Monday, March 31, 2008

Cap and Trade versus Taxes

From and economic point of view Cap and Trade is not seen as much different than taxation. The only difference is that in one case you start by limiting supply which drives up price. In the other you start by driving up price itself. Either way that should push down demand. But as Dan Ariely demonstrates in his new book, Predictably Irrational, price changes do not produce a stable response. Consumers accommodate to price changes over time. That makes for a big difference in the policy effectiveness of Cap and Trade versus taxation. In contrast to a Cap and Trade program, the effectiveness of taxation will diminish over time and require ever increasing taxes to maintain stable carbon output levels. So in the one case, you only have to fight a one time political battle. In the other, it is an ongoing war.

Monday, March 24, 2008

How I Came to Think that Merely Feel Good Actions Do More

This year, 24 cities around the World will be part of Earth Hour by switching off lights and appliances from 8-9pm on Saturday. I used to think of this as the kind of project that is about as feel good a project as you can come up with – the kind of thing that breeds smugness while making (almost) no difference. The kind of thing that may actually diminish people’s likelihood of doing what really needs to be done – which will hurt a lot. But I have changed my mind. I still think the actual actions do (almost) no good. But what I think I ignored is the power of collectivity in drawing people into action that they would otherwise be unlikely to make on their own. Such imitative behavior, even when mindless, is an incredibly important engine that needs to be harnessed to bring about change. And what these kinds of actions do is get that process going. The real challenge is to capitalize on that initial success and build on it to more meaningful actions. Earth Hour is a project of the World Wild Fund for Nature which started the project in Sydney last year. This year’s cities are:
Aalborg, Denmark
Aarhus, Denmark
Adelaide, Australia
Atlanta, USA
Bangkok, Thailand
Brisbane, Australia
Canberra, Australia
Chicago, USA
Christchurch, New Zealand,
Copenhagen, Denmark
Dublin, Ireland
Manila, Philippines
Melbourne, Australia
Montreal, Canada
Odense, Denmark
Ottawa, Canada
Perth, Australia
Phoenix, USA
San Francisco, USA
Suva, Fiji
Sydney, Australia
Tel Aviv, Israel
Toronto, Canada
Vancouver, Canada

Monday, March 17, 2008

Why Things are Worse than You Thought

To see how much worse things are than you might have thought take a look at:
Maximilian Auffhammer and Richard T. Carson, "Forecasting the Path of China's CO2 Emissions Using Province Level Information" (August 7, 2007). Department of Agricultural & Resource Economics, UCB. CUDARE Working Paper 971.
The upshot of their research is that the projected rate of growth of greenhouse gas output by China is 11.88% for 2000-2010 not the 2.58-4.82% projected by the IPCC.
Here is the abstract:
Our results suggest that the anticipated path of China's Carbon Dioxide (CO2) emissions has dramatically increased over the last five years. The magnitude of the projected increase in Chinese emissions out to 2015 is several times larger than reductions embodied in the Kyoto Protocol. Our estimates are based on a unique provincial level panel data set from the Chinese Environmental Protection Agency. This dataset contains considerably more information relevant to the path of likely Chinese greenhouse gas emissions than national level time series models currently in use.

Monday, March 10, 2008

Climate Change Deniers and Creationists

Many years ago, the philosopher Jerry Aronson convinced me that it was a mistake to even enter into debate with Creationists. To do so, he argued, was to grant them something that should not be granted in the first place: that they were bound by the communal rules of science … not just rules about the role of evidence but more importantly, rules about the structure of inference. Does the same hold true of those who deny climate change? For some of the most rabid perhaps. But I have come to think that for many the situation is different. For them the issue is whether anthropogenic climate change is certain enough to merit action. What is missing in this way of putting it though is the cost of being wrong. There may be disagreement there as well but it is not discussed nearly enough.

Monday, March 3, 2008

The Truth that Nobody Wants to Face

When the west industrialized and radically uplifted its standard of living, the total population involved was at most 500 million. Take the rest of the world today that seeks to emulate that standard of living and it is at least 10 times that number. It is this simple arithmetic that lies at the heart of where the real crisis of combating global warming lies. Assume no further population growth (instead of the 9+ billion projection for 2050) and assume zero emissions from the West prospectively, then still, without a radical change in technology, the rest of the world will only achieve 10% parity with the standard of living of the West for an equivalent global warming output. There is no way we can begin to address equity issues in climate without addressing population – at least going forward. The notion of a fair distribution being based on a per capita calculation may be defensible looking at population as it is today but it can only be so looking forward if we incorporate some normative standards for reproductive rates in making equity calculations.