysis of these issues will eventually lead to practical, pragmatic solutions to the challenges and opportunities presented by globalization.

The Smart Globalist also aggregates content from some of the best blogs and media outlets on the internet. By syndicating content from established and emerging bloggers, The Smart Globalist hopes to draw attention to important perspectives often missing from the mainstream media, while taking advantage of the new ways of organizing and distributing information afforded by new technologies.

Our editorial staff reviews all of the syndicated content appearing on the site to ensure that it is timely, relevant, insightful and of interest to our readers. We publish the headline, a brief lede, and any image that comes embedded in the RSS feed, and provide a link to the original content. We never change or edit any of the syndicated content itself, we do not archive any syndicated content for more than two weeks, and we do not allow our readers to comment on this material. We encourage you to visit the websites of the original authors of this material and leave comments there, where the authors can respond, either by clicking through the links available with each post, or else by perusing our blogroll. We believe that this constitutes 'fair use' of the syndicated materials.

In short, we hope to fulfill a public service by helping everyone to form thoughtful, well-informed, reality based opinions and perspectives on global economic and political issues.

The Smart Globalist is run on a not-for-profit basis by the Economic Strategy Institute, a non partisan, non-profit public policy research organization based in Washington DC. The website is funded in part through a generous grant from the Alfred P. Sloan Foundation.

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KOF index of globalization

A useful index of globalisation.

KOF Index of Globalization

This link gives information on where to get the data and how it is constructed.

Watching UK's newsnight is rather frustrating when they talk about "de-globalisation".

Globalisation is slowing but not reversing. Barriers to trade remain low and are still falling.

Falling trade does not mean globalisation has reversed.

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What Environmentalists Need to Know About Economics

A new online book that will of use to many environmental management students or environmental scientists taking economics courses.

Jason Scorse: "What Environmentalists Need to Know About Economics"

"Academic disciplines are often separated by gulfs of mutual incomprehension, but the deepest and widest may be the one that separates most economists from most environmentalists...What underlies this is not so much disagreements about facts as disagreement about how to think."
~ Never The Twain Shall Meet. (2002, January 31). The Economist.

"This book was inspired by the warm reception I received from a short essay I wrote back in 2005 entitled, 'Why Environmentalists Should Embrace Economics.' The target audience is those interested in environmental issues with an eye towards actually solving them: students, citizens, policy‐makers, and activists. No economics background is required for this text, although some basic microeconomics knowledge is helpful. Even those with more advanced training in economics may find some new perspectives in this volume that they may have not considered before."
~ Jason Scorse


Download the Book

What Environmentalists Need to Know about Economics - Entire Book [PDF]

Table of Contents and Introduction

Part I: How Economists Approach Environmental Issues

Chapter 1 - The Root Causes of Environmental Problems

Chapter 2 - Determining the "Optimum" Amount of Pollution

Chapter 3 - Valuing Ecosystems

Chapter 4 - Putting Monetary Values on the Environment and Living Things

Chapter 5 - Valuing Future Generations

Chapter 6 - Tools to Address Environmental Problems: Taxes, Property Rights, Information, and Psychological Insights

Part II: Putting Economic Analysis to Work

Chapter 7 - Climate Change

Chapter 8 - Conservation and Biodiversity Preservation

Chapter 9 - Agriculture

Chapter 10 - Chemical Pollution

Chapter 11 - Fisheries

Chapter 12 - Deforestation

Chapter 13 - Population Growth & Technological Change

Chapter 14 - Demand-Side Interventions

Final Thoughts & Additional Resources


Comments and constructive criticism are welcome at: jason.scorse@miis.edu.


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