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February 27 2014


February 26 2014

Sponsored post

February 24 2014


February 16 2014


February 12 2014


Green taxes aren't the answer to Britain's floods, just ask Australia

Britain's flood crisis will need a firm response from Government but David Cameron should resist the urge to follow Australia's example on green taxes

February 11 2014


The broken window fallacy

From Matt Kahn (who I think is being subtley snarky on progressives):

One person's challenge is another person's opportunity.  To rephrase this point, there is demand and supply.  As the cold regions of the country have experienced heavy snowfall, this has created jobs for guys to clean it up and opportunities for guys who sell salt.  Progressives should view climate change as creating a Keynesian stimulus.   The cost and time it takes to clean up from a shock do represent an adaptation cost but these costs will fall over time due to the magic of capitalism.  The money that is spent for the clean up goes to somebody and in a time with great concern about the 99% much of this $ will go for paying for basic labor that can't be supplied by someone in China because the work for the cleanup is here.

via greeneconomics.blogspot.com

I would simply mention this as a comment at the Matt's blog, but there is no comment feature there. Here is the Google on broken window fallacy at this blog. 

February 09 2014


Climate change might effect the Winter Olympics (and the ski industry)

Porter Fox (the features editor at Powder magazine):

Officials canceled two Olympic test events last February in Sochi after several days of temperatures above 60 degrees Fahrenheit and a lack of snowfall had left ski trails bare and brown in spots. That situation led the climatologist Daniel Scott, a professor of global change and tourism at the University of Waterloo in Ontario, to analyze potential venues for future Winter Games. His thought was that with a rise in the average global temperature of more than 7 degrees Fahrenheit possible by 2100, there might not be that many snowy regions left in which to hold the Games. He concluded that of the 19 cities that have hosted the Winter Olympics, as few as 10 might be cold enough by midcentury to host them again. By 2100, that number shrinks to 6. ...

The effect on the ski industry has already been significant. Between 1999 and 2010, low snowfall years cost the industry $1 billion and up to 27,000 jobs. Oregon took the biggest hit out West, with 31 percent fewer skier visits during low snow years. Next was Washington at 28 percent, Utah at 14 percent and Colorado at 7.7 percent.

The winter sports industry contributes $66 billion annually to the nation’s economy, and supports more than 960,000 jobs across 38 states, according to the Outdoor Industry Association. A surprisingly large sector of the United States economy appears to be teetering on the brink.

Much of these environmental data come from a 2012 report, “Climate Impacts on the Winter Tourism Economy in the United States,” by two University of New Hampshire researchers, Elizabeth Burakowski and Matthew Magnusson. 

via www.nytimes.com

As always, with this sort of change, the effect on GDP and jobs is likely to be negligible as people adapt and find substitute activities. The more significant loss is consumer surplus - the willingness to pay for skiiing over and above the money spent. That is harder to replace. 

January 30 2014


Winter deluges may become the norm for Britain

Climate change projections show that the country will get warmer and wetter over the next 20 years


January 29 2014


January 28 2014


xkcd: Cold

And climate change:


Source: http://xkcd.com/1321/

January 27 2014


Everyone keeps asking me: What should I do if I haven't been following the EPA Climate Rules?*

Now I have an answer. Nathan Richardson:

I have a new piece in the Milken Institute Review that looks at EPA’s current and near-future carbon emissions rules. It starts at the beginning of the story and is aimed at a more-or-less general audience, so if you haven’t been following the issue it’s a good place to start.

via common-resources.org

*No one has asked me this, but I'm sure it is a good question with, now, a good answer. 

January 24 2014


I'd like to teach the world to sing in perfect harmony

Nike and Coke adapt to climate climate change with synthetic fibers and synthetic high fructose corn syrup, or something like that, and a quote from an economist that deserves attention:

Coke reflects a growing view among American business leaders and mainstream economists who see global warming as a force that contributes to lower gross domestic products, higher food and commodity costs, broken supply chains and increased financial risk. Their position is at striking odds with the longstanding argument, advanced by the coal industry and others, that policies to curb carbon emissions are more economically harmful than the impact of climate change.

“The bottom line is that the policies will increase the cost of carbon and electricity,” said Roger Bezdek, an economist who produced a report for the coal lobby that was released this week. “Even the most conservative estimates peg the social benefit of carbon-based fuels as 50 times greater than its supposed social cost.”

Some tycoons are no longer listening.

At the Swiss resort of Davos, corporate leaders and politicians gathered for the annual four-day World Economic Forum will devote all of Friday to panels and talks on the threat of climate change. The emphasis will be less about saving polar bears and more about promoting economic self-interest.

In Philadelphia this month, the American Economic Association inaugurated its new president, William D. Nordhaus, a Yale economist and one of the world’s foremost experts on the economics of climate change.

“There is clearly a growing recognition of this in the broader academic economic community,” said Mr. Nordhaus, who has spent decades researching the economic impacts of both climate change and of policies intended to mitigate climate change.

In Washington, the World Bank president, Jim Yong Kim, has put climate change at the center of the bank’s mission, citing global warming as the chief contributor to rising global poverty rates and falling G.D.P.’s in developing nations. In Europe, the Organization for Economic Cooperation and Development, the Paris-based club of 34 industrialized nations, has begun to warn of the steep costs of increased carbon pollution.

Nike, which has more than 700 factories in 49 countries, many in Southeast Asia, is also speaking out because of extreme weather that is disrupting its supply chain. In 2008, floods temporarily shut down four Nike factories in Thailand, and the company remains concerned about rising droughts in regions that produce cotton, which the company uses in its athletic clothes.

“That puts less cotton on the market, the price goes up, and you have market volatility,” said Hannah Jones, the company’s vice president for sustainability and innovation. Nike has already reported the impact of climate change on water supplies on its financial risk disclosure forms to the Securities and Exchange Commiss

via www.nytimes.com

The first quote doesn't seem quite. I'm fairly sure that the most conservative estimate (in the coal industry's use of the term) of benefits and costs of using oil and coal would find that the benefits are swamped by the costs (e.g., the Stern Review). I'm not endorsing that extreme estimate, only saying that Dr. Bezdek seems to be missing some work. Nordhaus' work is somewhere in the middle and he finds that a positive carbon tax would be an efficient policy. 

January 23 2014


No pain no gain?

I'm no expert on European macroeconomics, but my casual reading suggests that climate policy isn't necessarily the villain here:

For years, Europe has tried to set the global standard for climate-change regulation, creating tough rules on emissions, mandating more use of renewable energy sources and arguably sacrificing some economic growth in the name of saving the planet.

But now even Europe seems to be hitting its environmentalist limits.

High energy costs, declining industrial competitiveness and a recognition that the economy is unlikely to rebound strongly any time soon are leading policy makers to begin easing up in their drive for more aggressive climate regulation.

On Wednesday, the European Union proposed an end to binding national targets for renewable energy production after 2020. Instead, it substituted an overall European goal that is likely to be much harder to enforce. ...

Europe pressed ahead on other fronts, aiming for a cut of 40 percent in Europe’s carbon emissions by 2030, double the current target of 20 percent by 2020. Officials said the new proposals were not evidence of diminished commitment to environmental discipline but reflected the complicated reality of bringing the 28 countries of the European Union together behind a policy. ...

But the proposals were seen as a substantial backtrack by environmental groups, and evidence that economic factors were starting to influence the climate debate in ways they previously had not in Europe. ...

The British government, a frequent critic of what it sees as moves by the European Union that inhibit economic performance, welcomed the proposals. It singled out for praise the scrapping of national targets for renewable energy in favor of an overall goal of producing 27 percent of Europe’s energy from renewables by 2030, an approach that will leave countries battling among themselves over who should do more.

via www.nytimes.com

Three comments:

  • 88% of AERE survey respondents disagree that “we should wait until the economy gets better before we make the environment a major policy priority” and 84% disagree that “we worry too much about the future of the environment and not enough about prices and jobs today.”

  • And actually, the policy change makes good sense. A well designed climate policy, either an efficient carbon tax or cap-and-trade cap would provide sufficient incentives to pursue the efficient amount of renewable energy (whatever that may be). No renewable energy standards would be necessary. 

  • If any of my co-authors, journal editors looking for referee reports, students or administrators expect any work out of me, please note that Watauga County schools have been closed all week. Today the culprit is "black ice on secondary roads." 

How cap-and-trade might work

The headline says that the CO2 allowances were priced at $3 in the 2013 auction:

Having completed revisions to their state CO2 Budget Trading Programs, the nine states participating in the Regional Greenhouse Gas Initiative (RGGI) announced that the 2014 RGGI cap is 91 million tons. This represents a 45 percent reduction to the RGGI CO2 cap. To further build on this progress, the RGGI cap will decline 2.5 percent each year from 2015 to 2020. By 2020, power plant CO2 pollution in the nine RGGI states is projected to be half of 2005 levels.

The first CO2 allowance auction under the new cap, and the twenty-third RGGI auction overall, will take place on March 5, 2014. The RGGI states released the Auction Notice for CO2 Allowance Auction 23 today.

Having strengthened their successful carbon pollution reduction program, the RGGI states have submitted extensive comments to the United States Environmental Protection Agency (EPA) describing why regional cap-and-trade programs, like RGGI, offer a simple, cost-effective way for states to comply with upcoming EPA regulations to cut CO2 pollution from existing power plants....

via www.envirovaluation.org

Here is a test question for your students:

All things equal, the allowance price will be __________ in the 2014 auction:

  1. higher
  2. lower
  3. the same
  4. none of the above; all things equal? give me a freakin' break! job killing cap-and-trade is an energy tax. Q.E.D.

January 21 2014


What I wouldn't give to have my own opinion poll with USA Today Poll

RFF always gets everything:

The first round of results from the RFF/Stanford/USA Today poll was released today and it shows that a majority of the US favors doing something to address the threat of climate change, although there is substantially less agreement about what exactly to do. There’s a lot to dig into that’s relevant to climate policy options we analyze here at RFF.  For example, the poll finds that 54 percent of respondents supports the US government requiring power plants to limit their emissions of greenhouse gas pollutants. That number is up from recent years, but it’s down slightly from its high in 2007.

via common-resources.org

January 01 2014


World's climate warming faster than feared, scientists say

Scientists say the world's climate is warming faster than feared because previous predictions were too "optimistic" and overestimated the cooling impact of clouds


"Valuing conservation in the context of climate change"

I've had students who wanted to estimate benefits of greenways for years. We never could find much in the literature. Here is something new. Carolyn Kousky and Margaret Walls:

In the twentieth century, flooding caused more deaths and property damage in the United States than any other natural disaster. Most climate models predict that flooding will worsen in the future, a prospect that is leading a growing number of communities to explore the use of natural areas as protection against extreme events. These areas are currently providing flood mitigation benefits. ... But how much more valuable will the lands become if floods are more frequent or severe in the future [?]

With our coauthor, Ziyan Chu, we recently came up with a dollar value of these climate resilience benefits for the case of a specific investment in natural areas in the state of Missouri—the Meramec Greenway. ... In this study, we calculated the additional benefits that the greenway might provide in four climate change scenarios, two in which peak discharges increase and two in which the frequency of flooding increases. 

... According to our estimates, the current protected lands yield an average annual benefit in the form of avoided flood damages of $13.1 million a year, or about $6,000 per acre. If climate change causes peak discharges to rise by 30 percent, an increase consistent with some of the (limited) literature on how climate change will affect flood risks in the region, the benefits of the greenway are $4.5 million higher. If peak discharges rise by 50 percent, which we look at as an upper bound, the benefits of the greenway are $7.9 million higher. If the frequency of flood events doubles, the benefits double. And finally, if the frequency of only the worst events doubles (the 100-, 250-, and 500-year events), we find that the benefits increase by just $1.2 million, or 9 percent.

via common-resources.org

And, you can thank me for the link to the paper. 

December 11 2013


Comment on the SCC

Common Resources at RFF:

The White House has revised the data used in its evaluation of the social cost of carbon (SCC), resulting in a change from $21 to $38 per metric ton in the central case estimate. The technical support document is open for public comment and officials are interested in understanding “the strengths and limitations of the overall approach.”

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