... Last week on Twitter, I publicly offered to bet at 2:1 odds that the global warming pause will continue for another 15 years.
Yoram Bauman has nobly accepted my offer. Indeed, he offers better terms than I requested: 3:1 odds, and I win if (according to according to ncdc.noaa.gov/cag/time-series) the average global annual land + ocean temperature increase between 2014 and 2028 inclusive is less than or equal to +.05 C.
My main question: Do Bauman's terms raise any red flags? In particular, does anyone have any problem with his suggested data source?
Otherwise, I propose only cosmetic changes:
1. Since we already have some data from 2014, the bet should run from 2015 to 2029.
2. Yoram proposed Wheat and Chessboard stakes, but I prefer to simply bet my nominal $333.33 against his nominal $1000.
3. If ncdc.noaa.gov/cag/time-series stops publishing data during this period, we call the bet off. Alternately, Yoram can propose back-up data sources, and we only call the bet off if they all stop publishing data.
I was out to eat awhile back with the co-manager of my daughter's U12 soccer team and our wives. We asked the waitress to take our picture so we could thank the parents who bought the gift card for us and let them know how much fun we had. The guy at the next table had some fun and photobombed us. So, assuming he would want as many people as possible to see how photogenic he is ...
The state is investigating a fish kill in an eastern Ohio creek near where a fire occurred at a
shale-well fracking site on Saturday.
The Ohio Department of Natural Resources learned yesterday of the fish kill in Possum Creek in
Monroe County, said Jason Fallon, an agency spokesman. Fallon said he did not have details about
the extent of the kill. “I can’t confirm if it’s related to the gas-well fire,” he said.
Phillip Keevert, director of the Monroe County Emergency Management Agency, said Division of
Wildlife agents were inspecting the creek yesterday and confirmed that a kill occurred.
The trucks that caught fire are used in hydraulic fracturing, commonly known as fracking.
Statoil North America operates eight wells on the pad.
At the height of the fire, 20 to 25 families that live within a mile of the site were evacuated.
They were allowed to return home on Saturday evening.
A number of area residents reported the fish kill yesterday. Jack Shaner, deputy director of the
Ohio Environmental Council, said he has been told that the kill stretched for a few miles.
Shaner said he suspects that chemicals used in fracking ran into the creek when firefighters
extinguished the blaze.
“It sounds like it was not just smoke and not just fire, but a major fish kill,” he said. “Both
the company and state agencies owe the public a full public accounting of what went wrong and how
they are going to prevent future occurrences.”
Statoil North America officials could not be reached for comment.
All 17 of the company’s Ohio wells are in Monroe County, state records show.
Where have I been for the past week? Well, I had the privilege (used loosely) of taking the Official Only Son of Env-Econ (OOSEE), and his baseball tea--the Crush Baseball Club--to Omaha, Nebraska to compete in a 12 and under baseball tournament centered around the NCAA College World Series. This is a national tournament with 34 teams from all over the country. The boys live the week in a dorm (barracks?) along with two coaches (lucky me...). Here's the story...
Over the weekend a prominent Republican, former Treasury Secretary Henry Paulson, came out for a more-comprehensive attack on global warming than anything the Environmental Protection Agency has proposed: In a New York Times essay, he called for a tax on carbon. Economist and Times columnist Paul Krugman quickly challenged Paulson: A carbon tax won’t happen because of politics, so will Paulson support “second-best” solutions?
Economists agree that regulating carbon-dioxide emissions like other pollutants doesn’t work. Carbon is everywhere: producing energy, driving cars, making cement. "We’re talking about hundreds of millions of sources," says Robert Stavins, an environmental economist at Harvard, "so the whole notion of trying to reduce those emissions with source-by-source regulations is simply infeasible."
A carbon tax is a tax on carbon sources, proportionate to how much carbon each source emits. "It provides incentives for everyone" to use less carbon, says Stavins, "from the electical generator, to the cement company, to myself, in terms of running the dishwasher."
So a carbon tax is like a bug bomb. Everything else -- the world of second-best solutions -- is running around your apartment with a flyswatter.
MIT economist Michael Greenstone proposes a different metaphor for second-best solutions. "I like to think of all of these policies as kind of a bank shot in the game of billiards," he says. "You’re shooting the ball to one side of the table, although the pocket is on the other." So it’s harder to make your shot -- and you may hit something you don’t mean to.
Similarly, because the EPA’s new power-plant regulations aim at carbon-intensity, not carbon emissions, they produce some unintended effects, says University of Colorado economist Daniel Kaffine. Because gas is less carbon-intensive than coal, the strategy "sort of acts like a tax on coal and a subsidy to gas," he says. "But what we really want is a tax on both coal and gas."
Meanwhile, evaluating the tradeoffs creates work for economists. "You know, given this menu of second-best policies," says Kaffine, "how do they compare against the reference point of doing nothing?"
Ross Douthat attempts to justify the reform conservative backdown on climate policy; John Quiggin isn’t persuaded. But there’s one argument Quiggin, somewhat surprisingly, doesn’t make: Douthat has the economics all wrong.
Douthat’s essential point, as I understand it, is that economic troubles make this a bad time to take on the burden of climate adjustment, that they strengthen the case for waiting to see if we can get by doing less and using cheaper approaches.
But that’s exactly backwards. Yes, we’re having tough times — but the toughness stems from insufficient demand, which has led to an oversupply of both labor and capital. Here’s the real cost of government borrowing:
Climate action would mainly involve investment — especially investment in new or retrofitted power plants, replacing coal-fired plants with lower-emission sources. In good times such investment would mean diverting labor and capital from other useful activities. But in the post-2008 economy we’ve been awash in unemployed labor and capital with no place to go. This is an ideal time to be doing a lot about climate!
There is alot not to like here, beginning with the notion that U.S. economy is in a depession. Whether we call December 2007 to June 2009 the lesser depression or the great recession doesn't matter, what matters is the 2014 economic isn't depressed. It can be described as lousy but not depressed. So Krugman's post title is just inflated rhetoric.
Second, it is a reach to say that environmental policy can act as Keynesian stimulus. In it's simplest terms the GDP of an economy can be expressed by Y = C + I + G + (X-M), where Y is GDP, C is consumption spending, I is investment spending, G is government spending and (X-M) is net exports. Keynes argued that an increase in government spending (G) could raise a country from a depression. Krugman is arguing that environmental policy, which imposes constraints on firms, will increase investment spending (I).
On the surface this sounds perfectly reseasonble. But this is not the type of investment spending that leads to new products and lower costs of production. It is investment spending that replaces a broken window (here is what I said last June [and here] when Krugman made a similar claim about environmental policy and Keynesian stimulus). In short, the productive capacity of the economy hasn't much changed after the additional spending and so it isn't really an investment. Further, prices on energy-intensive goods will rise and consumers will have less money to spend on ordinary goods and services. In effect, consumer spending shifts over to cover increased investment spending and nothing really changes to the overall economy. In fact, there might be small negative effects because of the constraints on the production process (Krugman doesn't really disagree but says that the negative impact would be small).
I tend to agree with the conservatives that you'd rather impose environmental policiy during good macroeconomic times. But, it doesn't seem like the only good time for environmental policy is when the economy is peaking.
Jessoe, Katrina, and David Rapson. 2014. "Knowledge Is (Less) Power: Experimental Evidence from Residential Energy Use." American Economic Review, 104(4): 1417-38.
Imperfect information about product attributes inhibits efficiency in many choice settings, but can be overcome by providing simple, lowcost information. We use a randomized control trial to test the effect of high-frequency information about residential electricity usage on the price elasticity of demand. Informed households are three standard deviations more responsive to temporary price increases, an effect that is not attributable to price salience. Conservation extends beyond pricing events in the short and medium run, providing evidence of habit formation and implying that the intervention leads to greenhouse gas abatement. Survey evidence suggests that information facilitates learning.
"This blog aims to look at more of the microeconomic ideas that can be used toward environmental ends. Bringing to bear a large quantity of external sources and articles, this blog presents a clear vision of what economic environmentalism can be."
... the Environmental Economics blog ... is now the default homepage on my browser (but then again, I guess I am a wonk -- a word I learned on the E.E. blog). That is a very nice service to the profession. -- Anonymous
"... I try and read the blog everyday and have pointed it out to other faculty who have their students read it for class. It is truly one of the best things in the blogosphere." -- Anonymous