Climate Shock

A lamentable blogging performance recently mainly due to a recent twitter addiction (it is quicker and simpler).

 https://twitter.com/RobertJRElliott

I thought I would break by lengthy absence with a quick cut and paste for what looks like an excellent new book. Some strong endorsements and Jeffery Sachs has it down as a fun read which I am sure I will agree with. Martin is certainly one of the most engaging/entertaing seminar speakers I have seen.

I will review later (if I cen get a copy from somewhere).
 
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CLIMATE SHOCK: The Economic Consequences of a Hotter Planet by Gernot Wagner and Martin Weitzman is published next month by Princeton University Press.

http://press.princeton.edu/titles/10414.html

The Black Swan for climate change Economists Gernot Wagner and Martin Weitzman argue that uncertainty about global warming is a reason to do more now, not less, in their new book CLIMATE SHOCK The Economic Consequences of a Hotter Planet

“CLIMATE SHOCK is a brilliant, clear, rigorous, and to-the-point account of the problem of climate change and what we can and should do about it…An outstanding book.” ― Nassim Nicholas Taleb, author of The Black Swan and Antifragile

 “A remarkable book on climate change, CLIMATE SHOCK is deeply insightful, challenging, eye-opening, thought-provoking, and sheer fun to read. It will help you to think clearly and incisively about one of the most important issues of our generation.” ─ Jeffrey Sachs, author of The Price of Civilization

If you had a 10 percent chance of having a fatal car accident, you’d take necessary precautions. If your finances had a 10 percent chance of suffering a severe loss, you’d reevaluate your assets. So if we know the world is warming and there’s a 10 percent chance this might eventually lead to a catastrophe beyond anything we could imagine, why aren’t we doing more about climate change right now? We insure our lives against an uncertain future—why not our planet?

In CLIMATE SHOCK: The Economic Consequences of a Hotter Planet, economists Gernot Wagner and Martin Weitzman explore in lively, clear terms the likely repercussions of a hotter planet, drawing on and expanding from work previously unavailable to general audiences. They show us how the longer we wait to act, the more likely an extreme event will happen. An island nation, threatened by rising seas, might unilaterally decide to try geoengineering a solution, with uncertain results for the planet. Zeroing in on the unknown extreme risks that we may be facing, Wagner and Weitzman look at how economic forces that keep us from enacting sensible climate policies make radical would-be fixes like geoengineering all the more probable. What we know about climate change is alarming enough. What we don’t know about the extreme risks could be far more dangerous. Wagner and Weitzman help readers understand that we need to think about climate change in the same way we think about insurance—as a risk management problem, only here on a global scale.

CLIMATE SHOCK also offers a roadmap for responding to climate change today—Scream, Cope, and Profit. Scream: Demand lawmakers and businesses pay attention to one of the most catastrophic issues of our time. Cope: Recognize that decisions need to be informed by what is going to happen to our world by taking into account, for example, the effect of hurricanes and rising oceans before building (or rebuilding) on seaside property. Profit: Make investments in industries that will benefit in the long run as we turn our attention to the growing challenges of climate change. “Think climate change is a low-priority problem? Something to put off while we deal with more immediate threats? Then CLIMATE SHOCK will open your eyes.” ─ Michael E. Mann, author of The Hockey Stick and the Climate Wars

About the Authors: Gernot Wagner, Ph.D., is a lead senior economist at Environmental Defense Fund, where he co-leads the office of economic policy and analysis to advocate for market-based solutions to a wide range of environmental problems. His particular focus is on climate and energy economics. He teaches energy economics as adjunct faculty at Columbia’s School of International and Public Affairs. Gernot is a research associate at the Harvard Kennedy School and a term member of the Council on Foreign Relations.

 Martin L. Weitzman is Professor of Economics at Harvard University. Previously he was on the faculties of MIT and Yale. He has been elected as a fellow of the Econometric Society and the American Academy of Arts and Sciences. He has published widely in many leading economic journals and written two books. Weitzman's interests in economics are broad and he has served as consultant for several well-known organizations. His current research is focused on environmental economics, including climate change, the economics of catastrophes, cost-benefit analysis, long-run discounting, green accounting, and comparison of alternative instruments for controlling pollution. He is one of the world’s leading authorities on uncertainty and climate change.

CLIMATE SCHOCK The Economic Consequences of a Hotter Planet Gernot Wagner & Martin L. Weitzman Cloth $27.95 • £19.95 | ISBN: 978-0-691-15947-8 248 pp. | 5 ½ x 8 ½ | 3 line illustrations, 5 tables eBook | ISBN: 9780691400865475 Publication Date: 18 March 2015

Deforestation infographic

Interesting graphic.

Click to Enlarge Image



CustomMade

The IPCC treatment of the total economic impact of climate change

Richard Tol's latest paper compares the estimated economic impact of climate change from the 2nd, 3rd, 4th and 5th assessment reports to show there is little statistical difference and compares this fact with the content of the technical summaries which appear to change over time. 

Although the estimates may not change that much, the degree to which the IPCC is "certain" has increased over time (and justifies some additional rhetoric).

Everyone would agree I am sure that the IPCC should be objective and base their summaries on the scientific facts.  Have they got better or worse in their "selling of the results"?  Perhaps the more recent summaries are a better reflection of the facts?

The result that Tol finds is not surprising however.  Climate change fatigue means that larger headlines are needed each time to get the same response from a beleaguered general public who are trying to cope with pressure on real incomes, employment opportunities, higher energy costs and rising house prices.

The real issue is what the IPCC and governments should do in light of these "not surprising" results?  It should certainly not be taken as an excuse for non-action of climate change mitigation policies.

There is no doubt that the IPCC should stick to the scientific facts or it risks undermining its credibility.  Leave the political spin to others.

On the Value of Catastrophic Climate Change

The possibility of catastrophic risk means more stringent action required.  This is not a surprising conclusion but is the correct way to look at the discounting issue in my opinion.

Models-as-Usual for Unusual Risks? On the Value of Catastrophic Climate Change

Antoine Bommier (Chair for Integrative Risk Management and Economics - ETH Zurich)

Bruno Lanz (Center for International Environmental Studies - Graduate Institute Geneva) 

Stéphane Zuber (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris 1 - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) 

http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00973491&r=env

 

We study the role of alternative intertemporal preference representations in a model of economic growth, stock pollutant and endogenous risk of catastrophic collapse. We contrast the traditional "discounted utility" model, which assumes risk neutrality with respect to intertemporal utility, with a multiplicative choice model that displays risk aversion in that dimension. First, we show that both representations of preferences can rationalize the same "business as usual" economy for a given interest rate and no pollution externality. Second, once we introduce a collapse risk whose hazard rate is a function of the pollution stock, multiplicative preferences recommend a much more stringent policy response. An illustration in the context of climate change indicates that switching to the multiplicative preference representation has a similar effect, in terms of policy recommendations, as scaling up the schedule of the hazard rate by a factor of 100.

Research paper: Crime, weather, and climate change - murder rates up

Climate change in the US to result in 22,000 more murders, 180,000 rape cases and 1.2 million MORE aggravated assults between 2010 and 2099. Potential for headlines when publishing results of this type.  Important to put these numbers relative to current crime rates of course.

Results will depend on which climate model  is used and how these are justified.  Non-linear effects?

These simulations are based on the IPCC's A1B scenario, a \middle-of-the-road" climate change scenario that assumes eventual stabilization of atmospheric CO2 levels at 720 ppm (IPCC, 2000, 2007). I use predictions from two general circulation models: the U.K. Hadley Centre's HadCM3 climate model, and the U.S. National Center for Atmospheric Research's CCSM3 climate model. The predictions, which are available from an archive maintained by the World Climate Research Programme's Coupled Model Intercomparison Project Phase 3 (CMIP3), have an interpolated resolution of two degrees of latitude by two degrees of longitude (WCRP, 2007; Maurer et al, 2007).

Crime, weather, and climate change

Matthew Ranson 

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Abstract

This paper estimates the impact of climate change on the prevalence of criminal activity in the United States. The analysis is based on a 30-year panel of monthly crime and weather data for 2997 US counties. I identify the effect of weather on monthly crime by using a semi-parametric bin estimator and controlling for state-by-month and county-by-year fixed effects. The results show that temperature has a strong positive effect on criminal behavior, with little evidence of lagged impacts. Between 2010 and 2099, climate change will cause an additional 22,000 murders, 180,000 cases of rape, 1.2 million aggravated assaults, 2.3 million simple assaults, 260,000 robberies, 1.3 million burglaries, 2.2 million cases of larceny, and 580,000 cases of vehicle theft in the United States.

Keywords

• Climate change;
• Crime;
• Weather

Trade liberalisation and pollution taxes

Trade liberalisation leads to lower pollution taxes whether set federally or locally according to the latest working paper from Per Fredriksson.  However, if taxes are set locally pollution emissions may fall.  All in all, not an argument to show free trade is good for the environment - on balance this paper is more suggestive of the opposite effect.

The paper concludes:

While our model results do not predict an increase in pollution due to trade liberalization, it is notable that the environmental policy becomes less stringent as a result of trade liberalization. Hence, if one wants to rule out this eff ect, an addendum to trade liberalization agreements concerning the stringency of environmental policy could be considered, in particular if the country under consideration decides on environmental taxes at the federal level. Our fi ndings suggest that future empirical work that seeks to endogenize environmental policy may want to take into account at which governmental level policy is set.

 
Trade Liberalization and Environmental Taxation in Federal Systems

CESifo Working Paper Series No. 4717

PER G. FREDRIKSSON, University of Louisville - College of Business - Department of Economics

XENIA MATSCHKE, University of Trier - Faculty of Economics


The literature on trade liberalization and environment has not considered federal structures. This paper shows how the design of environmental policy in a federal system has implications for the effects of trade reform. Trade liberalization leads to a decline in pollution taxes regardless of whether pollution taxes are set at the federal (centralized) or local (decentralized) level, and it increases social welfare. The effect under a decentralized system is smaller than if these taxes are set by the federal government, and pollution emissions therefore decline in this case. Moreover, majority bias interacts with trade liberalization if federal taxes are used.
 

 

 

Solutions to the crisis? an ecofeminist economics perspective

In addition to mainstream approaches this blog is always interested in alternative approaches.  The role of ecofeminist economics as a solution to the global economic crisis may offer an interesting solution.  This is from the most recent issue of  Ecological Economics.

Solutions to the crisis? The Green New Deal, Degrowth, and the Solidarity Economy: Alternatives to the capitalist growth economy from an ecofeminist economics perspective

Christine Bauhardt

(Humboldt University)

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Abstract

This article deals with three approaches conceived as alternative approaches to the capitalist growth economy: the Green New Deal, Degrowth, and the Solidarity Economy. Ecofeminist economics has much to offer to each of these approaches, but these contributions remain, as of yet, unrealized. The Green New Deal largely represents the green economy, which holds economic success as contingent upon the ecological restructuring of industrial production. The degrowth approach more fundamentally raises questions concerning the relationship between material prosperity and individual and social well-being. The principles of the solidarity economy involve the immediate implementation of the principles of self-determination and cooperation. None of these approaches takes into account the claims of ecofeminist economics; and none of them clearly view gender equity as essential to economic change. The three approaches are, however, deeply gendered in the sense that they are implicitly based on assumptions concerning women's labor in the sphere of social reproduction. This article demonstrates how each approach can be improved upon by the integration of ecofeminist economic principles in order to achieve economic change that also meets claims for gender equity.

Keywords

• Ecofeminist ecological economics;
• Degrowth;
• Care economy;
• Gender equity;
• Social reproduction

Rethinking China’s Future Path [Globalist]

Good summary of the environmental issues that China needs to confront in the next decade by Richard Phillips in the Globalist.  As the article points out, the current leadership is aware of these problems and is acting.  There is still a large gap between coming up with a strategy and their being any noticeable effect.  The sheer scale effect with overwhelm any technique or composition effect for many years but not through lack of trying.

Interesting points covered.

1. Productivity is being negatively affected by environmental pollution.  An under-researched area IMO.

2. Pollution of agricultural land and the implications - something I am looking to work on.

3. Water economics in China - this will (and already is) a major issue and likely to become more important.

4. Corruption - looked at in a previous tweet from earlier today.]

5. Governance at the firm level - ongoing research into this issue and some good papers coming out on this topic.  I will try and post on this issue if I get time.

Rethinking China’s Future Path  [Globalist]

"The Chinese economy in its current form may not be sustainable.

 Economic commentators around the world are sounding alarms with increasing frequency about the outlook for the Chinese economy. Looking beyond these economic bellwethers, however, one finds a simple reality: The Chinese economy in its current form may not be unsustainable. 

 China’s problems are fundamental. The very factors that have led to the country’s dynamic growth over the past two decades may well constitute China’s chief challenge in the future. Why? Because these sources of growth cannot be sustained.

To be sure, different economic models may forecast a range of possibilities for China. When one views China’s problems through the prism of sustainability, one gets not only several valuable insights but also a possible way forward for Chinese leadership.

Sustainability is generally defined as embracing three core criteria of performance: environmental, social and governance practices.

Each of these sub-headings is considered in turn.  The bold heading are live links if you go to the original article.  I post the article here in full as I think it is a nice summary of the current situation.  It is easier to read in the full article but this is so I can refer back to this material.

" Environmental calamity

China’s current environmental practices pose a hazard to its citizens and to the world as a whole. If China continues to put growth ahead of sound environmental practice, it will face significant dislocations at home as well as broad-based antipathy abroad.

According to a recent report published by China’s Ministry of Environmental Protection entitled “Soil Pollution and Physical Health,” approximately one-sixth of China’s agricultural land is contaminated with heavy metals and pesticides.

The integration into China’s food supply of contaminated agricultural products grown on these lands poses a public health threat of immense proportion. This is likely to manifest itself in above normal incidence of birth defects, cancers and neurological disorders.
By the same token, Chinas air ranks among the most polluted in the world.

All-enveloping smog conditions that periodically blanket China’s major cities, including Beijing and Shanghai, pose a public health menace, while also diminishing productivity, as commerce periodically grinds to a halt for days on end.
Recently, Premier Li Keqiang called for a “war against pollution.” He said it was “nature’s red-light warning against inefficient and blind development.”
On the global level, China’s carbon footprint now exceeds that of the United States by a wide margin. China now accounts for a staggering 23.5% of global CO2 emissions. That is even in excess of its global population share.

To make matters worse, China’s CO2 emissions continued to rise, even as the United States’ CO2 emissions declined for several years during the economic crisis and slow recovery.

Other factors play a role as well. Consider the impending water crisis. A general undersupply of potable water (7% of global fresh water versus 20% of the population) is exacerbated by rampant ongoing industrial pollution. This demonstrates clearly that China cannot sustain the development path it has taken over the past several decades with respect to the environment.

Social injustice

But the problems of sustainability are not confined to the environment. They extend to the various metrics that in the aggregate form a country’s social profile.

Bribery and corruption have been pervasive in China’s development process. China ranked 80th among 177 countries in Transparency International’s 2013 Corruption Perceptions Index.

With a score of 40 on a scale of 0-100, it ranked lower than Brazil, South Africa, Turkey and Saudi Arabia. One needs to look toward the corrupt economies of the Central Asian “Stans” and Sub-Saharan Africa to find bigger offenders.

Bribery and corruption on the scale of China’s undermines the rule of law and impedes fair competition. It also contributes to instability and human rights abuses among China’s less privileged citizens.

Similarly, labor abuse has also been endemic to China’s development process, although China has recently taken steps to strengthen its labor laws. Investigative reports from organizations such as China Labor chronicle an ongoing tale of hopelessness and misery for millions of Chinese workers.

Shoddy labor practices are not only breeding discontent within the Chinese workforce. They also create significant supply chain risk for companies based in developed markets that manufacture in China.

Companies that might be affected include major names such as Apple, Samsung, Toyota, Siemens and Mattel. This already long list of companies facing supply chain issues continues to grow.

Poor governance practices

Finally, China’s overall governance framework – the third pillar in the ESG sustainability process — ranks among the worst in the world.

On the corporate level, the average corporate governance rating for Chinese companies, according to Thomson Reuters Corporate Responsibility Ratings, is a meager 41.9. This places Chinese companies in the bottom third among the nearly 5,000 companies rated worldwide.

Disclosure by Chinese companies is among the worst of any major economy. Risk controls are at best ad hoc and, in most cases, shaped by convenience. Government meddling and political cronyism are pervasive.

As a result, Chinese companies harbor risks and inconsistencies that are not always visible to the naked eye. Over time they may take a toll on China’s ability to sustain an efficient capital market.

Furthermore, hidden flaws in China’s financial and corporate sectors, which have been obscured by China’s development boom, are likely to surface unexpectedly in a slowdown. Count on many land mines currently buried in the corporate landscape to explode then.

ESG: The solution, not the problem

China’s government is well aware of these problems. And its leadership is well aware that, to sustain its impressive economic growth of the past two decades, it will have to adapt. Although the cost of adapting is uncertain, all indications are that the sums involved will be massive.

Change – radical change – is essential for China to maintain stability and expand its prosperity in the years ahead. China’s leaders have shown great wisdom in steering China through its development phase.

Now, leadership might apply that same wisdom by avoiding the temptation to engage in reactive micromanagement of transient economic issues as a solution to the country’s myriad problems.

Instead, Chinese leadership might find it more effective to focus on the longer-term issue of sustainability by establishing a process for the structural reform of its environmental, social and governance policies."

Climate Change: Collective action and tipping points

For all the IPCC rhetoric IMO tipping points are crucial and misunderstood.  Currently reading:

On the Sensitivity of Collective Action to Uncertainty About Climate Tipping Points" 

CESifo Working Paper Series No. 4643

SCOTT BARRETT, Columbia University - School of International & Public Affairs (SIPA)


ASTRID DANNENBERG, Göteborg University

Previous research shows that collective action to avoid a catastrophic threshold, such as a climate “tipping point,” is unaffected by uncertainty about the impact of crossing the threshold but that collective action collapses if the location of the threshold is uncertain. Theory suggests that behavior should differ dramatically either side of a dividing line for threshold uncertainty. Inside the dividing line, where uncertainty is small, collective action should succeed. Outside the dividing line, where uncertainty is large, collective action should fail. We test this prediction in the experimental lab. Our results strongly support the prediction: behavior is highly sensitive to uncertainty around the dividing line.

Scott Barrett is always worth reading on this topic.  Linking environmental economics with lab experiments is something I want to look at trying myself. 

7 million deaths annually linked to air pollution

World Health Organisation present the facts.  Some good statistics (to help motivate research in this area).  City level data on air pollution is useful and this weblink has a number of excellent data sources and technical information for researchers to use.

7 million deaths annually linked to air pollution [WHO]

In new estimates released, WHO reports that in 2012 around 7 million people died - one in eight of total global deaths – as a result of air pollution exposure. This finding more than doubles previous estimates and confirms that air pollution is now the world’s largest single environmental health risk. Reducing air pollution could save millions of lives.

 3.7 million deaths attributable to ambient air pollution

 4.3 million deathsattributable to household air pollution

 7 million deathscaused by air pollution in 2012, covering both household and ambient air pollution

Other reports:

Air Pollution Kills 7 Million People Every Year, World Health Organization Report Finds [Huffington Post]

Pollution is the world’s biggest killer: Dirty air has overtaken heart disease, diet and even smoking-related deaths as the biggest preventable killer [Daily Mail]

"Merchants of eco-doom who peddle their vision of apocalypse to a secular choir"

For some reason I like this small piece on eco-doomsters.  As a dismal scientist, the peak-everything-doomsday literature is an interesting genre that economists have a natural affinity with.

I have posted the article here as it is worth reading in the full.  Link provided.  The title of this blog post is one of the better quotes. 

The first Ehrlich quote is impressive.  What does the collapse of civilisation actually mean?  I would like a definition before I can apply the odds but it sounds pretty unpleasant.

It probably is too late for some future equilibriums but the key is to arrive at the best possible alternative - but best for who?  How many generations into the future are we discounting?

There is a chance of a sustainable future for civilisation but there is a lot of work to do to get there.

The Merchants of Doom

 "Paul Ehrlich and Ann Ehrlich, two long-time prominent voices in the environmental community, often speculate about the future of humanity. They recently shared this anecdote:

A few years ago we had a disagreement with our friend Jim Brown, a leading ecologist.  We told him we thought there was about a 10 percent chance of avoiding a collapse of civilization but, because of concern for our grandchildren and great grandchildren, we were willing to struggle to make it 11 percent.  He said his estimate of the chance of avoiding collapse was only 1 percent, but he was working to make it 1.1 percent.  Sadly, recent trends and events make us think Jim might have been optimistic.  Perhaps now it’s time to talk about preparing for some form of collapse soon, hopefully to make a relatively soft “landing.”

If you want to know why the Ehrlichs think it’s essentially game over for civilization, read their 2013 paper published in the Proceedings of the Royal Society. Their diagnosis:

The human predicament is driven by overpopulation, overconsumption of natural resources and the use of unnecessarily environmentally damaging technologies and socio-economic-political arrangements to service Homo sapiens’ aggregate consumption.

Translation: Too many damn people on the earth, driving cars, buying too much crap, all made possible by a globalized, industrialized, capitalistic system. Or something like that. Unsurprisingly, the Ehrlichs don’t agree with those who paint a sunnier view of humanity’s current trajectory. (What might a model sustainable society look like? Paul Ehrlich recently pointed to Australia’s Aboriginal culture.)

Now I’m not the only one to observe that the environmental community, as a whole, has a bleak view of the future.

But is the near-future collapse of civilization virtually guaranteed, as the Ehrlichs seem to think? Is there no reversing this collision course? Here’s what UK environmentalist Jonathan Porritt said last week in an interview:

A lot of people in my community of sustainability professionals have basically come to the conclusion it’s too late.

This strikes me as a self-defeating outlook, as I hinted the other day. It lends itself to the fatalism that has already infected environmental discourse, as I have previously discussed:

If you are a regular consumer of environmental news and commentary, you are familiar with the narrative of humanity’s downfall.

In the current issue of The New York Review Of Books, the novelist Zadie Smith is conflicted about this eco-doomsday narrative. On the one hand, she is bothered that most people aren’t taking seriously “the visions of apocalypse conjured by climate scientists and movie directors,” which she refers to as “the coming emergency.” But she also seems to get the futility of this storyline:

Sometimes the global, repetitive nature of this elegy is so exhaustively sad—and so divorced from any attempts at meaningful action—that you can’t fail to detect in the elegists a fatalist liberal consciousness that has, when you get right down to it, as much of a perverse desire for the apocalypse as the evangelicals we supposedly scorn.

Indeed, the merchants of eco-doom who peddle their vision of apocalypse to a secular choir are just as self-rightous and scornful of humanity as the fundamentalist preachers who hawk their hellfire and brimstone sermons. And like the most warped fundamentalists who exploit tragedy, the merchants of eco-doom also cynically seize on current events. On this score, nobody rivals Nafeez Ahmed (the UK Left’s faux-scholarly equivalent to Glenn Beck), who has an unquenchable appetite for peak-everything porn. (For commentary on his latest connect-the-collapse dots, see this post.)

Not all greens have a fetish for doomsday scenarios. Some are are trying to chart a more empowering vision for environmentalism. Porritt belongs to this group. He has a new book that appears hopeful about the future.

If only more environmentalists could snap out of their endless mourning for the planet and offer the rest of us something to look forward to other than imminent eco-collapse."

Economist does "who hit the climate pause button"

Well balanced article on the "pause" used by climate change deniers as proof that there is nothing to worry about.  The economist's thinking matches my own.  The pause is not only temporary but could bounce back with a vengeance.

Who pressed the pause button? [The economist]

"The solar cycle is already turning. And aerosol cooling is likely to be reined in by China’s anti-pollution laws. Most of the circumstances that have put the planet’s temperature rise on “pause” look temporary. Like the Terminator, global warming will be back."

China's "War on Pollution"

No surprises to readers of this blog. Reuters reports.  What is interesting is how they equate the war on pollution with the ongoing war on poverty.  These two issues are not mutually exclusive.  The war on pollution might lead to an increase in poverty if not handled carefully.

Energy demand is growing rapidly.  Costs are rising. China has a lot of coal.  There is no simple solution.  A green stimulus plan will help but it all costs money that could be spend elsewhere.

Water pollution is a growing problem that will only get worse.

China has correctly pin-pointed a number of challenges including enforcement.  The environmental economists at Birmingham are doing work on a number of these topics.  At least two of my extended essay undergraduate students have written good essays on this topic this year.

I have included the full article.

China to 'declare war' on pollution, premier says [Reuters]

(Reuters) - China is to "declare war" on pollution, Premier Li Keqiang said on Wednesday at the opening of the annual meeting of parliament, with the government unveiling detailed measures to tackle what has become a hot-button social issue.

It is not uncommon for air pollution in parts of China to breach levels considered by some experts to be hazardous. That has drawn much public ire and is a worry for the government, which fears any discontent that might compromise stability.

"We will resolutely declare war against pollution as we declared war against poverty," Li told the almost 3,000 delegates to the country's largely rubber-stamp legislature in a wide-ranging address carried live on state television.

Curbing pollution has become a key part of efforts to upgrade the economy, shift the focus away from heavy industry and tackle the perennial problem of overcapacity, with Li describing smog as "nature's red-light warning against inefficient and blind development".

"This is an acknowledgement at the highest level that there is a crisis," said Craig Hart, expert on Chinese environmental policy and associate professor at China's Renmin University.

"Their approach is going to have to be pro-economy. I think they will pump money into upgrading plants. This could be another green stimulus although it is not being packaged that way."

China has published a series of policies and plans aimed at addressing environmental problems but it has long struggled to bring big polluting industries and growth-obsessed local governments to heel.

Li said efforts would focus first on reducing hazardous particulate matter known as PM 2.5 and PM 10 and would also be aimed at eliminating outdated energy producers and industrial plants, the source of much air pollution.

China will cut outdated steel production capacity by a total of 27 million tonnes this year, slash cement production by 42 million tonnes, and also shut down 50,000 small coal-fired furnaces across the country, Li said.

The 27 million tonnes of steel, equivalent to Italy's production capacity, amounts to less than 2.5 percent of China's total, and industry officials have warned that plants with another 30 million tonnes of annual output went into construction last year.

The targeted cement closures amount to less than 2 percent of last year's total production.

The battle against pollution will also be waged via reforms in energy pricing to boost non-fossil fuel power. Li promised change in "the way energy is consumed and produced" through the development of nuclear and renewables, the deployment of smart power transmission grids, and the promotion of green and low-carbon technology.

The National Development and Reform Commission (NDRC), the country's economic planner, said in its report that new guidelines would be issued on relocating key industries away from urban centers to help tackle smog.

NOT JUST SMOG

China does not just suffer from smog, which has once again this winter enveloped large parts of the heavily populated east, and will this year also aim to tackle severe water and soil pollution.

The NDRC said it would also take action this year to tackle agricultural pollution, including the contamination of farmland by heavy metals, with 3.33 million hectares (8 million acres) believed to be too polluted to grow crops.

Last month, the government said it would spend 2 trillion yuan ($330 billion) on tackling pollution of scarce water resources.

Li said China would also aim to convert 333,300 hectares of marginal farmland to forest and grassland and would continue to fight desertification and recover wetlands.

The NDRC said China would seek to ensure that polluters pay by establishing a new mechanism to compensate victims of environmental damage and by holding local officials accountable.

Parliament is also mulling amendments to environmental protection legislation that will grant new powers to fine and punish offenders.

In a separate report on Wednesday, the Ministry of Finance said China would spend 21.1 billion yuan on energy conservation and environmental protection in 2014, up 7.1 percent on 2013. It said 64.9 billion yuan would be allocated to agriculture, forestry and water conservation, up 8.6 percent.

(Reporting by Michael Martina, Li Hui, David Stanway and Stian Reklev; Writing by Ben Blanchard and David Stanway; Editing by Raju Gopalakrishnan and Robert Birsel)