Environmental Economics

Should We Use Science to Manipulate the Climate?

[Since I mention Tim and John in this post, I thought I'd cross-post it here so they can straighten me out on all of this.]

Should we use science-based proposals for alleviating global warming such as putting particles in the upper atmosphere to deflect solar energy? Do we know enough about the risks of such wide-scale manipulation of the environment to be sure we know how this would turn out?

Scientists weigh risks of climate 'techno-fixes', by Moises Velasquez-Manoff, The Christian Science Monitor: Faced with the specter of a warming planet and frustrated by the lack of progress..., some scientists ... seek a way to give humanity direct control over Earth's thermostat.

Proposals run the gamut from space mirrors deflecting a portion of the sun's energy to promoting vast marine algal blooms to suck carbon out of the atmosphere. The schemes have sparked a debate over the ethics of climate manipulation, especially when the uncertainties are vast and the stakes so high. For many scientists, the technology is less an issue than the decision-making process that may lead to its implementation. [Graphic showing some of the proposals.]

Environmental policy driven purely by cost-benefit analyses cannot, they say, effectively point the way on large issues like climate change.

More corn

American farmers are planning to plant more corn this year than anytime since World War II, as farmers rush to cash in on high prices bolstered by the demand for ethanol.

Source: New York Times.

Hat tip: Mr. Nobody.

Finally a voice of reason for climate change policy!

"It [global warming] is a very valid issue," [Scientologist and former Sweathog/T-Bird John Travolta] declared. "I'm wondering if we need to think about other planets and dome cities."

Can I get an Amen?

More on Environmental versus Ecological Economics

A while back, John wrote a highly controversial post in which he called out ecological economists for the frauds that they are (OK, he didn't really say that, I was just trying to get your attention).  Yesterday, a new Env-Econ commenter, Verdurous--welcome and you're welcome for the overwhelming flood of hits you're about to get-- wrote:

There seems to me to be a very fundamental difference. Is the economy a subset of Earth's ecology or is the environment a subset of the field of economics. Using the former lens seems more appropriate to me. Now more than ever it is important for economics to re-engage with other disciplines - rather than roll over the top of them as is currently occuring.

In response, frequent Env-Econ commenter, Dano wrote:

It is painfully obvious to too few: the economy is a subset of the environment. You can have an environment without an economy, but you can't have an economy without an environment.

I'm not sure if Dano was calling out environmental economists for assuming that the environment is a subset of the economy, but I took it that way and to that I respond--nice try.  So I will go back to first principles to explain the position most economists I know take on the environment.  I present to you, the Block-O model of an economy (more commonly known as the circular flow model).

Confusing demand and supply changes in the gasoline market

Drivers shrug as gasoline prices soar:

Prices at the pump are rising again, much as they do every spring as oil traders bid up the price of crude ahead of possible summer shortages. Possibilities for more conflict in Iran and elsewhere in the Middle East are adding to the surge.

A demand increase is in the first sentence. A future supply decrease expectation is in the second. This leads to another demand increase today in the futures market. No real supply change has occurred. So, how will consumers react?

I don't disagree with this editorial

Building houses closer to the water on an eroding, yet nourished, ocean beach sounds like a dumb idea to me. But that is just me, and I've been known to do some dumb things while thinking that they were smart.

So, I read some articles in the Wilmington Star News last week and didn't really (a) understand, (b) fathom, (c) comprehend, or (d) all of the above that the North Carolina Coastal Resources Commission (the quasi-government agency that usually upholds North Carolina's ban on beach hardening) would really allow foolish (in a long term sense) construction.

Read the editorial if you don't believe a guy who has done dumb things himself (yet, my dumb things usually don't involve hundreds of thousands of dollars):

Hundreds of new houses could rise on North Carolina's renourished beaches in coming years, making lot owners and tax collectors as happy as clams in an incoming tide. The question is how long the houses can stand in that tide.

The costs of climate change mitigation

From the WSJ Energy Blog:

The Guardian reported yesterday on a new study (subscription required) by consulting firm McKinsey estimating it could cost €1.1 trillion (about $1.5 trillion) to reach the European Union’s goal of cutting greenhouse gas emissions by 20% by 2020. Reaching the goal is possible, McKinsey says, but the political challenge will be “immense.”

To put that estimated price tag in perspective: the €1.1 trillion is over 14 years. That’s €60 billion to €80 billion per year, or $78 billion to $106 billion per year, which is about 0.7% of the EU’s nominal annual GDP of $13.5 trillion dollars. The EU economy grew about 2.8% last year. So an anti-global-warming bill of the sort McKinsey is talking about would mean an appreciable drag on growth.

Quote of the Day

"The sinister idea of converting food into combustibles was definitively established as the economic line of the foreign policy of the United States."

Fidel Castro

More...

Pig poop: subsidies vs taxes

The most basic economic analysis of environmental policy considers a marginal (i.e., additional) abatement cost that increases with emissions (or effluent) reduced. Emissions taxes or abatement subsidies. If the tax is above the marginal abatement cost then the firm will choose to reduce emissions until the tax is below the marginal abatement cost. Then the firm will choose to pay the tax. If the subsidy is above the marginal abatement cost the firm will choose to abate until the subsidy does not cover the cost. In the short run, both policies can be used to achieve the optimal pollution level. In the long run, we're not so sure.

It looks like North Carolina might be moving toward technological subsidies (yuck) to reduce hog waste (yuck):

Bills introduced in the House and Senate would provide up to $50 million to help farmers convert to more environmentally friendly waste disposal systems. Any new systems would have to reduce odors, airborne pathogens and water pollution.

ED's fisheries report

Just a pointer for now but the gist is that tradeable quotas improves fisheries in more ways than one:

Our study shows that by adding a key missing ingredient -- economic incentives -- to fisheries management, we can:

    * protect the environment,
    * increase profits,
    * provide higher quality fish,
    * create more full-time jobs, and
    * save lives.

This study documents how fisheries in the United States and British Columbia have performed against key environmental, economic and social goals since converting from conventional management to catch shares.