The Green Paradox II - too much oil?

Today is "Green Paradox" day.

Following on from Rick Van der Ploeg comes a new paper from Reyer Gerlagh (Tilborg). Incidently, both presented papers at the University of Birmingham last year (although not these papers).

Both papers suggest the green paradox could be an illusion or more accurately not a paradox at all. As I rule I am a fan of paradoxes so it is a shame to see another one bite the dust.

Too Much Oil

Reyer Gerlagh
Tilburg University - Center and Faculty of Economics and Business Administration


February 25, 2010

FEEM Working Paper No. 14.2009

Abstract:
Fear for oil exhaustion and its consequences on economic growth has been a driver of a rich literature on exhaustible resources from the 1970s onwards. But our view on oil has remarkably changed and we now worry how we should constrain climate change damages associated with oil and other fossil fuel use. In this climate change debate, economists have pointed to a green paradox: when policy makers stimulate the development of non-carbon energy sources to (partly) replace fossil fuels in the future, oil markets may anticipate a future reduction in demand and increase current supply. The availability of ‘green’ technologies may increase damages. The insight comes from the basic exhaustible resource model. We reproduce the green paradox and to facilitate discussion differentiate between a weak and a strong version, related to short-term and long-term effects, respectively. Then we analyze the green paradox in 2 standard modifications of the exhaustible resource model. We find that increasing fossil fuel extraction costs counteracts the strong green paradox, while with imperfect energy substitutes both the weak and strong green paradox may vanish.

Keywords: Green Paradox, Climate Change, Exhaustible Resources, Fossil Fuels

JEL Classifications: Q31, Q54
Working Paper Series


I am experimenting with the all new Amazon links which are now worth doing (as the hassle factor has been reduced considerably).

You have to love Peak Oil and it's partner in crime "Hubbert's Peak".



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Is There Really a Green Paradox?

Rick Van der Ploeg (Oxford) is working on a number of interesting areas.

The green paradox is important and often over looked.

"The Green Paradox states that, in the absence of a tax on CO2 emissions, subsidizing a renewable backstop such as solar or wind energy brings forward the date at which fossil fuels become exhausted and consequently global warming is aggravated."

Seems obvious - is there a solution?

Is There Really a Green Paradox?

Rick Van der Ploeg
University of Oxford; European University Institute - Economics Department (ECO); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Centre for Economic Policy Research (CEPR)

Cees Withagen
Free University of Amsterdam; Tilburg University

February 2010

CESifo Working Paper Series No. 2963

Abstract:
The Green Paradox states that, in the absence of a tax on CO2 emissions, subsidizing a renewable backstop such as solar or wind energy brings forward the date at which fossil fuels become exhausted and consequently global warming is aggravated. We shed light on this issue by solving a model of depletion of non-renewable fossil fuels followed by a switch to a renewable backstop, paying attention to timing of the switch and the amount of fossil fuels remaining unexploited. We show that the Green Paradox occurs for relatively expensive but clean backstops (such as solar or wind), but does not occur if the backstop is sufficiently cheap relative to marginal global warming damages (e.g., nuclear energy) as then it is attractive to leave fossil fuels unexploited and thus limit CO2 emissions. We show that, without a CO2 tax, subsidizing the backstop might enhance welfare. If the backstop is relatively dirty and cheap (e.g., coal), there might be a period with simultaneous use of the non-renewable and renewable fuels. If the backstop is very dirty compared to oil or gas (e.g., tar sands), there is no simultaneous use. The optimum policy requires an initially rising CO2 tax followed by a gradually declining CO2 tax once the dirty backstop has been introduced. We also discuss the potential for limit pricing when the non-renewable resource is owned by a monopolist.

Keywords: Green Paradox, Hotelling rule, non-renewable resource, renewable backstop, global warming, carbon tax, limit pricing

JEL Classifications: Q30, Q42, Q54
Working Paper Series

CO2 and its local impact

One of the difficulties with looking at CO2 emissions is the lack of a "local impact" of CO2. This causes problems both theoretically and empirically.

My recent paper "Stochastic Divergence or Convergence of Per Capita Carbon Dioxide Emissions: Re-examining the Evidence" potentially suffers from this problem.

Perhaps now "motivating" such a piece of work will be a little easier.

Cities hit more by CO2 emissions

Carbon dioxide, the main greenhouse gas driving climate change, is a global problem – but a study at Stanford University in California shows it is also harmful locally, affecting city dwellers much more than their rural cousins, as a result of CO2 “domes” that develop over urban areas.

Mark Jacobson, director of Stanford’s Atmosphere/Energy Programme, found that domes of higher CO2 concentrations cause local temperature increases, which in turn increase the amount of local air pollutants such as low-level ozone and soot particles in urban air. He estimated that urban CO2 caused 50-100 excess deaths a year in California and 300-1,000 for the US, on top of the health effects of other pollutants.

The study, published in the journal Environmental Science and Technology, provides the first scientific basis for controlling local CO2 emissions based on their damage to health, according to Prof Jacobson. It also exposes an oversight in current cap-and-trade proposals for reducing CO2 emissions.

“The cap-and-trade proposal assumes there is no difference in the impact of CO2, regardless of where it originates,” Prof Jacobson said. “This study contradicts that assumption. It doesn’t mean you can never do something like cap and trade – it just means that you need to consider where the CO2 emissions are occurring.”

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Emissions FAIL

It is Friday after all.


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Tragedy of the Zimbabwe commons

From Marginal revolution.

A must read for Environmental Economics students.

See the Tragedy of the Commons [Marginal revolution]

In 2000 Zimbabwe began to forcibly redistribute land from private but predominantly white-owned commercial farms to much poorer black farmers who toiled on communal lands. Stunning pictures from Google Earth collected by Craig Richardson show the result.

Take a look at the Before picture. The communal land on the left is dry, dusty and unproductive compared to the private farmland on the right which is green and dotted with blue ponds and lakes. Why? There were two theories to explain this difference.

* The Tragedy of the Commons – the farmers on the communal lands did not have the incentives to invest in the land and thus the land eroded and turned to desert.

* The land on the right (which was owned mostly by whites) was better quality land.

Both theories could be true. Regarding the latter explanation, however, notice that the dry communal lands on the left are sharply delineated from the green private farms on the right--so sharply that soil quality and rainfall alone are unlikely to explain the difference.

So what happened after the land was redistributed beginning in 2000 and all of it made communal?

After reform the land quality worsened everywhere. In particular, note that the blue lakes and ponds on the right became dry and empty as farmers no longer had an incentive to invest in maintaining these resources. The tragedy of the commons.

This excellent visual look at the tragedy of the commons was produced by Todd Moss at The Center for Global Development based on pictures and ideas from Craig Richardson. Of course Zimbabwe had many problems before and after this forcible land redistribution. You can find more pictures, background information and a lengthier discussion of this episode here.

In addition, I have included the shifting graphic in a set of PowerPoint slides which could be incorporated in a classroom discussion of the tragedy of the commons. Feel free to modify these slides as you wish and thanks to the Center for Global Development for helping me to create the slides.

This post is an example of the material available at a new website designed for anyone teaching principles of economics and called, SeetheInvisibleHandBlog. At the new website you can can find videos, powerpoints, ideas, blog posts and much more. The material is nicely linked up with our textbook, Modern Principles, but we think that this website will be useful to anyone who teaches principles of economics.

Climate engineering and "greenfinger" - can it save the planet or end it

The idea that climate engineering - the ability for countries to make it rain or snow on demand - could solve problems raised by climate change raising some worrying possibilities.

The infamous Superfreakanomics chapter touches on a number of these issues.

So just how does it work? Personally it is hard to believe that there are not serious side affects from the rain on demand idea. Surely this means someone, somewhere is going to get less rain.

I like the idea of the lone "greenfinger".

Quick Study: Climate Engineering [Readers Digest]

Chinese and Russian scientists claim to make it rain or snow on command. But can we slow global warming with massive operations called geoengineering? A growing number of experts say yes—and that radically altering our environment may be our last, best hope of avoiding disaster. From orbiting space mirrors to artificial trees to brighter clouds, here's what's under discussion.

Flash Points
Risks vs. rewards. Like any untested tech-nology, geoengineering harbors unknown risks. An artificial cooling of the earth could disrupt global weather patterns, bringing drought and famine to parts of North Africa, India, and China.

What it would cost. Hoisting mirrors or sun shields into space could cost trillions, according to a September 2009 report by the United Kingdom's Royal Society. Stratospheric aerosols, which could block solar radiation and cool the earth, could cost tens of billions of dollars a year; cloud brightening, which reflects sunlight away from the earth, $2 billion a year. Expensive, yes, but to some economists, geo-engineering is worth pursuing. One well-regarded but controversial report projects that stratospheric aerosols could carry a benefit 27 times higher than their cost; it also suggests that marine cloud brightening could save $7.5 trillion by reducing the damage caused by global warming.

The "Greenfinger" scenario. David Victor, a climate policy expert at the University of California, San Diego, worries about the prospect of a single nation taking matters into its own hands. "It could be a Hail Mary pass by a country getting hammered by global warming," he says. A wealthy individual—Victor calls him a "lone Greenfinger"—could also choose to go it alone. To prevent unilateral action, experts need a framework for researching geoengineering and deciding, as Victor says, "who gets to put their hand on the thermostat." One such meeting, organized by the nonprofit Climate Institute in Washington, D.C., will take place this month.

Forward Thinking
Contain the carbon. Removing carbon from the air and storing it underground, or reusing it for fuel, would help slow and possibly reverse global warming. This solution, says David Keith, a physicist at the University of Calgary, would cost considerably less than what we might spend converting carbon-fed electrical to rooftop solar power. England's Institution of Mechanical Engineers has even come up with a proposal to line highways with "artificial trees" that would collect carbon dioxide at rates far exceeding those of lazy natural trees and convert it into a form that's easily collected and stored.

Deflect, deflect, deflect. National Center for Atmospheric Research climatologist John Latham, along with University of Edinburgh engineer Stephen Salter, has designed a novel way of "brightening" clouds: a fleet of remote-controlled, wind-powered ships that would spray a fine seawater mist into marine clouds. "It's established that if you have a lot of little drops instead of a few big ones, then the clouds are more reflective," says Latham. They hope to increase that reflectivity by 10 percent, which, they say, would hold the earth's temperature steady until at least 2050. Keith is devising a reflective metal particle that could levitate itself above the ozone layer to reflect heat from the sun back into space, although his main focus remains on reflective aerosols. Washington-based Intellectual Ventures Lab, owned by former Microsoft guru Nathan Myhrvold, has proposed an 18-mile-long hose suspended from balloons that would pump liquefied sulfur dioxide (a gas emitted when volcanoes erupt) into the stratosphere.

Show them the money. Last year, a House of Representatives committee held its first hearing on climate engineering but shied away from funding any proposals. "We need a balanced, open, publicly funded research program," says Keith.

The Back-and-Forth …
"A tiny investment in climate engineering might be able to reduce as much of global warming's effects as trillions of dollars spent on emissions reductions."
—Bjorn Lomborg, the Copenhagen Consensus Center

"Geoengineering is a far-fetched, pie-in-the-sky dream to avoid having to make the emissions cuts we have to make now."
—Michael Crocker, spokesman for Greenpeace

The Time Line
874–853 bc: The prophet Elijah scales Mount Carmel in Israel and prays for rain. It pours.

400–200 bc: Bronze Age cultures in China and Southeast Asia bang the kettle gong in rainmaking ceremonies.

1824: Thomas Jefferson calls for an index of the American climate to monitor the effects of massive forest clearing and marsh draining.

1830s: James Espy, the first national meteorologist, proposes lighting huge fires along the Appalachian Mountains to control and enhance the nation's rainfall.

1901: Swedish meteorologist Nils Ekholm publishes a research paper on the possibility of climate modification.

1932: The U.S.S.R.'s Leningrad Institute of Rainmaking is founded.

1946: Researchers at General Electric spread the word about cloud seeding, leading to a commercial boom in weather-modification technology.

1960–1961: The U.S.S.R. reports clearing clouds over 12,000 square miles.

1965: President Lyndon Johnson's Science Advisory Committee issues the first high-level government report to include a discussion of ways to manipulate climate.

1966: The U.S. tests cloud seeding in Vietnam.

1977: Russian physicist Mikhail Budyko proposes using planes to release sulfur dioxide into the stratosphere, creating, in effect, a fake volcanic eruption.

1992: The National Academy of Sciences report "Policy Implications of Greenhouse Warming" advocates climate control.

2006: Nobel-winning chemist Paul Crutzen suggests launching sulfur dioxide into the stratosphere with weather balloons instead of planes.

June 2007: A Carnegie Institution report suggests using sulfate particles to roll back rising global temperatures, returning the planet to the average temperatures of 1900.

February 2009: Desperate to end a drought, Chinese meteorologists fire explosive rockets loaded with chemicals into the sky. A snowfall blankets Beijing.

October 2009: China claims to have prevented rain during its 60th-anniversary parade by sprinkling liquid nitrogen into clouds.

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As the sea rises which cities go under first - or where not to buy a house

Good visualisation of the threat of rising sea levels. Click the link for city names and sea level rise information.

Information is Beautiful: When Sea Levels Attack [Guardian]



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ØDEGÅRD - sustainable business strategy

Now the Department of Economics in the University of Birmingham is now part of the Birmingham Business School following a recent strategic merger I need to start thinking "sustainable business strategy".

This new blog will form part of my research.

The blog has a lot of pictures. I guess this is what I would have expected from a more business orientated blog.

This is something that this and the daddy of environmental economics blogs "Env-econ" are still sadly short of and I suspect this has something to do with them being written by economists although I note that each Env-Econ post now has a picture of the actual economist in colour after each post. This is a little scary.

I fear I cannot subject globalisation and environment readers to such an assault on their senses.

ØDEGÅRD

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World Development Report 2010: Development and Climate Change

It was great to have Kirk Hamilton come to the University of Birmingham last week to present the results of the World Bank 2010 World Development Report on Climate Change.

The presentation was accessible but also included some good economics for us to get our teeth into.

World Bank Report



Here is the press release:

WASHINGTON, September 15, 2009 – Developing countries can shift to lower-carbon paths while promoting development and reducing poverty, but this depends on financial and technical assistance from high-income countries, says a new World Bank report released today. High-income countries also need to act quickly to reduce their carbon footprints and boost development of alternative energy sources to help tackle the problem of climate change.

World Development Report 2010: Development and Climate Change, released in advance of the December meetings on climate change in Copenhagen, says that advanced countries, which produced most of the greenhouse gas emissions of the past, must act to shape our climate future. If developed countries act now, a ‘climate-smart’ world is feasible, and the costs for getting there will be high but still manageable. A key way to do this is by ramping up funding for mitigation in developing countries, where most future growth in emissions will occur.

“The countries of the world must act now, act together and act differently on climate change,” said World Bank President Robert B. Zoellick. "Developing countries are disproportionately affected by climate change – a crisis that is not of their making and for which they are the least prepared. For that reason, an equitable deal in Copenhagen is vitally important.”



Countries need to act now because today’s decisions determine both the climate of tomorrow and the choices that shape the future. Countries need to act together because no one nation can take on the interconnected challenges posed by climate change, and global cooperation is needed to improve energy efficiencies and develop new technologies. Countries need to act differently, because we cannot plan for the future based on the climate of the past.

Developing countries will bear most of the costs of the damage from climate change. Many people in developing countries live in physically exposed locations and economically precarious conditions, and their financial and institutional capacity to adapt is limited, says the report. Already, policymakers in some developing countries note that an increasing amount of their development budget is being diverted to cope with weather-related emergencies.

At the same time, 1.6 billion people in the developing world lack access to electricity, the report notes. These developing countries—whose average per capita emissions are a fraction of those of high-income countries—need massive expansions in energy, transport, urban systems, and agricultural production. Increasing access to energy and other services using high-carbon technologies will produce more greenhouse gases, hence more climate change.



The report finds, however, that existing low-carbon technologies and best practices could reduce energy consumption significantly, saving money. For example, the report notes that it is possible to cut energy consumption in industry and the power sector by 20–30 percent, helping reduce carbon footprints without sacrificing growth. In addition, many changes to reduce emissions of greenhouse gases also deliver significant benefits in environmental sustainability, public health, energy security, and financial savings. Avoided deforestation, for instance, preserves watersheds and protects biodiversity, while forests can effectively serve as a carbon sink.

Solving the climate problem requires a transformation of the world’s energy systems in the coming decades. Research and Development investments on the order of US$100 - $700 billion annually will be needed—a major increase from the modest $13 billion a year of public funds and $40 billion to $60 billion a year of private funds currently invested.

Developing countries, particularly the poorest and most exposed, will need assistance in adapting to the changing climate. Climate finance must be greatly expanded, since current funding levels fall far short of foreseeable needs. Climate Investment Funds (CIFs), managed by the World Bank and implemented jointly with regional developing banks, offer one opportunity for leveraging support from advanced countries, since these funds can buy-down the costs of low-carbon technologies in developing countries.

“Developing countries face 75-80 percent of the potential damage from climate change. They urgently need help to prepare for drought, floods, and rising sea levels. They also need to intensify agricultural productivity, contain malnutrition and disease, and build climate-resilient infrastructure,” said Justin Lin, World Bank Chief Economist and Senior Vice-President, Development Economics.

The current financial crisis cannot be an excuse to put climate on the back burner, the report warns. While financial crises may cause serious hardship and reduce growth over the short- to medium-term, they rarely last more than a few years. The threat of a warming climate is far more severe and long-lasting.

The earth’s warming climate is making the challenge of development more complicated, even as one in four people still live on less than $1.25 a day, and over a billion people do not have sufficient food to meet their daily basic nutritional needs.

“Grappling with climate shocks that are already hampering development will not be easy. But promising new energy technologies can vastly reduce future greenhouse gas emissions and prevent catastrophic climate change. We also need to manage our farms, forests, and water resources to ensure a sustainable future,” said Rosina Bierbaum, WDR co-director and Dean of the University of Michigan’s School of Natural Resources and Environment.

“The good news is that a climate-smart world is within reach if we work together now to overcome inertia, keep costs down, and modify our energy, food, and risk management systems to ensure a safer future for everybody,” said Marianne Fay, WDR co-director and Chief Economist for Sustainable Development at the World Bank.

“There are real opportunities to shape our climate future for an inclusive and sustainable globalization, but we need a new momentum for concerted action on climate issues before it is too late,” said Robert B. Zoellick, World Bank Group President.

The World Bank Group’s "Strategic Framework for Development and Climate Change" puts emphasis on including mitigation and adaptation initiatives in its lending, while recognizing that developing countries need to encourage economic growth and reduce poverty.

The number of World Bank-financed studies that help client countries plan and implement low-carbon growth strategies are also growing, and the Bank Group’s energy financing is increasingly turning towards renewable energies and energy efficiency. Over the past three years, approximately two-thirds of the Bank Group’s total energy financing was in the area of non-fossil fuels whereas around one-third was for fossil fuels, of which half was for natural gas.

The report is well worth a read. The economic logic is fine but getting this logic translated into policy will be a lot harder (see previous post).

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The "Deep Divide" stays deep

Ever the pessimist this blog has long expounded the fact that the developed and developing countries are so far apart on climate change that there is no chance of a meaningful deal. The Copenhagen failure was the result and was expected.

China's Special Representative for Climate Change Negotiations, Yu Qingtai, makes the point very clearly.

I am afraid I can do nothing but agree with the opening statement "there is little hope in overcoming the disagreements on how to fight climate change".

The bottom line is that the world needs a G-2 or G-3 agreement and that is what I believe to be most likely . China and the US will strike their own deal that in the end might just save the planet. The EU could be included.

The Chinese national interest is what matters. All we can hope for is that pollution grows more slowly that GDP. This should happen with technological change and the composition of production.

The joker is the pack is that emissions also harm China's national interest. This is ultimately the only thing that will bring them to the negotiating table. Remember that US emissions will also harm China more than the US.

I will post up the excellent world bank climate review later.

China Envoy Says Deep Divides Threaten Climate Talks [PlanetArk]

BEIJING - Rich and developing countries have little hope of overcoming key disagreements over how to fight global warming, China's climate change ambassador said on Wednesday, warning of a year of troubled negotiations.

China's Special Representative for Climate Change Negotiations, Yu Qingtai, said as nations seek a new global treaty on climate change by the end of 2010, major players are unlikely to budge on the issues that stymied stronger agreement at the contentious Copenhagen climate summit in late 2009.

"There may be some adjustments and shifts in the positions and tactics of the various sides, but I personally believe that on some core issues, the positions of the major parties will not undergo any substantive changes," Yu said at a meeting in Beijing on China's climate change policies.

After they failed to agree on a comprehensive pact at Copenhagen, negotiators now hope to put together a binding treaty through meetings culminating in Mexico late this year.

Yu was not hopeful.

"We can expect that in the coming year, there'll still be a mix of consensus and conflict, of cooperation and struggle, on the stage of climate diplomacy," he said. "The progress of the international negotiations faces very many difficulties."

Yu's comments added to recent gloomy forecasts for the climate negotiations, an issue that could add to tensions with the United States.

Agreeing a U.N. climate treaty in 2010 will be "very difficult," the head of the U.N. Climate Change Secretariat, Yvo de Boer, said on Tuesday.

DISPUTES

China has passed the United States to become the biggest producer of greenhouse gas emissions from human activity. Yet China is a developing country with average greenhouse gas output per person far lower than in wealthy countries.

That dual status has put Beijing at the heart of disputes with the United States, European Union and other rich economies about how developed and big developing countries should share out burdens for controlling greenhouse gas emissions.

Also crucial is how much international scrutiny should apply to the emissions actions of big developing nations.

In Copenhagen, China and other poorer countries accused the West of offering too little in the way of emissions cuts and climate funds and technology to the Third World.

Britain, Sweden and other countries accused China of obstructing stronger agreement at the Copenhagen summit, which ended with a non-binding accord.

China should not expect wealthy countries to change their tune this year, said Yu.

"I believe that there won't be any substantive change in the developed countries' settled policy of shifting blame to the developing countries," he said.

"They will continue pressuring the developing countries to shoulder unreasonable responsibilities."

The speeches by Yu and other Chinese climate policy officials were published online by an official news website (www.china.com.cn).

Yu said China and other developing countries would defend their right to grow their economies without taking on internationally binding emissions targets.

Chinese President Hu Jintao said on Tuesday he was committed to fighting climate change and pressing forward with a domestic goal to cut carbon intensity.

China has vowed to reduce the amount of carbon dioxide -- the main greenhouse gas from human activity -- emitted to create each unit of economic worth by 40-45 percent by 2020, compared with 2005 levels.

This goal would let China's greenhouse gas emissions keep rising, but more slowly than economic growth.

But Hu also said Beijing was committed to the "common but differentiated" principle: that developing countries should take action to fight climate change, but not assume the internationally binding emissions targets that developed countries must shoulder under U.N.-backed climate treaties.

Yu said negotiators should not expect China to budge.

"When it comes to responsibilities that we should not assume, that harm our national interests, we will resolutely hold out, no matter how much pressure there is in the negotiations," said Yu.

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The economic value of "TEETH"

Glancing at the previous work of Matthew Neidell (see previous post) I noticed he had published the paper called "The Economic Value of Teeth".

Matthew sounds like my kinda academic. One of the best paper titles I have seen for a while. How I missed this back in 2008 I don't know.

The result - good teeth influences earnings. This is a US study where I expect the teeth quality variation is fairly low. In the UK on the other hand the average teeth quality must be much lower and hence there should be a much higher variance.

The Economic Value of Teeth

Sherry Glied
Columbia University - Mailman School of Public Health; National Bureau of Economic Research (NBER)

Matthew Neidell
Columbia University; University of Chicago - Department of Economics and CISES

March 2008

NBER Working Paper No. W13879

Abstract:
Healthy teeth are a vital and visible component of general well-being, but there is little systematic evidence to demonstrate their economic value. In this paper, we examine one element of that value, the effect of oral health on labor market outcomes, by exploiting variation in access to fluoridated water during childhood. The politics surrounding the adoption of water fluoridation by local water districts suggests exposure to fluoride during childhood is exogenous to other factors affecting earnings. We find that women who resided in communities with fluoridated water during childhood earn approximately 4% more than women who did not, but we find no effect of fluoridation for men. Furthermore, the effect is almost exclusively concentrated amongst women from families of low socioeconomic status. We find little evidence to support occupational sorting, statistical discrimination, and productivity as potential channels of these effects, suggesting consumer and employer discrimination are the likely driving factors whereby oral health affects earnings.

JEL Classifications: I12, I18
Working Paper Series

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Temperature and the Allocation of Time: Implications for Climate Change

It is all about getting the right instrument these days.

This looks like an interesting paper (having not read it yet).

I am not yet convinced that working patterns will change with temperature changes especially where every company has air conditioning.

Even the quote from the abstract I find a little odd. It must relate to the definition of "climate". Are we all not exposed to climate all the time? How can one have a low exposure to climate?

"We find large reductions in U.S. labor supply in industries with high exposure to climate and similarly large decreases in time allocated to outdoor leisure."

I guess I need to read the paper to find out.


Temperature and the Allocation of Time: Implications for Climate Change

Joshua Graff Zivin
University of California, San Diego - Graduate School of International Relations and Pacific Studies (IRPS); National Bureau of Economic Research (NBER)

Matthew Neidell
Columbia University; University of Chicago - Department of Economics and CISES


February 2010

NBER Working Paper No. w15717

Abstract:
In this paper we estimate the impacts of climate change on the allocation of time using econometric models that exploit plausibly exogenous variation in daily temperature over time within counties. We find large reductions in U.S. labor supply in industries with high exposure to climate and similarly large decreases in time allocated to outdoor leisure. We also find suggestive evidence of short-run adaptation through temporal substitutions and acclimatization. Given the industrial composition of the US, the net impacts on total employment are likely to be small, but significant changes in leisure time as well as large scale redistributions of income may be consequential. In developing countries, where the industrial base is more typically concentrated in climate-exposed industries and baseline temperatures are already warmer, employment impacts may be considerably larger.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

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Help write the real "climate-gate" story

I happen to believe that "climate-gate" is a storm in a teacup. As a fellow academic I can appreciate the following observation from Phil Jones that appeared in today's Sunday Mail.

Climategate U-turn as scientist at centre of row admits: There has been no global warming since 1995 [Daily Mail]

The academic at the centre of the ‘Climategate’ affair, whose raw data is crucial to the theory of climate change, has admitted that he has trouble ‘keeping track’ of the information.

Colleagues say that the reason Professor Phil Jones has refused Freedom of Information requests is that he may have actually lost the relevant papers.

Professor Jones told the BBC yesterday there was truth in the observations of colleagues that he lacked organisational skills, that his office was swamped with piles of paper and that his record keeping is ‘not as good as it should be’.

This is a useful experiment by the Guardian. One can only hope that the idea is not hijacked by the sceptics. When it comes to the "cock-up over conspiracy" I tend to lean towards the former.

Help write the full story on the hacked emails controversy [Guardian]

In a unique experiment, The Guardian has published online the full manuscript of its major investigation into the climate science emails stolen from the University of East Anglia, which revealed apparent attempts to cover up flawed data; moves to prevent access to climate data; and to keep research from climate sceptics out of the scientific literature.

As well as including new information about the emails, we will allow web users to annotate the manuscript to help us in our aim of creating the definitive account of the controversy. This is an attempt at a collaborative route to getting at the truth.

We hope to approach that complete account by harnessing the expertise of people with a special knowledge of, or information about, the emails. We would like the protagonists on all sides of the debate to be involved, as well as people with expertise about the events and the science being described or more generally about the ethics of science. The only conditions are the comments abide by our community guidelines and add to the total knowledge or understanding of the events.

The annotations - and the real name of the commenter - will be added to the manuscript, initially in private. The most insightful comments will then be added to a public version of the manuscript. We hope the process will be a form of peer review. If you have a contribution to make, please email climate.emails@guardian.co.uk.

The anonymous commenting facility under each article will also be switched on so that anyone can contribute to the debate.

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Trade In"Virtual Carbon"

An interesting new paper on virtual carbon (although when I see the world GTAP it depresses me).

One of the authors, Kirk Hamilton, will be visiting the University of Birmingham on Monday next week. He will be making a presentation at 5pm in Lecture Theatre G06 in the Business School entitled:

“Development and Climate Change: Main Messages and Selected Economic Insights from the World Development Report 2010”.

Everyone is welcome to attend. So any blog readers in the Birmingham area please pop along and way hello if you can recognise me.

Here is the paper:

Trade In'Virtual Carbon': Empirical Results and Implications for Policy

Giles Atkinson
London School of Economics and Political Science (LSE) - Department of Geography and Environment

Kirk Hamilton
World Bank

Giovanni Ruta
World Bank - Environment and Natural Resources Division

Dominique Van der Mensbrugghe
World Bank

World Bank Policy Research Working Paper No. 5194

Abstract:
The fact that developing countries do not have carbon emission caps under the Kyoto Protocol has led to the current interest in high-income countries in border taxes on the"virtual"carbon content of imports. The authors use Global Trade Analysis Project data and input-output analysis to estimate the flows of virtual carbon implicit in domestic production technologies and the pattern of international trade. The results present striking evidence on the wide variation in the carbon-intensiveness of trade across countries, with major developing countries being large net exporters of virtual carbon. The analysis suggests that tax rates of $50 per ton of virtual carbon could lead to very substantial effective tariff rates on the exports of the most carbon-intensive developing nations.

Keywords: Climate Change Mitigation and Green House Gases, Environmental Economics & Policies, Climate Change Economics, Economic Theory & Research, Environment and Energy Efficiency

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The "Bhudda Mushroom"

I apologise for this post but some paper titles prove irrestible to me. As someone who spends hours on each paper title this appeals to me on many levels although I am not sure why.

The paper is also interesting from an environmental economics perspective.

The Buddha mushroom: Conservation behavior and the development of institutions in Bhutanstar

Jeremy S. Brooks

a Graduate Group in Ecology, University of California at Davis, Davis CA 95616, United States

Abstract

Common pool resource management institutions can be an effective means by which communities can regulate resource use. While we are gaining a greater understanding of the characteristics that are associated with successful institutions, we know less about why and how such institutions emerge and what role individual behaviors play in this process. The bottom-up emergence of institutions may depend on the patterns of heterogeneity in the cooperative behaviors of individual resource users. Likewise, the emerging institutions serve to constrain subsequent resource collection behaviors and alter those patterns. Because institutions both emerge from, and alter, the behaviors of individual resource users, it is useful to view the relationship between the two levels from a coevolutionary perspective. Here, I focus on the motivations for the adoption of conservation behavior and discuss how these behaviors can impact emerging institutions. This study is based on the harvest of a newly utilized, commercially valuable mushroom in two communities (geogs) in Bhutan. I examined which collectors exhibited each of two cooperative conservation behaviors, willingness to reduce one's harvest and punishment of non-compliant harvesting techniques and determined the traits associated with these behaviors. Using logistic regression I found that predictors from each of four domains, namely, economic factors, attitudes/values, knowledge/perceptions of resource scarcity, and social capital, are important for fostering conservation behavior. Other regarding values, high and low levels of wealth, perceptions of resource scarcity, and education are positively associated with a willingness to reduce ones harvest. Selfish values, high and low levels of wealth, and low levels of trust are associated with punishment. Changes in these individual characteristics may affect the frequency of cooperative acts and subsequently influence the success of the emerging institutions. As such, identifying the traits associated with the behaviors exhibited by individuals is an important step in understanding the dynamics of institutional evolution. Because this study captures perceptions and behaviors in the early stages of the harvest it can be used as the baseline for a longitudinal study exploring the coevolutionary dynamics between individual level behaviors and community level resource management institutions.

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Economists, time to team up with the ecologists!

Note the exclamation mark at the end of this new "lead" commentary from Ecological Economics. I suspect that Hilde Karine has a point but most economists still shy away from the word "interdisciplinary" as it tends to be associated with "low quality" (rightly or wrongly).

I am entering the new brave world of interdisciplinary research. Career suicide or stroke of genius? I will keep you updated.

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Economists, time to team up with the ecologists!

Hilde Karine

Department of Ecology and Natural Resource Management, Norwegian University of Life Sciences, Box 5003, 1432 Ås, Norway

Abstract

Bioeconomic modeling is an increasingly relevant meeting arena for economists and ecologists. A majority of the growing literature, however, is written by economists alone and not with ecologists in true interdisciplinary teamwork. Physical distance between research institutions is no longer a reasonable justification, and I argue that, in practice, neither do the more fundamental philosophical oppositions present any real hindrance to teamwork. I summarize these oppositions in order of increasing magnitude as: 1) the axiom, held by many ecologists, of ‘irreducible complexity of ecosystem functioning’, which is avoided simply because the ecological ‘whole’ (as opposed to its ‘parts’) is not an element of most realistic modeling scenarios; 2) the axiom, also held by many ecologists, of ‘the precautionary principle’, which mainly surfaces at the applied end of natural resource management, and thereby should not prevent economists and ecologists from jointly building the models necessary for the final decision making; and 3) the economists' axiom of ‘the tradability principle’, which is harder to overcome as it demands value-based practical compromises from both parties. Even this may be solved, however, provided the economists accept non-marketable components in the model (e.g. by using restriction terms based on ecology), and the ecologists accept a final model output measured in terms of monetary value. The easiest candidates for interdisciplinary teamwork in bioeconomics are therefore researchers who acknowledge ethical relativism. As bioeconomics presently functions mainly as an arena for economists, I say the responsibility for initiating interdisciplinary teamwork rests most heavily on their shoulders.

Keywords: Ecological economics; Intrinsic; Nature; Management; Philosophy; Wildlife

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Himalayan glaciers thrown into the climate chance melting pot

Are the Himalayan glaciers melting or not and even if they are how quickly are they likely to disappear?

The IPCC is getting some heat from the British right wing press.

It looks bad though. Surely the IPCC would not be so naive?

World misled over Himalayan glacier meltdown [Times]

A WARNING that climate change will melt most of the Himalayan glaciers by 2035 is likely to be retracted after a series of scientific blunders by the United Nations body that issued it.

Two years ago the Intergovernmental Panel on Climate Change (IPCC) issued a benchmark report that was claimed to incorporate the latest and most detailed research into the impact of global warming. A central claim was the world's glaciers were melting so fast that those in the Himalayas could vanish by 2035.

In the past few days the scientists behind the warning have admitted that it was based on a news story in the New Scientist, a popular science journal, published eight years before the IPCC's 2007 report.

It has also emerged that the New Scientist report was itself based on a short telephone interview with Syed Hasnain, a little-known Indian scientist then based at Jawaharlal Nehru University in Delhi.

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However, glaciologists find such figures inherently ludicrous, pointing out that most Himalayan glaciers are hundreds of feet thick and could not melt fast enough to vanish by 2035 unless there was a huge global temperature rise. The maximum rate of decline in thickness seen in glaciers at the moment is 2-3 feet a year and most are far lower.

Professor Julian Dowdeswell, director of the Scott Polar Research Institute at Cambridge University, said: "Even a small glacier such as the Dokriani glacier is up to 120 metres [394ft] thick. A big one would be several hundred metres thick and tens of kilometres long. The average is 300 metres thick so to melt one even at 5 metres a year would take 60 years. That is a lot faster than anything we are seeing now so the idea of losing it all by 2035 is unrealistically high.”

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New year "global warming" cheer

Even by economists standards this 1 minute video is on the bleak side. Think failure at Copenhagen when watching. Imagine the politicians sitting around arguing for the interests of their own country to the detriment of the planet. Good luck.



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The Story of Stuff

This is a simple but effective. Takes the material balance model and adds extra greenness - some interesting points raised.

Good for all school children and some academics.



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China achieved Copenhagen targets

Following on from the "China is evil" and sabbotaged Copenhangen:

Did China kill hope and the planet at Copenhagen?[China Economics Blog]

Copenhagen was never going to up with a decent environmental agreement. The result is better than nothing but only just. Are China really the bad guys in all this?

The left leaning Guardian puts the boot in. It is a surprise that they think it is a surprise that China would act in this way.

China are flexing their muscles and toughing it out - they can afford to do so without voters and upcoming elections. China's stance has internal and external logic. China will cut emissions and they will probably do a lot better then the West at hitting them but will do so on their own terms.

At least the Guardian accepts Copenhagen was a disaster. It always was. If you read previous posts on this blog such a disaster was inevitable. Can I provide a solution? No.

not surprisingly comes news that China are pretty happy with the result from Copenhagen.

China Says Achieved Goal In Copenhagen Climate Deal [PlanetArk]

BEIJING - Chinese negotiators achieved their goal at Copenhagen climate talks in ensuring financial aid for developing nations was not linked to external reviews of China's environmental plans, its top climate envoy said on Saturday.

Britain, Sweden and other countries have accused China of obstructing the climate summit, which ended last month with a non-binding accord that set a target of limiting global warming to a maximum 2 degrees Celsius but was scant on details.

China would never accept outside checks of its plans to slow greenhouse gas emissions and could only make a promise of "increasing transparency," Xie Zhenhua, deputy head of the powerful National Development and Reform Commission, said at a forum.

Developed nations' promise of $100 billion in financial aid by 2020 to help poorer countries adapt to climate change offered a good stepping stone for negotiations, he said.

"Next time, we can talk about when will they pay the money and how much each country will pay," he said.

Xie also said that China was well on track to meeting its goal of cutting energy intensity -- or the amount of energy consumed to produce each dollar of national income -- by 20 percent over the five years through 2010.

It had already made a 16 percent cut as of the end of last year, he said.

"As long as we continue to make efforts, we are likely to achieve the targeted 20 percent cut this year," he said.

Xie added that China was drafting tough guidelines for reducing the carbon intensity of its growth in its next five-year plan for economic development, which will cover the 2011-2015 period.

China has pledged to cut the amount of carbon dioxide produced for each unit of economic growth by 40-45 percent by 2020, compared with 2005 levels.

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