Category Archive for: Environment [Return to Main]

Saturday, August 02, 2014

'Shattering Myths to Help the Climate'

Robert Frank:

Shattering Myths to Help the Climate, by Robert Frank: Each new climate-change study seems more pessimistic than the last. This May and June, for example, were the hottest ones on record for the planet. Storms and droughts occur with increasing frequency. Glaciers are rapidly retreating, portending rising seas that could eventually displace hundreds of millions of people.
Effective countermeasures now could actually ward off many of these threats at relatively modest cost. Yet despite a robust scientific consensus that greenhouse gas emissions are at the root of the problem, legislation to curb them has gone nowhere in Congress. In response, President Obama has proposed stricter regulations on electric utilities, which some scientists warn may be too little, too late.
Why aren’t we demanding more forceful action? One reason may be the frequent incantation of a motley collection of myths, each one rooted in bad economics...

Friday, July 25, 2014

'Ignoring Climate Change Could Sink the U.S. Economy'

Robert Rubin:

How ignoring climate change could sink the U.S. economy, by Robert E. Rubin: ...When it comes to the economy, much of the debate about climate change ... is framed as a trade-off between environmental protection and economic prosperity. Many people argue that moving away from fossil fuels and reducing carbon emissions will impede economic growth, hurt business and hamper job creation.
But from an economic perspective, that’s precisely the wrong way to look at it. The real question should be: What is the cost of inaction? In my view — and in the view of a growing group of business people, economists, and other financial and market experts — the cost of inaction over the long term is far greater than the cost of action.
I recently participated in a bipartisan effort to measure the economic risks of unchecked climate change in the United States. We commissioned an independent analysis, led by a highly respected group of economists and climate scientists, and our inaugural report, “Risky Business,” was released in June. The report’s conclusions demonstrated the ... U.S. economy faces enormous risks from unmitigated climate change. ...
We do not face a choice between protecting our environment or protecting our economy. We face a choice between protecting our economy by protecting our environment — or allowing environmental havoc to create economic havoc. ...

Tuesday, June 24, 2014

'Bipartisan Report Tallies High Toll on Economy From Global Warming'

Republicans in Congress will ignore this bipartisan report and continue to block action on climate change. This "toxic mix of ideology and anti-intellectualism" is endangering our future:

Bipartisan Report Tallies High Toll on Economy From Global Warming, by Justin Gillis, NY Times: More than a million homes and businesses along the nation’s coasts could flood repeatedly before ultimately being destroyed. Entire states in the Southeast and the Corn Belt may lose much of their agriculture as farming shifts northward in a warming world. Heat and humidity will probably grow so intense that spending time outside will become physically dangerous, throwing industries like construction and tourism into turmoil.
That is a picture of what may happen to the United States economy in a world of unchecked global warming, according to a major new report released Tuesday by a coalition of senior political and economic figures from the left, right and center, including three Treasury secretaries stretching back to the Nixon administration.
At a time when the issue of climate change has divided the American political landscape, pitting Republicans against Democrats and even fellow party members against one another, the unusual bipartisan alliance of political veterans said that the country — and business leaders in particular — must wake up to the enormous scale of the economic risk. ...

Monday, June 23, 2014

How Much Do We Care About Future Generations?

At MoneyWatch:

How much do we care about future generations?, by Mark Thoma: Former U.S. Treasure Secretary Henry Paulson's recent warning that "We're staring down a climate bubble that poses enormous risks to both our environment and economy" and his call for a carbon tax brings up an important question. How do we assess the benefits to future generations from taking action on climate change now, especially benefits that may be decades or even centuries away?
To answer this question, it's necessary to consider what's known as the "discount rate" on such policies. ...

Paul Krugman: The Big Green Test

Are Republicans willing to settle for second best solutions to climate change?:

The Big Green Test, by Paul Krugman, Commentary, NY Times: On Sunday Henry Paulson, the former Treasury secretary and a lifelong Republican, had an Op-Ed article about climate policy... In the article, he declared that man-made climate change is “the challenge of our time,” and called for a national tax on carbon emissions... Considering the prevalence of climate denial within today’s G.O.P., and the absolute opposition to any kind of tax increase, this was a brave stand to take.
But not nearly brave enough. Emissions taxes are the Economics 101 solution to pollution problems... But that isn’t going to happen in the foreseeable future. ... Yet there are a number of second-best things ... that we’re either doing already or might do soon. ... Let me give some examples of what I’m talking about.
First, consider rules like fuel efficiency standards, or “net metering” mandates requiring that utilities buy back the electricity generated by homeowners’ solar panels. Any economics student can tell you that such rules are inefficient compared with the clean incentives provided by an emissions tax. But we don’t have an emissions tax, and fuel efficiency rules and net metering reduce greenhouse gas emissions. So a question for conservative environmentalists: Do you support the continuation of such mandates, or are you with the business groups (spearheaded by the Koch brothers) campaigning to eliminate them and impose fees on home solar installations?
Second, consider government support for clean energy via subsidies and loan guarantees. ... Are you O.K. with things like loan guarantees for solar plants, even though we know that some loans will go bad, Solyndra-style?
Finally, what about the Environmental Protection Agency’s proposal that it use its regulatory authority to impose large reductions in emissions from power plants? ... Are you willing to support this partial approach? ...
In policy terms, climate action — if it happens at all — will probably look like health reform. That is, it will be an awkward compromise dictated in part by the need to appease special interests... It will be the subject of intense partisanship, relying overwhelmingly on support from just one party, and will be the subject of constant, hysterical attacks. And it will, if we’re lucky, nonetheless do the job.
Did I mention that health reform is clearly working, despite its flaws?
The question for Mr. Paulson and those of similar views is whether they’re willing to go along with that kind of imperfection. If they are, welcome aboard.

Monday, June 09, 2014

Shrinking Arctic Ice

When will we acknowledge what is happening, and do something about it?:

Shrinking Arctic Ice Prompts Drastic Change in National Geographic Atlas, by Christine Dell'Amore: The shrinking of the Arctic ice sheet in the upcoming 10th edition of the National Geographic Atlas of the World is one of the most striking changes in the publication's history, geographers say. ...
Ice loss is accelerated in the Arctic because of a phenomenon known as the feedback loop: Thin ice is less reflective than thick ice, allowing more sunlight to be absorbed by the ocean, which in turn weakens the ice and warms the ocean even more, NASA says.
Because thinner ice is flatter, it allows melt ponds to accumulate on the surface, reducing the reflectiveness of the ice and absorbing more heat....
"You hear reports all the time in the media about this," Valdés said. "Until you have a hard-copy map in your hand, the message doesn't really hit home." ...

Paul Krugman: Interests, Ideology And Climate

The "real obstacle" to action on climate change:

Interests, Ideology And Climate, by Paul Krugman, Commentary, NY Times: There are three things we know about man-made global warming. First, the consequences will be terrible if we don’t take quick action to limit carbon emissions. Second, in pure economic terms the required action shouldn’t be hard to take: emission controls, done right, would probably slow economic growth, but not by much. Third, the politics of action are nonetheless very difficult.
But why is it so hard to act? Is it the power of vested interests?
I’ve been looking into that issue and have come to the somewhat surprising conclusion that it’s not mainly about the vested interests. ... What makes rational action on climate so hard is something else — a toxic mix of ideology and anti-intellectualism.
Before I get to that, however, an aside on the economics.
I’ve noted in earlier columns that every even halfway serious study of the economic impact of carbon reductions ... finds at most modest costs. ...
But wouldn’t protecting the environment nonetheless impose costs on some sectors and regions? Yes, it would — but not as much as you think. ... So why is the opposition to climate policy so intense?
Well, think about global warming from the point of view of someone who grew up taking Ayn Rand seriously, believing that the untrammeled pursuit of self-interest is always good and that government is always the problem, never the solution. Along come some scientists declaring that unrestricted pursuit of self-interest will destroy the world, and that government intervention is the only answer..., this is a direct challenge to the libertarian worldview.
And the natural reaction is denial — angry denial. Read or watch any extended debate over climate policy and you’ll be struck by the venom, the sheer rage, of the denialists.
The fact that climate concerns rest on scientific consensus makes things even worse..., right-wingers never liked or trusted scientists in the first place.
So the real obstacle, as we try to confront global warming, is economic ideology reinforced by hostility to science. In some ways this makes the task easier: we do not, in fact, have to force people to accept large monetary losses. But we do have to overcome pride and willful ignorance, which is hard indeed.

Friday, June 06, 2014

Why are Conservatives Attacking its Market-Based Climate Options?

Following up on the post below this one, this is Robert Stavins:

EPA’s Proposed Greenhouse Gas Regulation: Why are Conservatives Attacking its Market-Based Options?, by Robert Stavins: This week, the Obama Administration’s Environmental Protection Agency (EPA) released its long-awaited proposed regulation to reduce carbon dioxide (CO2) emissions from existing sources in the electricity-generating sector. The regulatory (rule) proposal calls for cutting CO2 emissions from the power sector by 30 percent below 2005 levels by 2030. ...
Much of the response this week has not been surprising..., but what should be surprising is the fact that conservative attacks on EPA’s proposed rule have focused, indeed fixated, on one of the options that is given to the states for implementation, namely the use of market-based instruments, that is, cap-and-trade systems. Given the demonization of cap-and-trade as “cap-and-tax” over the past few years by conservatives, why do I say that this fixation should be surprising?
The Irony of Conservatives Targeting Cap-and-Trade
Not so long ago, cap-and-trade mechanisms for environmental protection were popular in Congress. Now, such mechanisms are denigrated. What happened? Professor Richard Schmalensee (MIT) and I recently told the sordid tale of how conservatives in Congress who once supported cap and trade had come to lambast climate change legislation as “cap-and-tax.” Ironically, in doing this, conservatives have chosen to demonize their own market-based creation. ...
It may be that some conservatives in Congress opposed climate policies because of disagreement about the threat of climate change or the costs of the policies, but instead of debating those risks and costs, they chose to launch an ultimately successful campaign to demonize and thereby tarnish cap-and-trade as an instrument of public policy, rendering it “collateral damage” in the wider climate policy battle.
Today that “scorched-earth” approach may have come back to haunt conservatives. Have they now boxed themselves into a corner, unable to support the power of the marketplace to reduce their own states’ compliance costs under the new EPA CO2 regulation? I hope not, but only time will tell.

[The original post is much, much longer and detailed.]

Paul Krugman: The Climate Domino

On the administration's new climate rules:

The Climate Domino, by Paul Krugman, Commentary, NY Times: Maybe it’s me, but the predictable right-wing cries of outrage over the Environmental Protection Agency’s proposed rules on carbon seem oddly muted and unfocused. ... Where are the eye-catching fake horror stories?
For what it’s worth, however, the attacks on the new rules mainly involve the three C’s: conspiracy, cost and China. That is, right-wingers claim ... it’s all a hoax promulgated by thousands of scientists around the world; that taking action to limit greenhouse gas emissions would devastate the economy; and that, anyway, U.S. policy can’t accomplish anything because China will just go on spewing stuff into the atmosphere.
I don’t want to say much about the conspiracy theorizing, except to point out that any attempt to make sense of current American politics must take into account this particular indicator of the Republican Party’s descent into madness. There is, however, a lot to say about both the cost and China issues.
On cost: It’s reasonable to argue that new rules aimed at limiting emissions would have some negative effect on G.D.P.... Claims that the effects will be devastating are, however,... just wrong ... as I explained last week...
But what about the international aspect? At this point, the United States accounts for only 17 percent of the world’s carbon dioxide emissions, while China accounts for 27 percent — and China’s share is rising fast. So ... America, acting alone, can’t save the planet. We need international cooperation.
That, however, is precisely why we need the new policy. America can’t expect other countries to take strong action against emissions while refusing to do anything itself... And it’s fairly certain that action in the U.S. would lead to corresponding action in Europe and Japan.
That leaves China... China is enormously dependent on access to advanced-country markets ... and it knows that it would put this access at risk if it refused to play any role in protecting the planet.
More specifically, if and when wealthy countries take serious action to limit greenhouse gas emissions, they’re very likely to start imposing “carbon tariffs”... So China would find itself with strong incentives to start limiting emissions.
The new carbon policy, then, is supposed to be the beginning, not the end, a domino that, once pushed over, should start a chain reaction that leads, finally, to global steps to limit climate change. Do we know that it will work? Of course not. But it’s vital that we try.

Thursday, June 05, 2014

Energy Choices

Paul Krugman:

Energy Choices, by Paul Krugman: Nate Silver got a lot of grief when he chose Roger Pielke Jr., of all people, to write about environment for the new 538. Pielke is regarded among climate scientists as a concern troll – someone who pretends to be open-minded, but is actually committed to undermining the case for emissions limits any way he can. But is this fair?
Well, I’m happy to report that Pielke has a letter in today’s Financial Times about the economics of emissions caps – something I know a fair bit about – that abundantly confirms his bad reputation. Better still, the letter offers a teachable moment, a chance to explain why claims that we can’t limit emissions without destroying economic growth are nonsense. ...

Friday, May 30, 2014

Paul Krugman: Cutting Back on Carbon

The cost of taking action to reduce the threat from global warming isn't as large as you might be led to believe:

Cutting Back on Carbon, by Paul Krugman, Commentary, NY Times: Next week the Environmental Protection Agency is expected to announce new rules designed to limit global warming. Although we don’t know the details yet, anti-environmental groups are already predicting vast costs and economic doom. Don’t believe them. Everything we know suggests that we can achieve large reductions in greenhouse gas emissions at little cost to the economy.
Just ask the United States Chamber of Commerce.
O.K., that’s not the message the Chamber of Commerce was trying to deliver in the report it put out Wednesday. It clearly meant to convey the impression that the E.P.A.’s new rules would wreak havoc. But if you focus on the report’s content rather than its rhetoric, you discover that ... the numbers are remarkably small.
Specifically, the report considers a carbon-reduction program that’s probably considerably more ambitious than we’re actually going to see, and it concludes that between now and 2030 the program would cost $50.2 billion in constant dollars per year. That’s supposed to sound like a big deal. ... These days, it’s just not a lot of money.
Remember, we have a $17 trillion economy..., and it’s going to grow over time. So what the Chamber of Commerce is actually saying is that we can take dramatic steps on climate ... while reducing our incomes by only one-fifth of 1 percent. That’s cheap! ...
And ... this is based on anti-environmentalists’ own numbers. The real costs would almost surely be smaller...
You might ask why the Chamber of Commerce is so fiercely opposed to action against global warming, if the cost of action is so small. The answer, of course, is that the chamber is serving special interests, notably the coal industry ... and also ... the ever more powerful anti-science sentiments of the Republican Party.
Finally, let me take on the anti-environmentalists’ last line of defense — the claim that whatever we do won’t matter, because other countries, China in particular, will just keep on burning ever more coal. This gets things exactly wrong. Yes, we need an international agreement... But U.S. unwillingness to act has been the biggest obstacle to such an agreement. ...
Now, we haven’t yet seen the details of the new climate action proposal... We can be reasonably sure, however, that the economic costs of the proposal will be small, because that’s what the research — even research paid for by anti-environmentalists... — tells us. Saving the planet would be remarkably cheap.

Saturday, May 24, 2014

'Buying Insurance Against Climate Change'

Robert Shiller:

Buying Insurance Against Climate Change: The third National Climate Assessment report ... warns us about our hazardous future... We must face facts: There is a real risk of new kinds of climate-related disaster. ... We are taking major gambles with our environment... Expect surprises.
In March, a United Nations report identified with “high confidence” a number of risks that will be visited on different people unequally. ... In short, we need to worry about the potential for greater-than-expected disasters, especially those that concentrate their fury on specific places or circumstances ... we cannot now predict.
That’s why global warming needs to be addressed by the private institutions of risk management, such as insurance and securitization. They have deep experience in smoothing out disasters’ effects by sharing them among large numbers of people. The people or entities that are hit hardest are helped by those less badly damaged.
But these institutions need ways to deal with such grand-scale issues. Governments should recognize that by giving these businesses a profit incentive to prepare for these unevenly distributed disasters. ...

Friday, May 16, 2014

Paul Krugman: Points of No Return

Can anything reverse the growing hostility to science within the Republican Party?:

Points of No Return, by Paul Krugman, Commentary, NY Times: Recently two research teams, working independently and using different methods, reached an alarming conclusion: The West Antarctic ice sheet is doomed. ... Even if we took drastic action to limit global warming right now, this particular process of environmental change has reached a point of no return.
Meanwhile, Senator Marco Rubio of Florida — much of whose state is now fated to sink beneath the waves —... confidently declared the overwhelming scientific consensus on climate change false, although in a later interview he was unable to cite any sources for his skepticism.
So why would the senator make such a statement? The answer is that like that ice sheet, his party’s intellectual evolution (or maybe more accurately, its devolution) has reached a point of no return, in which allegiance to false doctrines has become a crucial badge of identity.
I’ve been thinking a lot lately about ... how support for a false dogma can become politically mandatory, and how overwhelming contrary evidence only makes such dogmas stronger and more extreme. ... To see how it works, consider a topic I know well: the recent history of inflation scares. ...
Inflation phobia has always been closely bound up with right-wing politics; to admit that this phobia was misguided would have meant conceding that one whole side of the political divide was fundamentally off base about how the economy works. So most of the inflationistas have responded to the failure of their prediction by becoming more, not less, extreme in their dogma...
The same kind of thing is clearly happening on the issue of global warming. ... As the evidence for a changing climate keeps accumulating, the Republican Party’s commitment to denial just gets stronger. ...
And truly crazy positions are becoming the norm. A decade ago, only the G.O.P.’s extremist fringe asserted that global warming was a hoax concocted by a vast global conspiracy of scientists (although even then that fringe included some powerful politicians). Today, such conspiracy theorizing is mainstream within the party, and rapidly becoming mandatory; witch hunts against scientists reporting evidence of warming have become standard operating procedure, and skepticism about climate science is turning into hostility toward science in general.
It’s hard to see what could reverse this growing hostility to inconvenient science. As I said, the process of intellectual devolution seems to have reached a point of no return. And that scares me more than the news about that ice sheet.

Monday, May 12, 2014

Paul Krugman: Crazy Climate Economics

Can you guess how conservatives will react if the EPA announces rules to combat climate change?:

Crazy Climate Economics, by Paul Krugman, Commentary, NY Times: Everywhere you look these days, you see Marxism on the rise. Well, O.K., maybe you don’t — but conservatives do. If you so much as mention income inequality, you’ll be denounced as the second coming of Joseph Stalin; Rick Santorum has declared that any use of the word “class” is “Marxism talk.” ...George Will says the only reason progressives favor trains is their goal of “diminishing Americans’ individualism in order to make them more amenable to collectivism.”
So it goes without saying that Obamacare, based on ideas originally developed at the Heritage Foundation, is a Marxist scheme... And just wait until the Environmental Protection Agency announces rules intended to slow the pace of climate change. ...
You can already get a taste of what’s coming in the ... recent Supreme Court ruling on power-plant pollution. ... Justice Scalia didn’t just dissent; he suggested that the E.P.A.’s proposed rule ... reflected the Marxist concept of “from each according to his ability.” ...
And you can just imagine what will happen when the E.P.A ... moves on to regulation of greenhouse gas emissions. ...
First, we’ll see any effort to limit pollution denounced as a tyrannical act. Pollution wasn’t always a deeply partisan issue... John McCain made ... cap-and-trade limits on greenhouse gases part of his presidential campaign. But when House Democrats actually passed a cap-and-trade bill in 2009, it was attacked as, you guessed it, Marxist. ...
Second, we’ll see claims that any effort to limit emissions will have ... “a devastating impact on our economy.” ... Now, the rules the E.P.A. is likely to impose won’t give the private sector as much flexibility as it would have had in dealing with an economywide carbon cap or emissions tax. But Republicans have only themselves to blame: Their scorched-earth opposition to any kind of climate policy has left executive action by the White House as the only route forward. ...
What about the argument that unilateral U.S. action won’t work...? ... U.S. action on climate is a necessary first step toward a broader international agreement, which will surely include sanctions on countries that don’t participate.
So the coming firestorm over new power-plant regulations won’t be a genuine debate... Instead, the airwaves will be filled with conspiracy theories and wild claims about costs, all of which should be ignored. Climate policy may finally be getting somewhere; let’s not let crazy climate economics get in the way.

Wednesday, May 07, 2014

Tax Miles?

Tim Haab at Environmental Economics:

Tax Miles? I still think I have a better idea...:

The California Legislature is looking at a voluntary program that would tax motorists for every mile they drive.

KCAL9’s Bobby Kaple reports that Sen. Mark DeSaulnier, D-Concord, introduced a bill to test out the vehicle miles traveled (VMT) tax because the state’s gas tax was no longer bringing in the revenue it used to due to people driving more fuel efficient vehicles. [via]

It's been almost exactly 7 years now (May 8, 2007) and people still aren't listening to me. 

Taxing miles creates perverse incentives for fuel efficiency. ...  In words, a mielage tax increases the tax per gallon the more fuel efficient the car.  Now granted, with higher mpg you use fewer gallons to drive an equivalent number of miles, and in the end, everyone driving 100 miles will pay the same tax.  And from a revenue perspective, that might be OK.  But there might be a way to kill fewer birds with one stone.

As I have written a number of times, a more straightforward proposal is to simply raise the gas tax.  Reaising the gas tax accomplishes a number of things 1) It raises revenue, 2) It discourages miles driven, and 3) It increases the incentive for higher fuel efficiency. ...

It's really simple.  Why worry about complicated milage programs?  The gas tax infrastructure is in place.  Raise the gas tax and meet multiple public policy and economic goals simultaneously.

Saturday, April 26, 2014

'Greening Economics: It is Time'

Another call for change in how economics is taught:

Greening Economics: It is time, by Carlo Carraro, Marianne Fay, Marzio Galeotti, Vox EU: ... It took the deepest economic and financial crisis since the Great Depression to provoke an open debate amongst macroeconomists as to whether the ‘economic model’ taught in economics programs is adequate. We do hope it will not take the full realization of the adverse consequences of climate change for the profession to come to its senses regarding environmental economics and the way natural capital is ignored in most macroeconomic work. How many superstorm Sandys will it take? By how much does the sea level have to rise? How many severe droughts and floods (and where) will it take before we come to the realization that ignoring natural capital and its many externalities is simply bad economics?
The difference between the financial and environmental crisis is that we actually do have a good body of work that incorporates natural capital in models of growth. The problem is that it has remained to a large extent the restricted domain of environmental economists. The vast majority of us were able to get degrees in economics without ever reading a single paper on environmental economics or encountering natural capital as an argument in the production functions we studied. We did hear about Pigouvian taxes of course – and so figured the problem had been solved…
Environmental economists have long modified growth models to account for the role of the environment, thus revisiting the conditions that ensure growth, whether sustainable or sustained. Classical references are three 1974 articles by Partha Dasgupta and Geoffrey Heal, by William Nordhaus, and by Robert Solow (though Solow could be hardly defined an environmental economist). More generally, existing work is summarized in the survey chapters by Tasos Xepapadeas and by William Brock and Scott Taylor, both published in 2005. A more recent example that compares ‘traditional’ (brown?) and ‘green’ models of growth is a 2011 World Bank working paper by Stephane Hallegatte, Geoffrey Heal, Marianne Fay, and David Treguer.
As a result, environmental economists tend not to talk about economic growth per se, but about sustainable economic growth. When macroeconomists refer to sustainable growth, however, they usually mean sustained growth. When growth economists study the role of externalities in the growth process they almost exclusively refer to technological and knowledge externalities, and generally ignore environmental ones, even though the latter are likely to become largely more relevant in the coming decades. Even social capital, a relative newcomer in economics, appears better integrated into the growth literature.
Why such disregard for an issue that epitomizes market failures from externalities, common property issues, and whose importance in both growth processes and human well-being is well documented? Sheer ignorance, likely – or a vague notion that innovation will come to the rescue. But why would markets generate the technology to solve a problem that combines both knowledge and environmental externalities?
The teaching of economics
Here is a plea then for an urgent change in the economics curriculum, at both introductory and advanced levels. Growth chapters in today’s macroeconomics textbooks make no reference to the environment – whether as an input into the production function or as a limiting factor affecting the productivity of human or physical capital. This is the case, for example, of David Romer’s textbook, in its fourth edition in 2011; of Jean-Pascal Benassy’s 2011 volume; or those of the Chicago School economists, such as Nancy Stokey, Robert Lucas and Edward Prescott’s (1989) and of Lars Ljungqvist and Thomas Sargent (third edition, 2012); or even that of Neo-keynesian economists such as Olivier Blanchard and Stanly Fischer (1989); or, finally, the very recent example of Michael Wickens (2012).
What is needed is not simply that more environmental economics be offered, but rather that the macroeconomics courses teach that natural capital is a key input into production processes, and that the environment – through massive mismanagement and a chronic failure to apply the basic principles of economics – has now become a serious macroeconomic problem, one that requires a profound and dramatic change in our model of growth. The development model of the industrial revolution (‘grow now and clean up later’) partly worked for a world of 1.5 million people; it simply won’t do for a global population approaching 9 billion.
If introducing the notion and role of the environment is necessary in macroeconomics teaching, it is a fortiori necessary when the student is presented with the theory and models of economic growth. There are a few economic growth textbooks written by well-known growth economists who are very active in that area. Going through the tables of contents, however, one is quickly disappointed. Neither the volume by Robert Barro and Xavier Sala-i-Martin (2003) nor the one by Daron Acemoglu (2008), for instance, consider explicitly the role of the environment in the process and in the perspectives of economic growth of a country. The same holds for the textbook by Olivier de la Grandville (2009), while Charles Jones and Dietrich Vollrath (2013) include a chapter on economic growth and natural resources, which is only a component of natural capital. Only the book by Philippe Aghion and Peter Howitt (2008) includes a chapter – the sixteenth – where the authors study ‘how new growth theories can integrate the environmental dimension, and in particular how endogenous innovation and directed technical change make it possible to reconcile the sustained growth objective with the constraints imposed by exhaustible resources or the need to maintain the environment’ (p.377).
It is remarkable that all textbooks on which undergraduate and graduate students learn the fundamental of economic growth invariably include a chapter on the role of human capital and of technological change, but always miss addressing the issue of the environment and natural capital.
As we believe that it is time to stop teaching that economic growth is uniquely measured by the growth of the production of all goods and services, we also firmly believe that the time has come to teach – from the first steps – that economic growth cannot abstract from the explicit consideration of the constraints and opportunities imposed by the environment and natural exhaustible resources. It is clear from many recent assessments (including the recently released IPCC Fifth Assessment Report) that environmental externalities, constraints on natural resources, and climate change – largely a macro problem – will constantly and deeply affect mankind’s future. The teaching of economics can no longer ignore it.

Friday, April 18, 2014

Paul Krugman: Salvation Gets Cheap

The "price of solar panels has fallen more than 75 percent just since 2008":

Salvation Gets Cheap, by Paul Krugman, Commentary, NY Times: The Intergovernmental Panel on Climate Change ... has begun releasing draft chapters from its latest assessment, and ... the reading is as grim as you might expect. ...
But there is one piece of the assessment that is surprisingly, if conditionally, upbeat: Its ... the incredible recent decline in the cost of renewable energy, solar power...
Before I get to that..., however, let’s talk for a minute about the overall relationship between economic growth and the environment.
Other things equal, more G.D.P. tends to mean more pollution. ... But other things don’t have to be equal. There’s no necessary one-to-one relationship between growth and pollution.
People on both the left and the right often fail to understand this point. ... On the left, you sometimes find environmentalists asserting that to save the planet we must give up on the idea of an ever-growing economy; on the right, you often find assertions that any attempt to limit pollution will have devastating impacts on growth. But there’s no reason we can’t become richer while reducing our impact on the environment. ...
The sensible position ... has always been that ... if we give corporations and individuals an incentive to reduce greenhouse gas emissions, they will respond.

What form would that response take? ... One front many people didn’t take too seriously ... was renewable energy. ... And I have to admit that I shared that skepticism. ...
The climate change panel ... notes that “many RE [renewable energy] technologies have demonstrated substantial performance improvements and cost reductions”... The Department of Energy is willing to display a bit more open enthusiasm; it titled a report on clean energy released last year “Revolution Now.” That sounds like hyperbole, but you realize that it isn’t when you learn that the price of solar panels has fallen more than 75 percent just since 2008.
Thanks to this technological leap forward, the climate panel can talk about “decarbonizing” electricity generation as a realistic goal — and since coal-fired power plants are a very large part of the climate problem, that’s a big part of the solution right there. ...
So is the climate threat solved? Well, it should be. The science is solid; the technology is there; the economics look far more favorable than anyone expected. All that stands in the way of saving the planet is a combination of ignorance, prejudice and vested interests. What could go wrong? Oh, wait.

Tuesday, April 15, 2014

'Rising Sun'

Paul Krugman:

Rising Sun: Joe Romm draws our attention to the third slice of the latest IPCC report on climate change, on the costs of mitigation; the panel finds that these costs aren’t that big — a few percent of GDP even by the end of the century, which means only a trivial hit to the growth rate. ...
In fact, you should be optimistic...: the technological prospects for a low-emission economy have gotten dramatically better.
It’s kind of odd how little attention the media give to the solar revolution, but this is really huge stuff:
In fact, it’s possible that solar will displace coal even without special incentives. But we can’t count on that. What we do know is that it’s no longer remotely true that we need to keep burning coal to satisfy electricity demand. The way is open to a drastic reduction in emissions, at not very high cost.
And that should make us optimistic about the future, right? I mean, all that stands in our way is prejudice, ignorance, and vested interests. Oh, wait.

Monday, February 03, 2014

'Keystone: The Pipeline to Disaster'

In case you want to talk about this (I don't have a well-formed opinion on the pipeline itself, I haven't done enough reading about it, so hoping to learn something from the comments):

Keystone: The Pipeline to Disaster, by Jeff Sachs: The new State Department Environmental Impact Statement for the Keystone Pipeline does three things. First, it signals a greater likelihood that the pipeline project will be approved... Second, it vividly illustrates the depth of confusion of US climate change policy. Third, it self-portrays the US Government as a helpless bystander to climate calamity.. ...
The pipeline will ... facilitate the mass extraction and use of Canada's enormous unconventional supplies. Therein lies the problem. ... The economic implications of the climate science are clear. Either we keep some of the world's oil, gas, and coal reserves under the ground..., or we wreck the planet. ... The most important single step is to keep most of the coal from being burned. ...
The Keystone pipeline is crucial to the global carbon budget. If the world deploys massive unconventional oil sources like Canada's oil sands we will exceed the carbon budget,... cheaper, (relatively) cleaner, and lower-CO2 oil is available. ...
Herein lies the tragic, indeed fatal, flaw of the State Department review. The ... State Department simply assumes ... that the oil sands will be developed and used one way or another. ... According to the State Department, in other words, the US Government is just a passive spectator to global climate change. Either the pipeline is built or the oil will be shipped by other means. ...
But do not lose hope. ... The vast majority of Americans want safety for themselves, their children, and the rest of humanity. Our generation can still turn the tide against environmental disaster.

Tuesday, November 12, 2013

'The Inequality of Climate Change'

Annie Lowrey:

The Inequality of Climate Change, by Annie Lowrey, NY Times: ... “No nation will be immune to the impacts of climate change,” said a major World Bank report on the issue last year. “However, the distribution of impacts is likely to be inherently unequal and tilted against many of the world’s poorest regions, which have the least economic, institutional, scientific and technical capacity to cope and adapt.”
That is the firmly established view of numerous national governments, development and aid groups and the United Nations as well. ...
The reason is twofold. First..., poorer lower-latitude regions are expected to face desertification and more-intense storms. The increase in the sea level might be 15 to 20 percent higher in the tropics than the global average, meaning flooding for coastal cities in regions like southern Asia. Droughts are also expected to increase significantly in lower-latitude areas, including in Africa and the Middle East. (The United States and Australia might also be hard hit...) Moreover, in many countries, the vulnerable poor might cluster in areas where climate change might have a disproportionate impact, like flood zones and dry rural areas. ...
The second, more significant reason is that the poorer the country, the harder it might be for it to respond to a changing climate. ...
For that reason, many poorer countries hold rich countries like the United States responsible for climate change, and want them to help pay for its effects. ...
“Poverty reduction and climate change are linked,” said Dr. Jim Yong Kim, the president of the World Bank... He concluded: “If we don’t confront climate change, we won’t end poverty.”

Thursday, October 24, 2013

'Gambling with Civilization'

In case you missed this in the daily links. From Paul Krugman:

Gambling with Civilization, by Paul Krugman, NYRB [Review of The Climate Casino: Risk, Uncertainty, and Economics for a Warming World, by William D. Nordhaus]:
1. Forty years ago a brilliant young Yale economist named William Nordhaus published a landmark paper, “The Allocation of Energy Resources,” that opened new frontiers in economic analysis. [1] Nordhaus argued that to think clearly about the economics of exhaustible resources like oil and coal, it was necessary to look far into the future, to assess their value as they become more scarce—and that this look into the future necessarily involved considering not just available resources and expected future economic growth, but likely future technologies as well. Moreover, he developed a method for incorporating all of this information—resource estimates, long-run economic forecasts, and engineers’ best guesses about the costs of future technologies—into a quantitative model of energy prices over the long term.
The resource and engineering data for Nordhaus’s paper were for the most part compiled by his research assistant, a twenty-year-old undergraduate... It was an invaluable apprenticeship. My reasons for bringing up this bit of intellectual history, however, go beyond personal disclosure—although readers of this review should know that Bill Nordhaus was my first professional mentor. For if one looks back at “The Allocation of Energy Resources,” one learns two crucial lessons. First, predictions are hard, especially about the distant future. Second, sometimes such predictions must be made nonetheless.
Looking back at “Allocation” after four decades, what’s striking is how wrong the technical experts were about future technologies. For many years all their errors seemed to have been on the side of overoptimism, especially on oil production and nuclear power. More recently, the surprises have come on the other side, with fracking having the biggest immediate impact on markets, but with the growing competitiveness of wind and solar power—neither of which figured in “Allocation” at all—perhaps the more fundamental news. For what it’s worth, current oil prices, adjusted for overall inflation, are about twice Nordhaus’s prediction, while coal and especially natural gas prices are well below his baseline.
So the future is uncertain, a reality acknowledged in the title of Nordhaus’s new book, The Climate Casino: Risk, Uncertainty, and Economics for a Warming World. Yet decisions must be made taking the future—and sometimes the very long-term future—into account. ... And as Nordhaus emphasizes, although perhaps not as strongly as some would like, when it comes to climate change uncertainty strengthens, not weakens, the case for action now.
Yet while uncertainty cannot be banished from the issue of global warming, one can and should make the best predictions possible. Following his work on energy futures, Nordhaus became a pioneer in the development of “integrated assessment models” (IAMs), which try to pull together what we know about two systems—the economy and the climate—map out their interactions, and let us do cost-benefit analysis of alternative policies. [2] At one level The Climate Casino is an effort to popularize the results of IAMs and their implications. But it is also, of course, a call for action. I’ll ask later in this review whether that call has much chance of succeeding. ...[continue]...

Wednesday, October 23, 2013

'Climate Change, Public Policy, and the University'

Robert Stavins:

Climate Change, Public Policy, and the University, by Robert Stavins: Over the past year or more, across the United States, there has been a groundswell of student activism pressing colleges and universities to divest their holdings in fossil fuel companies from their investment portfolios.  On October 3, 2013, after many months of assessment, discussion, and debate, the President of Harvard University, Drew Faust, issued a long, well-reasoned, and – in my view – ultimately sensible statement on “fossil fuel divestment,” in which she explained why she and the Corporation (Harvard’s governing board) do not believe that “university divestment from the fossil fuel industry is warranted or wise.”  I urge you to read her statement, and decide for yourself how compelling you find it, and whether and how it may apply to your institution, as well.
About 10 days later, two leaders of the student movement at Harvard responded to President Faust in The Nation Andrew Revkin, writing at the New York Times Dot Earth blog, highlighted the fact that the students responded in part by saying, “We do not expect divestment to have a financial impact on fossil fuel companies …  Divestment is a moral and political strategy to expose the reckless business model of the fossil fuel industry that puts our world at risk.”
I agree with these students that fossil-fuel divestment by the University would not have financial impacts on the industry, and I also agree with their implication that it would be (potentially) of symbolic value only.  However, it is precisely because of this that I believe President Faust made the right decision.  Let me explain. ...

Monday, September 30, 2013

'World Leaders Must Act Faster on Climate Change'

Speaking of the GOP undermining of the public's faith in the government's ability to solve important problems. This is from Nicholas Stern:

World leaders must act faster on climate change, by Nicholas Stern, Commentary, Financial Times: Governments and businesses should be left in no doubt about the dangers of delaying further cuts in greenhouse gas emissions following the publication of the new assessment report by the Intergovernmental Panel on Climate Change. ... [W]e are seeing fundamental changes to the world’s climate, which could soon be ... causing mass migration and endless conflict. This should focus minds...
But all governments must recognise that they themselves potentially pose the biggest threat. There is a danger that, through vacillation and confusion, they will create policy risk that undermines the confidence of the companies largely responsible for delivering the transition to low-carbon economic growth and development. ...
Some politicians will still seek to deny the science and downplay the risks. Many of them have vested financial interests in protecting the status quo, or ideological beliefs that mean they cannot acknowledge the logic of correcting market failures ... to strengthen the role of markets... Although they are small in number, they still have the power to create confusion and slow action.
But everywhere evidence is emerging of opportunities afforded by new energy sources that are more efficient and less polluting. No investor should fail to be impressed by how rapidly the costs of solar photovoltaics and other technologies are falling. ...
The new IPCC report should now convince all world leaders to accelerate their efforts to tackle climate change and create a safer and more prosperous world.

Given the (intentionally created) political climate surrounding attempts to address this problem, it's hard for me to imagine anything of significance happening anytime soon.

Wednesday, September 25, 2013

Understanding the 'Economic' Arguments Against Dealing with Global Warming

Brad DeLong:

"But We Must Do the Wrong Thing!": Understanding the "Economic" Arguments Against Dealing with Global Warming: The market-based economics that I was brought upon had four principles:

  1. It is important to get the distribution of wealth right, or as right as you can, so that household willingness-to-pay properly represent social marginal values.
  2. It is important to get aggregate demand right--for the government to create the right amount of safe and of liquid assets to match shifting private sector demand and so make Say's Law true in practice if not in theory--so that the problems economic policy is dealing with are Harberger Triangles and not Okun Gaps.
  3. Then you can let the competitive market rip--as long, that is, as...
  4. You have also imposed the right Pigovian taxes and bounties to deal with externalities.

"But the Coase Theorem" you say? The Coase Theorem is three things:

  1. An injunction to carve property rights at the joints--to bundle powers, rights, obligations so that you have to impose as little in the way of Pigovian taxes and bodies as possible.
  2. A powerful way of thinking about whether the proper Pigovian taxes and bounties are best imposed through Article I processes (legislation) or Article III processes (adjudication).
  3. A thought experiment that, as Ronald Coase complained until the day he died, was seized by George Stigler for his own purposes and is much more often misinterpreted than applied.

The self-deluded who don't know what they're doing and the vested interests that fear they would be impoverished when we to do the right thing dealing with global warming are still holding on to their first line of defense: that global warming is not happening. They have, however, built a second line of defense: that global warming was happening until 1995, but then something stopped it, and it will not resume. And behind that is the third line of defense that they are now building which we are here to think about today: that we cannot afford to do the right Pigovian tax-and-bounty thing, for dealing with global warming will cost jobs and incomes.

This is the fifth policy-relevant case I have seen in recent years of the political right that claims to love the market system denying and abandoning the basic principles that underpin the technocrat judgment that the market system can and often is a wonderful social economic calculation, allocation, and distribution mechanism. It is almost as if their previous advocacy of the technocratic case for the market system was simply a mask for their vested interests. We have seen this in opposition to doing the right thing in financial regulation; in the management of aggregate demand; in the provision of the right level of social insurance in the long run; and in shifting the policy mix to partially offset the medium-run rapid rise in inequality. Milton Friedman and George Stigler always used to say that you were better off relying on market contestability rather than capture of old regulatory bureaucracies like the interstate commerce commission to deal with the market failures created by private monopoly, but the problems like excessive inequality and poverty on the one hand and pollution on the other required government action--a negative income tax in the first case, and a market-based antipollution policy via Pigovian taxes and bounties in the second. That is now, largely, out the window.

It is important to recognize what is going on here. ...

There's much, much more in the full post.

Saturday, September 14, 2013

'Ronald Coase, a Pragmatic Voice for Government’s Role'

Robert Frank:

Ronald Coase, a Pragmatic Voice for Government’s Role, by Robert Frank, Commentary, NY Times: ... Nobel Memorial Prize in Economic Science [winner] ... Ronald H. Coase ... spent most of his career at the University of Chicago, where he was revered by its many free-market enthusiasts as the world’s foremost authority on ... negative externalities... He became their champion because they thought his framework provided the most cogent arguments for limiting government’s role in economic life.
That belief was profoundly mistaken. In time, I predict, Mr. Coase’s framework will instead be seen as providing not only the best explanation for why governments regulate..., but also the best advice on how they might regulate more effectively. ...
Mr. Coase’s work cannot be read as a case for minimal government. On the contrary, his message was more purely pragmatic: Because we can’t negotiate efficient private solutions most of the time, we must ask whether laws and other institutions can help steer us toward solutions we would have chosen if negotiation had been practical. ...
Because population density has been rising, behaviors with harmful side effects have been growing steadily more important. Our continued prosperity ... will require thinking clearly about how to mitigate the resulting damage. Mr. Coase has pointed the way forward.

Thursday, September 12, 2013

'Remembering Ronald Coase’s Contributions'

In his post Remembering Ronald Coase’s Contributions, Robert Stavins notes a big surprise, the Wall Street Journal's editorial page being less than forthright (he is summarizing a statement in "an effective essay" by Severin Borenstein on "the effect that Coase’s thinking had decades ago on his own intellectual development"):

the Wall Street Journal in its ... tribute to Coase ... twisted the implications of his work to fit the Journal’s view of the world

Stavins goes on to discuss "The Coase Theorem and the Independence Property":

... In our article, “The Effect of Allowance Allocations on Cap-and-Trade System Performance,” Hahn and I took as our starting point a well-known result from Coase’s work, namely, that bilateral negotiation between the generator and the recipient of an externality will lead to the same efficient outcome regardless of the initial assignment of property rights, in the absence of transaction costs, income effects, and third party impacts. This result, or a variation of it, has come to be known as the Coase Theorem.
We focused on an idea that is closely related to the Coase theorem, namely, that the market equilibrium in a cap-and-trade system will be cost-effective and independent of the initial allocation of tradable rights (typically referred to as permits or allowances). That is, the overall cost of achieving a given emission reduction will be minimized, and the final allocation of permits will be independent of the initial allocation, under certain conditions (conditional upon the permits being allocated freely, i.e., not auctioned). We called this the independence property. It is closely related to a core principle of general equilibrium theory (Arrow and Debreu 1954), namely, that when markets are complete, outcomes remain efficient even after lump-sum transfers among agents.
The Practical Political Importance of the Independence Property
...The reason why this property is of such great relevance to ... public policy is that it allows equity and efficiency concerns to be separated. In particular, a government can set an overall cap of pollutant emissions (a pollution reduction goal) and leave it up to a legislature to construct a constituency in support of the program by allocating shares of the allowances to various interests, such as sectors and geographic regions, without affecting either the environmental performance of the system or its aggregate social costs. Indeed, this property is a key reason why cap-and-trade systems have been employed and have evolved as the preferred instrument in a variety of environmental policy settings.
...Does the Property Always Hold?
...Hahn and I ... carried out an empirical assessment of the independence property in past and current cap-and-trade systems...
I hope some of may find time to read our article, but a quick summary of our assessment is that we found modest support for the independence property in the seven cases we examined (but also recognized that it would surely be useful to have more empirical research in this realm).
Political Judgments
That the independence property appears to be broadly validated provides support for the efficacy of past political judgments regarding constituency building through legislatures’ allowance allocations in cap-and-trade systems. Governments have repeatedly set the overall emissions cap and then left it up to the political process to allocate the available number of allowances among sources to build support for an initiative without reducing the system’s environmental performance or driving up its cost.
This success with environmental cap-and-trade systems should be contrasted with many other public policy proposals for which the normal course of events is that the political bargaining that is necessary to develop support reduces the effectiveness of the policy or drives up its overall cost. So, the independence property of well-designed and implemented cap-and-trade systems is hardly something to be taken for granted. It is of real political importance and remarkable social value. It is just one of many lasting contributions of Ronald Coase.

Saturday, August 31, 2013

A Carbon Tax That America Could Live With?

I expected Greg Mankiw's latest column to be about sales of his textbook. That's important news everyone should know about. But in a complete surprise, he talked about carbon taxes instead:

A Carbon Tax That America Could Live With: ... If the government charged a fee for each emission of carbon, that fee would be built into the prices of products and lifestyles. When making everyday decisions, people would naturally look at the prices they face and, in effect, take into account the global impact of their choices. In economics jargon, a price on carbon would induce people to “internalize the externality.”
A bill introduced this year by Representatives Henry A. Waxman and Earl Blumenauer and Senators Sheldon Whitehouse and Brian Schatz does exactly that. Their proposed carbon fee — or carbon tax, if you prefer — is more effective and less invasive than the regulatory approach that the federal government has traditionally pursued.
The four sponsors are all Democrats, which raises the question of whether such legislation could ever make its way through the Republican-controlled House of Representatives. The crucial point is what is done with the revenue raised by the carbon fee. If it’s used to finance larger government, Republicans would have every reason to balk. But if the Democratic sponsors conceded to using the new revenue to reduce personal and corporate income tax rates, a bipartisan compromise is possible to imagine. ...

Mankiw once said that economists shouldn't consider the political realities of policy, they should just recommend the best policy:

Politics aside: I have finally gotten around to reading the new Ebenstein biography of Milton Friedman. Here is a quotation from Milton that I particularly like:

“The role of the economist in discussions of public policy seems to me to be to prescribe what should be done in light of what can be done, politics aside, and not to predict what is ‘politically feasible’ and then to recommend it.”

So now, when I advocate raising gasoline taxes and cutting income taxes, and my conservative friends tell me that the plan is politically unrealistic, that the government will just keep the extra revenue instead of cutting income taxes, I can quote Milton....

I get that Mankiw really wants his personal taxes to be lowered, he seems to hate the idea of paying a fair share in taxes from what he makes from the textbook he hawks at every opportunity. But why, from an economic standpoint, is lowering his personal taxes (corporate taxes too) the best option (as opposed to simply trying to find something that is politically acceptable to the right)? Has he made that argument? The revenue could be used to help low income households that would be hurt by the tax, for deficit reduction without cutting programs, there are all sorts of ways the revenue could be used and it's not at all clear that his recommendation is, from an economic rather than a political view, the best way to use the revenue from a carbon tax.

Wednesday, August 07, 2013

'A Market to Save Whales?'

What do you think about this proposal?:

A Market to Save Whales?, by Timothy Taylor: The International Whaling Commission imposed a moratorium on commercial whaling in 1986, which is still in effect. However, the moratorium has effectively allowed "scientific" whaling (mainly Japan), "subsistence" whaling (various aboriginal groups), and limited commercial whaling (mainly by Norway and Iceland). The total number of whales caught has doubled since the 1990s to about 2,000 per year, which is a pace that many biologists consider to be unsustainably high. After watching the moratorium approach struggle and fail over the last quarter-century, it's time to think about alternatives. In the Spring 2013 edition of Issues in Science and Technology, Ben A. Minteer and Leah R. Gerber discuss the possibility of "Buying Whales to Save Them."

What Minteer and Gerber have in mind is that the International Whaling Commission or some similar body would set a quota for the number of whales that could be taken, based on estimates of sustainable catch from biologists. These quotas would be marketable; in particular, environmentalist groups could purchase the right to take a whale--but then not do so. ...

As you might expect, this kind of proposals is controversial. Many environmentalists feel that putting a value on whales is unethical, a betrayal of the underlying values involved. Other environmentalists, especially those with an economic turn of mind, note that if those who would be catching whales sell their quota to those who do not wish to catch whales, both parties can be benefit from the exchange--and the result may be that fewer whales are killed. Much of Minteer and Gerber's article is a consideration of these issues. ...

My own sense, trained as I am into economic ways of thinking, is that if ethics are to be meaningful, they need to engage with pragmatic realities. The moratorium on commercial whaling is not, in fact, protecting a biologically sufficient number of whales. The arguments that whales should not be hunted, whatever their merits, have not been winning where it counts--that is, as measured by the size of the whale population. Arguments about the ethics whaling have even not brought us to a biologically sustainable situation, much less to the far more stringent limits on whaling that many environmentalists would prefer. In that situation, real-world ethical behavior calls for looking at alternatives.

Here's a similar proposal to save rhinos: Scientists Call for Legal Trade in Rhino Horn. Not sure it would work, but in my view it would be worth trying.

Saturday, August 03, 2013

'A Republican Case for Climate Action'

Republican administrators of the E.P.A under Presidents Richard Nixon, Ronald Reagan, George Bush and George W. Bush try to convince other Republicans that climate change is real, and that we need to do something about it now, not later:

A Republican Case for Climate Action, by William D. Ruckelshaus, Lee M. Thomas, William K. Reilly, and Christine Todd Whitman, Commentary, NY Times: Each of us took turns over the past 43 years running the Environmental Protection Agency. We served Republican presidents, but we have a message that transcends political affiliation: the United States must move now on substantive steps to curb climate change, at home and internationally.
There is no longer any credible scientific debate about the basic facts: our world continues to warm... The costs of inaction are undeniable. ... And the window of time remaining to act is growing smaller: delay could mean that warming becomes “locked in.”
A market-based approach, like a carbon tax, would be the best path to reducing greenhouse-gas emissions, but that is unachievable in the current political gridlock in Washington. Dealing with this political reality, President Obama’s June climate action plan lays out achievable actions that would deliver real progress. He will use his executive powers to require reductions in the amount of carbon dioxide emitted by the nation’s power plants... The president also plans to use his regulatory power to limit the powerful warming chemicals known as hydrofluorocarbons...
Rather than argue against his proposals, our leaders in Congress should endorse them and start the overdue debate about what bigger steps are needed and how to achieve them — domestically and internationally.
As administrators of the E.P.A under Presidents Richard M. Nixon, Ronald Reagan, George Bush and George W. Bush, we held fast to common-sense conservative principles — protecting the health of the American people, working with the best technology available and trusting in the innovation of American business and in the market to find the best solutions for the least cost.
That approach helped us tackle major environmental challenges to our nation and the world: the pollution of our rivers... The solutions we supported worked, although more must be done. ...
We can have both a strong economy and a livable climate. All parties know that we need both. The rest of the discussion is either detail, which we can resolve, or purposeful delay, which we should not tolerate. ... The only uncertainty about our warming world is how bad the changes will get, and how soon. What is most clear is that there is no time to waste.

Friday, June 28, 2013

Paul Krugman: Invest, Divest and Prosper

The war on coal won't cost jobs in a depressed economy, it "could be just what our economy needs":

Invest, Divest and Prosper, by Paul Krugman, Commentary, NY Times: It has been a busy news week, what with voting rights, gay marriage and Paula Deen. Even so, it’s remarkable how little attention the news media gave to President Obama’s new “climate action plan.”...; this is ... a very big deal. For this time around, Mr. Obama wasn’t touting legislation we know won’t pass. The new plan is, instead, designed to rely on executive action. This means that ... it can bypass the anti-environmentalists who control the House of Representatives.
Republicans realize this, and ... right now they don’t seem eager to attack climate science, maybe because that would make them sound unreasonable (which they are). Instead, they’re ... denouncing the Obama administration for waging a “war on coal” that will destroy jobs.
And you know what? They’re half-right. The new Obama plan is, to some extent, a war on coal — because reducing our use of coal is, necessarily, going to be part of any serious effort to reduce greenhouse gas emissions. But making war on coal won’t destroy jobs. In fact, serious new regulation of greenhouse emissions ...
It’s always important to remember that what ails the U.S. economy right now isn’t lack of productive capacity, but lack of demand. The housing bust, the overhang of household debt and ill-timed cuts in public spending have created a situation in which nobody wants to spend; and because your spending ... this leads to a depressed economy over all. ...
Suppose that electric utilities, in order to meet the new rules, decide to close some existing power plants and invest in new, lower-emission capacity. Well, that’s an increase in spending, and more spending is exactly what our economy needs.
O.K., it’s still not clear whether any of this will happen. Some of the people I talk to are cynical..., believing that the president won’t actually follow through. All I can say is, I hope they’re wrong.
Near the end of his speech, the president urged his audience to: “Invest. Divest. Remind folks there’s no contradiction between a sound environment and strong economic growth.” Normally, one would be tempted to dismiss this as the sound of someone waving away the need for hard choices. But, in this case, it was simple good sense: We really can invest in new energy sources, divest from old sources, and actually make the economy stronger. So let’s do it.

Tuesday, May 28, 2013

'China and the Environmental Kuznets Curve'

Tim Taylor:

China and the Environmental Kuznets Curve: The original Kuznets curve posited, back in 1955, that inequality of incomes would follow an inverted-U pattern as a nation's economy developed, first rising, and then declining. In 1955, this looked reasonable! The "environmental Kuznets curve" suggests that pollution may follow an inverted-U pattern as a nation's economy develops. Pollution first rises as a low income nation industrializes with few limitations on pollution. But then the nation becomes better-off and more able and willing to pay the costs of limiting pollution, and the nation's economy shifts from industry to services, and pollution levels fall. For a useful overview article, Susmita Dasgupta, Benoit Laplante, Hua Wang, and David Wheeler wrote on "Confronting the Environmental Kuznets Curve" in the Winter 2002 issue of the Journal of Economic Perspectives. (Like all articles in JEP, it is freely available online compliments of the American Economic Association. Full disclosure: I've been the Managing Editor of JEP for the last 26 years.)
Of course, the environmental Kuznets curve is a theory that needs to be supported or refuted with evidence... And the experience of China, with its burgeoning economy and extraordinary environmental issues, is at the center of the debate. ...
The conventional environmental Kuznets is that emissions of pollutants rise up until some level between about $5000 and $8000 in per capita income, and then fall after that point. There is some historical evidence to support this claim. ...
According to the World Bank, China's per capita GDP was $5,445 in 2011, so it is just reaching the levels where its pollution should first start to level off, and then to decline. ...
Interestingly, there are signs that for some pollutants, the level of pollution is no longer rising with the growth of China's economy. For example, here's a figure about air pollution. The top line shows the growth of GDP. Emissions of sulfur dioxides and soot have not been rising with GDP, and even emissions of carbon dioxide have been lagging behind the rise in GDP in the last few years.
Here's a similar figure for water pollution. Chemical oxygen demand (COD) measures the level of organic pollutants in water. Both that measure and wastewater are at least not rising at the same pace as GDP.
It remains true that China's amount of pollution relative to its economic output is high by the standards of high income countries. ...
The policy prescription for reducing pollution in China is clear enough: close down older facilities, and make sure their replacements have up-to-date anti-pollution equipment; keep building sewage treatment facilities; put a price on polluting activities to encourage conservation; and so on. Sam Hill's paper has details.
But ultimately, China's path along the environmental Kuznets curve will be determined by politics and public pressure, and public pressure in China does seem to be building for stronger environmental protection. The (wonderfully named) Elizabeth C. Economy at the Council of Foreign Relations recently wrote a brief piece on "China’s Environmental Politics: A Game of Crisis Management," which notes the growing number of environmental public protests in China. In a society under such a high degree of government control, environmental protests can become a place where those discontented with government have a semi-safe space for dissent.

Tuesday, May 21, 2013

'The Climate Skeptics Have Already Won'

Martin Wolf:

Humanity has decided to yawn and let the real and present dangers of climate change mount. ... Judged by the world’s inaction, climate skeptics have won..., however rational it may be to seek to lower the risk of catastrophic outcomes, this is not what is happening now or seems likely to happen in the foreseeable future. ...

The attempt to shift our choices away from the ones now driving ever-rising emissions has failed. It will, for now, continue to fail. The reasons for this failure are deep-seated. Only the threat of more imminent disaster is likely to change this and, by then, it may well be too late. This is a depressing truth. It may also prove a damning failure.

As he says, it's not too late, "Unless the most apocalyptic scenario happens, humanity may be able to curb emissions and buy itself time," but the clock is running and it's hard to see how meaningful change will come about without substantial changes in the political environment. Gridlock favors the skeptics.

Thursday, March 07, 2013

'The Sordid History of Cap-and-Trade'

Richard Schmalensee and Robert Stavins on how "conservatives are choosing to demonize their own market-based creation" for addressing the market failures that lead to "large-scale environmental problems":

The sordid history of Congressional acceptance and rejection of cap-and-trade: Implications for climate policy, by Richard Schmalensee and Robert N. Stavins, Not so long ago, cap-and-trade mechanisms for environmental protection were popular in Congress. Now, such mechanisms are denigrated. What happened? This column tells the sordid tale of how conservatives in Congress who once supported cap and trade now lambast climate change legislation as ‘cap-and-tax’. Ironically, conservatives are choosing to demonize their own market-based creation. The successful conservative campaign that disparaged cap-and-trade means it may now be politically impossible to promote it in the US. The good news? Elsewhere, cap and trade is now a proven, viable option for tackling large-scale environmental problems. ...

Wednesday, February 20, 2013

China Says It May Implement a Carbon Tax

China may implement a (modest) carbon tax:

Taxing Carbon, by Vikas Bajaj, NY Times: Long considered the biggest holdout in climate change negotiations, China said this week that the country would implement new taxes designed to curb greenhouse gas emissions. Officials in Beijing provided few details, but a report by the state-owned Xinhua news service suggested that the government is working on a relatively modest plan. ...
The Xinhua report ... did not say how big a tax the country would impose, but it pointed to a three-year-old proposal by government experts that would have levied a 10-yuan ($1.60) per ton tax on carbon in 2012 and raised it to 50-yuan ($8) a ton by 2020. Those prices are far below the $80 (500-yuan) a ton that some experts have suggested would be needed to achieve “climate stability,” and which would raise the cost of gasoline by about 70 American cents a gallon.
China’s plan will not make a serious dent in global warming, though the tax may still have some beneficial impact within the country, where air pollution is a serious problem. ...
Meanwhile, in the U.S., many members of Congress find the idea of carbon taxes totally anathema and think such taxes would wreck the economy. They might, however, want to consider a proposal promoted by Mr. Hansen that would take the money collected from carbon taxes — or carbon fees as he prefers to call them — and rebate it in full to individuals. That would help consumers pay for more expensive electricity and gasoline, while giving them an incentive to cut their use of energy and fossil fuels. It’s an elegant way to limit damage to the economy while giving people incentives to do what is right for the planet.

Contrary to what "many members of Congress" (i.e. many Republicans) claim, eliminating a market failure through a carbon tax moves the economy closer to the optimal growth path rather than further from it.

Wednesday, February 06, 2013

Jagdish Bhagwati Does Not Seem to Like Al Gore

Not sure where to start with this one other than to note that Jagdish Bhagwati does not seem to like Al Gore:

Futurama, by Jagdish Bhagwati: ...Al Gore ... surely succeeded beyond his wildest expectations as the author of An Inconvenient Truth. But his phenomenal success had little to do with science (which has remained somewhat controversial: many of us remember for instance the not-too-distant scare about global cooling, also from climate scientists) and much to do with the photographs of polar bears caught on drifting ice as glaciers melted. An image like that is what we all need when we push our pet agendas. Alas, none of us is so fortunate. Nor is Gore as he turns now to writing about our future. ...
The problem Gore faces in the bulk of this book therefore is that his identification of problems, and his proposed solutions, are not compelling. His erudition is considerable but is necessarily limited since he casts his net wide, and he is both unfamiliar with important issues pertinent to his analysis and also shallow in his prescriptions for remedial policies. ...
Given Gore’s justified reputation on climate change, a disappointing feature of Gore’s book is in the chapter titled “The Edge.” I agree with him that the evidence on climate change, and the contribution to it by man-made carbon emissions, is about as good as science can provide; and he is persuasive in his sketch of the scenario of the dangers that global warming, unchecked, hold for mankind. Where he fails is in the remedies that he discusses. To focus on just one issue: there is now agreement from the last meeting at Cancún on the attempted renewal of Kyoto Protocol that $100 billion be found annually to create new technologies of mitigation and adaptation to climate change. It is expected that a significant share of this will be public funds. We have the precedent that public monies should largely be used to create public good: thus the new seeds under the green revolution were publicly financed and they were available to everyone virtually for free. Should we then not expect the green technologies developed with public funds to be available for free to Mars, China, and India?
But, to my knowledge, Gore has not embraced this proposal, which would make, say, India accept more ambitious targets of carbon reduction because it would reduce the cost of doing so. I would not make the ferocious charges that Gore levels at the opponents of climate change (see page 283). But may I wonder whether the reason for Gore’s omission is that he is heavily invested in green-energy stocks and would like to see public funds to be used only for private payoffs by these firms?
The good in the book is therefore offset by the bad. But even the bad will produce good if it irritates us into thinking harder about the many issues that Gore correctly insists we must confront.

Gore's sin is not embracing a particular proposal, and it must be because "he is heavily invested in green-energy stocks?" Pretty thin charge, and pretty speculative -- I expected a more compelling complaint. (Bhagwati agress with Gore on the science, says he's persuasive, etc., and acts like the know-it-all judge of all things related to climate change, yet he tosses out the global cooling thing? There's a reason this is called the "global cooling myth.")

In another part, I was surprised to hear a call for unions:

...The problem in this world of competition among similar products is that comparative advantage is now fragile: it has a “knife-edge” quality. One day you have it; the next day you do not. Almost every entrepreneur has a rival breathing down his neck; and this need not be from China or India, with their “low wages”—what Gore frets about—but may be Poland or France or Sweden. There are three implications.
First, firms need flexibility in firing if they are to hire.
Second, we can no longer assure economic security for workers by giving them lifetime employment. The security has to be for the worker herself, unrelated to specific occupation and employment.
Third, the volatility also means that we can no longer expect firms to provide training and hence “human capital” to blue-collar workers who can be expected to leave at the next sign of trouble at their plant or firm. We therefore have to provide this human capital through efforts by unions, employers, community colleges, etc.
Gore also accepts uncritically the notion that we are doomed to greater inequality in a globalized world of trade and multinational investment. The evidence is more mixed than he reports...

I think it would only be fair to note the incentives work the other way as well. With firms willing to fire workers at the drop of a hat -- older social obligations to retain workers through tough times are largely gone -- there's no incentive for workers to invest in themselves if the human capital is unique to the particular firm. Why bother if you are unlikely to be there for very long? (That is, I don't think the problem is workers who "leave at the next sign of trouble." f course they'll leave for another opportunity if they fear they'll be fired in the near future due to the "trouble.")

Sunday, January 27, 2013

Climate Policy in Obama's Second Term

I think of Robert Stavins as being on the optimistic side when it comes to action on climate change, but even he seems discouraged despite Obama's mention of this issue in his inaugural address:

The Second Term of the Obama Administration, by Robert Stavins: In his inaugural address on January 21st, President Obama surprised many people – including me – by the intensity and the length of his comments on global climate change.  Since then, there has been a great deal of discussion in the press and in the blogosphere about what climate policy initiatives will be forthcoming from the administration in its second term. ...
Although I was certainly surprised by the strength and length of what the President said in his address, I confess that it did not change my thinking about what we should expect from the second term.  Indeed, I will stand by an interview that was published by the Harvard Kennedy School on its website five days before the inauguration (plus something I wrote in a previous essay at this blog in December, 2012).  Here it is, with a bit of editing to clarify things, and some hyperlinks inserted to help readers. ...
Q: In the Obama administration’s second term, are there openings/possibilities for compromises...?
A: It is conceivable – but in my view, unlikely – that there may be an opening for implicit (not explicit) “climate policy” through a carbon tax. At a minimum, we should ask whether the defeat of cap-and-trade in the U.S. Congress, the virtual unwillingness over the past 18 months of the Obama White House to utter the phrase “cap-and-trade” in public, and the defeat of Republican Presidential candidate Mitt Romney indicate that there is a new opening for serious consideration of a carbon-tax approach to meaningful CO2 emissions reductions in the United States.
First of all, there surely is such an opening in the policy wonk world. Economists and others in academia, including important Republican economists such as Harvard’s Greg Mankiw and Columbia’s Glenn Hubbard, remain enthusiastic supporters of a national carbon tax. And a much-publicized meeting in July, 2012, at the American Enterprise Institute in Washington, D.C. brought together a broad spectrum of Washington groups – ranging from Public Citizen to the R Street Institute – to talk about alternative paths forward for national climate policy. Reportedly, much of the discussion focused on carbon taxes.
Clearly, this “opening” is being embraced with enthusiasm in the policy wonk world. But what about in the real political world? The good news is that a carbon tax is not “cap-and-trade.” That presumably helps with the political messaging! But if conservatives were able to tarnish cap-and-trade as “cap-and-tax,” it surely will be considerably easier to label a tax – as a tax! Also, note that President Obama’s silence extends beyond disdain for cap-and-trade per se. Rather, it covers all carbon-pricing regimes.
So as a possible new front in the climate policy wars, I remain very skeptical that an explicit carbon tax proposal will gain favor in Washington. ...
A more promising possibility – though still unlikely – is that if Republicans and Democrats join to cooperate with the Obama White House to work constructively to address the short-term and long-term budgetary deficits the U.S. government faces,... then there could be a political opening for new energy taxes, even a carbon tax. ...
Those who recall the 1993 failure of the Clinton administration’s BTU-tax proposal – with a less polarized and more cooperative Congress than today’s – will not be optimistic. ... The key group to bring on board will presumably be conservative Republicans, and it is difficult to picture them being more willing to break their Grover Norquist pledges because it’s for a carbon tax.

Here's the surprising part (to me anyway), some optimism after all:

What remains most likely to happen is what I’ve been saying for several years, namely that despite the apparent inaction by the Federal government, the official U.S. international commitment — a 17 percent reduction of CO2 emissions below 2005 levels by the year 2020 – is nevertheless likely to be achieved!  The reason is the combination of CO2 regulations which are now in place because of the Supreme Court decision [freeing the EPA to treat CO2 like other pollutants under the Clean Air Act], together with five other regulations or rules on SOX [sulfur compounds], NOX [nitrogen compounds], coal fly ash, particulates, and cooling water withdrawals. All of these will have profound effects on retirement of existing coal-fired electrical generation capacity, investment in new coal, and dispatch of such electricity.
Combined with that is Assembly Bill 32 (AB 32) in the state of California, which includes a CO2 cap-and-trade system that is more ambitious in percentage terms than Waxman-Markey was in the U.S. Congress, and which became binding on January 1, 2013. ...  In other words, there will be actions having significant implications for climate, but most will not be called “climate policy,” and all will be within the regulatory and executive order domain, not new legislation. ...

Tuesday, January 22, 2013

Time Is Not On Our Side

What if we actually achieve the target of limiting global warming to a 2 degree Celsius increase? We are unlikely to meet this goal -- it's looking much worse than that -- but what if we did?:

 ... It is abundantly clear that the target of a 2-degree Celsius limit to climate change was mostly derived from what seemed convenient and doable without any reference to what it really means environmentally. Two degrees is actually too much for ecosystems. Tropical coral reefs are extremely vulnerable to even brief periods of warming. .. A 2-degree world will be one without coral reefs (on which millions of human beings depend for their well-being)..., there undoubtedly will be massive extinctions and widespread ecosystem collapse. The difficulty of trying to buffer and manage change will increase exponentially with only small increments of warming.
In addition, the last time the planet was 2 degrees warmer, the oceans were four to six (perhaps eight) meters higher. We may not know how fast that will happen (although it is already occurring more rapidly than initially estimated), but the end point in sea-level rise is not in question. A major portion of humanity lives in coastal areas and small island states that will go under water. ...
More than a 2-degree increase should be unimaginable. Yet to stop at 2 degrees, global emissions have to peak in 2016. ...
Environmental change is happening rapidly and exponentially. We are out of time.

Of course, global emissions won't be anywhere near a peak in 2016.

Wednesday, January 16, 2013

'The Right’s Resistance to Regulation'

Peter Dizikes of MIT News:
The right’s resistance to regulation, by Peter Dizikes, MIT News Office: James Watt, who served as Secretary of the Interior from 1981 to 1983, is remembered primarily for a short, business-friendly tenure that ended with his resignation soon after an ill-judged remark about women, minorities and the disabled. And yet, as MIT professor Judith Layzer observes in her new book about environmental politics, “Open for Business,” there is good reason to regard Watt’s impact differently.

For one thing, Watt, among others on the political right, managed to cut government funding for conservation efforts. For another, he installed staff members who emphasized the development of natural resources, rather than just the protection of land. In so doing, Watt was one of many Republicans who instituted fundamental changes in U.S. environmental policy.

“I will build an institutional memory that will be here for decades,” Watt once said of his department, as Layzer recounts.

These kinds of under-the-radar changes, Layzer argues, are one of two ways conservatives have dramatically altered environmental politics since the 1970s, when environmentalists probably reached the high point of their political influence.

The other, says Layzer, an associate professor of environmental policy at MIT, is ideological and rhetorical: Conservatives have gained enormous traction by touting “the virtues of the market system and the horrors of regulation,” thus limiting public backing for stricter government-imposed controls on natural resources. By arguing that the market economy, when left alone, is effectively self-policing and morally sound, conservatives have put environmentalists on the defensive, making them tentative about arguing for environmental protections as a good in themselves. So whereas President Richard Nixon once green-lighted the Environmental Protection Agency, today’s political debates often touch on the necessity of opening further federal lands for oil exploration.

“The set of conservative ideas has really pushed the framing of issues to the point where many people today aren’t even aware of the [older] alternatives,” Layzer says. “Only if you’d been involved or lived through this history would you know it hasn’t always been thus.” ...[continue]...

The one thing I'll note is that "free market rhetoric," which is said to have played a key role in winning (or at least shifting) the battle of ideas, was the vehicle for defending other interests, e.g. business interests in having as few environmental regulations as possible. It (free markets) was not the goal in and of itself.

As to what should be done, for this reason I'm not so sure that “It really was about ideas." And you have to fight ideas with ideas.” It was also about having the political power to make the ideas heard, and to turn them into actual legislation that served the interests of the of those supporting the politicians financially. So I'd say, "It was really about using ideas to serve the interests of those who held the reins of power." Or something like that.

Tuesday, January 15, 2013

'Egregious in its Misuse of Data'

Jeff Sachs is unhappy with the WSJ's editorial page (and not for the first time):

Wall Street Journal: Get a Fact Checker, by Jeffrey Sachs: ...I ... want to talk about fact checking. The [Wall Street] Journal editorial board is egregious in its misuse of data. It writes what it wants without fact checking. Where is the journalistic profession to call them out?
There are two editorial pieces this weekend of note. The story on "Europe's Bankrupt Welfare State" asserts that, "the European way of welfare is bankrupt." This is easy to check. Look at European countries with large welfare states, and see how they are doing in terms of debt, deficits, unemployment, and other indicators of "bankruptcy." I do this in Table 1 here comparing the US with Europe's five leading welfare states: the Netherlands, Denmark, Norway, Sweden, and Germany. ...
Looking at Table 1..., the conclusion is simple. The European welfare states tax and spend more than the US as a percent of GDP, yet also have lower budget deficits as a share of GDP, lower debt-GDP ratios, and lower unemployment rates. Note that the government sectors of Norway and Sweden have net assets rather than net debt. Some bankruptcy!
The second comment is by editorial board member Holman Jenkins, Jr. Mr. Jenkins tries to debunk global warming by writing that "the warmest year on record globally is still 1998 and no trend has been apparent globally since then."
His claim is both false and irrelevant. It is false because most data point to more recent years as being warmer than 1998. ... The claim is also irrelevant, since 1998 was an exceptionally strong El Nino (essentially, a tilt of Pacific warm water towards the west coast of Latin America). ... Comparing subsequent years to a very strong El Nino year mixes up trends and inter-annual variability. ...
The Wall Street Journal editors have failed to notice that even the climate skeptics have come around. ...
The Wall Street Journal editorial board needs a fact checker plain and simple. It's a major paper, with excellent news coverage, and should not destroy its integrity by an editorial board that flouts the basic process of checking the facts.

Monday, December 24, 2012

Real Tree or Artificial Tree?

A bit late for most of you, but in case it comes up over the next few days:

Real Tree or Artificial Tree, by Tim Taylor: My family always had real Christmas trees when I was growing up. I've always had real trees as an adult. Living in my own little bubble, it thus came as a shock to me to learn that, of the households that have Christmas trees, over 80% use an artificial tree, according to Nielsen survey results commissioned by the American Christmas Tree Association  (which largely represents sellers of artificial trees). But in a holiday season where the focus is often on whether we are naughty or nice, what choice of tree has greater environmental impact? ...

Wednesday, December 12, 2012

Just Sayin': It May Already Be Too Late

Tim Haab:

Just sayin': I was thinking of writing a lengthy post about climate change denial being completely unscientific nonsense, but then geochemist and National Science Board member James Lawrence Powell wrote a post that is basically a slam-dunk of debunking. His premise was simple: If global warming isn’t real and there’s an actual scientific debate about it, that should be reflected in the scientific journals.
He looked up how many peer-reviewed scientific papers were published in professional journals about global warming, and compared the ones supporting the idea that we’re heating up compared to those that don’t. What did he find? This:

Powell-Science-Pie-Chart[1]The thin red wedge.   Image credit: James Lawrence Powell

Maximillian Auffhammer at the Berkeley blog:

Doha schmoha: On Saturday (Dec. 8) another wildly unsuccessful round of climate negotiations, in Doha, Qatar, concluded with applying a band aid to solve the rapidly accelerating climate problem. The 1997 Kyoto accord was extended to 2020. If you think this is a good thing, you are severely mistaken. China, the US and the other usual suspects made no significant concessions. Further,  the climate leader — the EU — is internally in disagreement over what reductions should be agreed to. ...
While academics have proposed a number of interesting avenues for further studies of so called architectures for future agreements, time is slowly running out. It is simply too difficult to get 200+ countries to agree and then stick to a binding agreement. So what to do?
I think a simple handshake between the U.S. and China would be a good start. Each agrees to a carbon tax which is collected fairly far upstream. Any country wanting to sell its goods into the U.S. or Chinese markets could either pay a carbon tariff at the border or start charging its own equivalent carbon tax and be exempt from the tariff.
Is this going to happen? Maybe not...
But one thing is for sure: We are becoming richer as a species and we will want to consume more energy services. Unless we start pricing carbon, that energy will largely come from coal. And if that happens, limiting warming to 2 degrees is a pipe dream. In fact, it may already be too late.

Thursday, December 06, 2012

'Climate Science Predictions Prove Too Conservative'

Don't say you weren't warned about the risks of climate change, though you might be able to say you weren't adequately warned:

Climate Science Predictions Prove Too Conservative, by Glenn Scherer and Across two decades and thousands of pages of reports, the world's most authoritative voice on climate science has consistently understated the rate and intensity of climate change and the danger those impacts represent, say a growing number of studies on the topic. 
This conservative bias, say some scientists, could have significant political implications, as reports from the group – the U.N. Intergovernmental Panel on Climate Change – influence policy and planning decisions worldwide, from national governments down to local town councils.
As the latest round of United Nations climate talks in Doha wrap up this week, climate experts warn that the IPCC's failure to adequately project the threats that rising global carbon emissions represent has serious consequences: The IPCC’s overly conservative reading of the science, they say, means governments and the public could be blindsided by the rapid onset of the flooding, extreme storms, drought, and other impacts associated with catastrophic global warming. ...

Wednesday, December 05, 2012

A Counter Example to the 'Tragedy of the Commons'

Running late -- have a dissertation proposal defense to get to, then a final to give to my Ph.D. students -- so a quick one:

A Counter Example to the "Tragedy of the Commons", by Matthew Kahn: ...This OP-ED by Andrew Kahrl is actually quite interesting. ... For at least 20 years, I have lectured on the "tragedy of the commons" that takes place both in cities and in the oceans. Consider a smoker in a city...[numerical example]. This is a simple example of the tragedy of the commons --- this smoker unintentionally degraded the commons as he pursued his privately optimal action. The same logic applies to over-fishing in common oceans. One "solution" to this property rights issue is to privatize the commons and the owner would charge a price to allow the smoker to smoke and the smoker would only smoke if he is willing to pay this fee.

We can now evaluate Professor Kahrl's claims. He argues that the privatization of beaches in the Northeast is the reason that Hurricane Sandy caused so much damage.

He writes; "By increasing the value of shoreline property and encouraging rampant development, the trend toward privatizing formerly public space has contributed in no small measure to the damage storms like Hurricane Sandy inflict. Tidal lands that soaked up floodwaters were drained and developed. Jetties, bulkheads and sea walls were erected, hastening erosion. And sand dunes — which block rising waters but also profitable ocean views — were bulldozed." ...
Kahrl is saying that capitalism and the pursuit of aesthetic beauty nudged us to drop our guard and destroy Mother Nature's coastal defense system. .... For this claim to be true, he must assume that the tragedy of the commons would not have degraded such natural capital. This may be true.

Mother Nature is now engaging in a takings as she tries to seize coastal property from incumbent owners. I say let her win. These place based stakeholders want to use your tax dollars as funds to build a wall around them. A compromise would be for the state government to buy these properties and knock them down and revitalize the natural capital adaptation strategies that the author lists. ...

Monday, November 26, 2012

'Wreaking Havoc on the Environment with Little or No Accountability'

Jeff Sachs says "polluters must pay":

Polluters Must Pay: When BP and its drilling partners caused the Deepwater Horizon oil spill in the Gulf of Mexico in 2010, the United States government demanded that BP finance the cleanup, compensate those who suffered damages, and pay criminal penalties for the violations that led to the disaster. BP has already committed more than $20 billion in remediation and penalties. Based on a settlement last week, BP will now pay the largest criminal penalty in US history – $4.5 billion.
The same standards for environmental cleanup need to be applied to global companies operating in poorer countries, where their power has typically been so great relative to that of governments that many act with impunity, wreaking havoc on the environment with little or no accountability. As we enter a new era of sustainable development, impunity must turn to responsibility. Polluters must pay, whether in rich or poor countries. Major companies need to accept responsibility for their actions. ...
I can't see the companies doing this voluntarily.

Wednesday, October 31, 2012

Climate Change and Hurricane Sandy

Is there a link between climate change and hurricane Sandy?:

Did Climate Change Cause Hurricane Sandy?, by Mark Fischetti, Scientific American: If you’ve followed the U.S. news and weather in the past 24 hours you have no doubt run across a journalist or blogger explaining why it’s difficult to say that climate change could be causing big storms like Sandy. Well, no doubt here: it is.
The hedge expressed by journalists is that many variables go into creating a big storm, so the size of Hurricane Sandy, or any specific storm, cannot be attributed to climate change. That’s true, and it’s based on good science. However, that statement does not mean that we cannot say that climate change is making storms bigger. It is doing just that—a statement also based on good science, and one that the insurance industry is embracing, by the way. (Huh? More on that in a moment.)
Scientists have long taken a similarly cautious stance, but more are starting to drop the caveat and link climate change directly to intense storms and other extreme weather events, such as the warm 2012 winter in the eastern U.S. and the frigid one in Europe at the same time. They are emboldened because researchers have gotten very good in the past decade at determining what affects the variables that create big storms. Hurricane Sandy got large because it wandered north along the U.S. coast, where ocean water is still warm this time of year, pumping energy into the swirling system. But it got even larger when a cold Jet Stream made a sharp dip southward from Canada down into the eastern U.S. The cold air, positioned against warm Atlantic air, added energy to the atmosphere and therefore to Sandy, just as it moved into that region, expanding the storm even further.
Here’s where climate change comes in. ... [more] ...

Saturday, October 27, 2012

Climate Change and 'Free Drivers'

Gernot Wagner and Martin Weitzman on the "allure of geoengineering" as a solution to global warming, and the temptation for individual countries to act on their own:

Playing God: ... All it takes is a single actor willing to focus on the purported benefits to his country or her region to pull the geoengineering trigger. The task with geoengineering is to coordinate international inaction while the international community considers what steps should be taken. The fate of the planet cannot be left in the hands of one leader, one nation, one billionaire.
Fortunately, we are still many years off from the full "free driver" effect taking hold. There's some time to engage in a serious global governance debate and careful research: building coalitions, guiding countries and perhaps even individuals lest they take global matters into their own hands. In fact, that is where the discussion stands at the moment, with a governance initiative convened by the British Royal Society, the Academy of Sciences for the Developing World, and the Environmental Defense Fund, among other deliberations guiding how geoengineering research should be pursued.
With time come the "free drivers"
The clock, however, is ticking. A single dramatic climate-related event anywhere in the world - think Hurricane Katrina on steroids - could trigger the "free driver" effect. That event need not be global and it need not even be conclusively linked to global warming. A nervous leader of a frightened nation might well race past the point of debate to deployment. The "free driver" effect will all but guarantee that we will face this choice at some point.
"Free riding" and "free driving" occupy opposite poles of the spectrum of climate action: One ensures that individuals won't supply enough of a public good. The other creates an incentive to engage in potentially reckless geoengineering and supply a global bad. It's tough to say which one is more dangerous. Together, these powerful forces could push the globe to the brink.

Sunday, October 21, 2012

Stavins: Cap-and-Trade, Carbon Taxes, and My Neighbor’s Lovely Lawn

Speaking of externalities associated with energy use, Robert Stavins throws cold water on "current enthusiasm about carbon taxes in the academic and broader policy-wonk community":

Cap-and-Trade, Carbon Taxes, and My Neighbor’s Lovely Lawn, by Robert Stavins: conclusion in 1998 strongly favored a market-based carbon policy, but was somewhat neutral between carbon taxes and cap-and-trade. Indeed, at that time and for the subsequent eight years or so, I remained agnostic regarding what I viewed as the trade-offs between cap-and-trade and carbon taxes. What happened to change that? Three words: The Hamilton Project.
...In 2007, the Project’s leadership asked me to write a paper proposing a U.S. CO2 cap-and-trade system. ... The Hamilton Project leaders said ... they wanted me to make the best case I could for cap-and-trade, not a balanced investigation of the two policy instruments. Someone else would be commissioned to write a proposal for a carbon tax. (That turned out to be Professor Gilbert Metcalf of Tufts University ... who did a splendid job!) Thus, I was made into an advocate for cap-and-trade. It’s as simple as that. ...
In principle, both carbon taxes and cap-and-trade can achieve cost-effective reductions, and – depending upon design — the distributional consequences of the two approaches can be the same. But the key difference is that political pressures on a carbon tax system will most likely lead to exemptions of sectors and firms, which reduces environmental effectiveness and drives up costs, as some low-cost emission reduction opportunities are left off the table. But political pressures on a cap-and-trade system lead to different allocations of the free allowances, which affect distribution, but not environmental effectiveness, and not cost-effectiveness.
I concluded that proponents of carbon taxes worried about the propensity of political processes under a cap-and-trade system to compensate sectors through free allowance allocations, but a carbon tax would be sensitive to the same political pressures, and should be expected to succumb in ways that are ultimately more harmful: reducing environmental achievement and driving up costs.
Of course, such positive political economy arguments look much less compelling in the wake of the defeat of cap-and-trade legislation in the U.S. Congress and its successful demonization by conservatives as “cap-and-tax.”
A Political Opening for Carbon Taxes?
Does the defeat of cap-and-trade in the U.S. Congress, the obvious unwillingness of the Obama White House to utter the phrase in public, and the outspoken opposition to cap-and-trade by Republican Presidential candidate Mitt Romney indicate that there is a new opening for serious consideration of a carbon-tax approach to meaningful CO2 emissions reductions?

First of all, there surely is such an opening in the policy wonk world. Economists and others in academia, including important Republican economists such as Harvard’s Greg Mankiw and Columbia’s Glenn Hubbard, remain enthusiastic supporters of a national carbon tax. And a much-publicized meeting in July at the American Enterprise Institute in Washington, D.C. brought together a broad spectrum of Washington groups – ranging from Public Citizen to the R Street Institute – to talk about alternative paths forward for national climate policy. Reportedly, much of the discussion focused on carbon taxes.

Clearly, this “opening” is being embraced with enthusiasm in the policy wonk world. But what about in the real political world? The good news is that a carbon tax is not “cap-and-trade.” ... But if conservatives were able to tarnish cap-and-trade as “cap-and-tax,” it surely will be considerably easier to label a tax – as a tax! Also, note that Romney’s stated opposition and Obama’s silence extend beyond disdain for cap-and-trade per se. Rather, they cover all carbon-pricing regimes.
So as a possible new front in the climate policy wars, I remain very skeptical that an explicit carbon tax proposal will gain favor in Washington, no matter what the outcome of the election. ...
I would personally be delighted if a carbon tax were politically feasible in the United States, or were to become politically feasible in the future. But I’m forced to conclude that much of the current enthusiasm about carbon taxes in the academic and broader policy-wonk community in the wake of the defeat of cap-and-trade is – for the time being, at least – largely a manifestation of the grass looking greener across the street.

Wednesday, October 10, 2012

Why Aren't Politicians Talking about Climate Change?

As I'm waiting to board a plane, this surprised me -- promising to address climate change is a vote getter?:

Why Aren't Politicians Listening to Joe Romm About Climate Change?, by Chris Mooney, The Atlantic: He's been called "America's fiercest climate blogger." ... Romm has called Obama's failure to speak out about global warming, loudly and often, his "biggest communications mistake."
Now, a raft of new polls are showing that this issue has the potential to move independent and swing voters... So we stopped to chat with Romm ... about his unusual take on this subject. ...
Do you think this has always been true -- that climate change has always been a potential political winner -- or has it become more true over time?...
There's no question that the Obama team has gotten a misimpression that this is not a winning issue. And that I think is based on some rather questionable analysis done years ago, that basically said, "if you only present the doom and gloom case, you turn some people off." But nobody really does that -- nobody I know does that. ...
The polling data seems clear: This is a classic wedge issue that separates conservatives not just from progressives, but also from moderates and independents. So you know, we can spend a lot of time being puzzled about why this administration does bizarre messaging. If you talk to communications experts, many will say this administration is not great at it. You can get upset about President Obama not bringing up climate change, but this is not an administration that's good at communicating -- and this is just one of the many areas that they mistakenly downplay. ...


Friday, September 21, 2012

'Primetime Fox News And WSJ Editorial Climate Coverage Mostly Wrong'

Climate scientists document News Corporation's distortions on climate change:

Brenda Ekwurzel is a climate scientist with the Union of Concerned Scientists. She announced in New York City on September 21st the results of an analysis of climate change coverage at two major properties of the News Corporation, the Fox News Channel and the Wall Street Journal.
“What we found in our analysis was that a staggering 93 percent of all occurrences in the last six months in the prime time news of Fox News were misleading occurrences of climate science. Okay, for the Wall Street Journal opinion section in the last year, we found a surprising 81 percent of the occurrences were misleading. And of the accurate ones, these were all letters to the editor that were submitted in response to misrepresentations in editorials or other letters. So, a broad swath of News Corporation viewers and readership are being misled about the science.”

Tuesday, September 11, 2012

Wind Power

Is wind power the answer?:

Wind could meet many times world's total power demand by 2030, researchers say, EurekAlert: In a new study, researchers at Stanford University's School of Engineering and the University of Delaware developed the most sophisticated weather model available to show that not only is there plenty of wind over land and near to shore to provide half the world's power, but there is enough to exceed total demand by several times if need be...
The new paper contradicts two earlier studies that said wind potential falls far short of the aggressive goal because each turbine steals too much wind energy from other turbines, and that turbines introduce harmful climate consequences that would negate some of the positive aspects of renewable wind energy. ...
Among the most promising things the researchers learned is that there is a lot of potential in the wind — hundreds of terawatts. At some point, however, the return on building new turbines plateaus, reaching a level in which no additional energy can be extracted even with the installation of more turbines.
"Each turbine reduces the amount of energy available for others," Archer said. The reduction, however, becomes significant only when large numbers of turbines are installed, many more than would ever be needed.
"And that's the point that was very important for us to find," Archer said. ...
"We're not saying, 'Put turbines everywhere,' but we have shown that there is no fundamental barrier to obtaining half or even several times the world's all-purpose power from wind by 2030. The potential is there, if we can build enough turbines," said Jacobson.
Knowing that the potential exists, the researchers turned their attention to how many turbines would be needed to meet half the world's power demand — about 5.75 terawatts — in a 2030 clean-energy economy. ...
Archer and Jacobson showed that four million, five-megawatt turbines operating at a height of 100 meters could supply as much 7.5 terawatts of power — well more than half the world's all-purpose power demand — without significant negative affect on the climate.  ...
In terms of surface area, Jacobson and Archer would site half the four million turbines over water. The remaining two million would require a little more than one-half of one percent of the Earth's land surface — about half the area of the State of Alaska. However, virtually none of this area would be used solely for wind, but could serve dual purposes as open space, farmland, ranchland, or wildlife preserve.
Rather than put all the turbines in a single location, Archer and Jacobson say it is best and most efficient to spread out wind farms in high-wind sites across the globe — the Gobi Desert, the American plains and the Sahara for example.
"The careful siting of wind farms will minimize costs and the overall impacts of a global wind infrastructure on the environment," said Jacobson. "But, as these results suggest, the saturation of wind power availability will not limit a clean-energy economy."

[Brad Plumer has more.]