Environmental Economics

CC12 Biodiversity

[I wish I had posted this on May 7* (see background post, one that I wish I had written on April 26).]

As part of Copenhagen Consensus 2012, I wrote a "perspective" paper [pdf] on the biodiversity challenge paper* along with my graduate school office mate and biodiversity expert Paul Chambers (the paper would have been technical drivel without Paul).  Perspective papers:

... balance the challenge paper and indicate important issues that were not sufficiently dealt with in the challenge paper. The perspective papers are short papers, where published research that might have been left out in the original challenge paper will be reviewed, and alternate interpretations provided on the estimates and/or other strengths, weaknesses and omissions in the economic models pointed out. Their role is primarily to spur discussion and reveal substantial professional differences regarding the subject.

Here is a bit of Bjorn Lomborg's summary of the biodiversity paper:

The issue of disappearing biodiversity has increasingly received mainstream media attention in the past few years, and is starting to compete with climate change as the environmental threat that we talk about the most. Often, biodiversity campaigners have attempted to capture our attention with pictures of cuddly endangered animals or alarming figures about the rate of disappearing species. ...

In a research paper on biodiversity released today for Copenhagen Consensus 2012, Salman Hussain and Anil Markandya find that there will be a significant loss of biodiversity over the next 40 years. ...

The first solution focuses on increasing agricultural productivity through research and development. This may seem like a roundabout way to address biodiversity, but as the global population has increased to 7 billion, we have cut down more and more forest to grow our food. Between now and 2050, we will likely expand agricultural area another 10 percent, and that land will come from forests and grasslands. Thus, if we could increase agricultural productivity, we would need to take less and be able to leave more to nature. ...

The authors estimate that with a $14.5 billion annual infusion into research, we can achieve 20 percent higher annual growth rates for crops and 40 percent higher growth rates for livestock, which over the next 40 years will significantly reduce the pressures on nature. ...

When we take into account that these forests will store more carbon, for every dollar spent, we will do about seven times the amount of good both for biodiversity and climate. ...

Hussain and Markandya ... explore increasing protected land to about 20 percent globally (across a large number of ecological regions), over three decades. There are obvious benefits but also significant costs, principally the loss of output from the land that is taken out of use. ...

Land scarcity arising from such a policy would likely force an increase in agricultural productivity. The cost estimates for the newly protected lands have a big impact on the overall results. With higher assumptions, the program costs more than it achieves, even when the benefits of avoided climate change are included. With lower assumptions it only barely passes, making $1 spent achieve slightly more than a $1 worth of good. ...

The final program Hussain and Markandya propose seeks to prevent all dense forests from being converted to agriculture over a 30-year period. The academics do not attempt to assess the political viability of such an approach. To use the same measure as above, it would save more than seven times the area of Spain in tropical forests.

The benefits are very high, but there is considerable uncertainty about the costs. With estimates they find reasonable, the benefits exceed the costs even without including the CO₂ storage value, and the solution is attractive because it will get a minimum of $7 back on the dollar.

In an otherwise remarkable paper, Hussain and Markandya do not develop confidence intervals around their benefit estimates nor conduct sensitivity analysis over assumptions use to develop the benefit estimates. In our perspective paper we reviewed a number of reasons for why the biodiversity benefit estimates may be more uncertain than the cost estimates. From our presentation** [PPT]:

We conducted an ex-post Monte Carlo sensitivity analysis in order to:

• provide a mean benefit-cost ratio for each policy over the range of cost estimates
• assess the sensitivity of the mean benefit-cost ratios to assumptions made in the analysis.

Our results are suggestive:

• none of the policies are likely to have benefits greater than costs at the 95% level of confidence when the standard deviation is about 40% of the point estimate of the present value of benefits.

Next post: CC12 Outcome.

*Note: I had hoped to stay on top of this but my blogging had to take a backseat to directing and grading 13 senior seminar papers. Graduation was yesterday so today I'm trying to fully understand what all I put on the backburner over the past month.

**Note: Alas, there was not sufficient funding for us to deliver our presentation in person.

Copenhagen Consensus 2012

[I wish I had posted this on April 26*.]

Bjorn Lomborg in Slate:

The Copenhagen Consensus project, which I direct, provides a link between academic research and concrete economic analysis that can be used by decision-makers in the real world. Every four years, researchers and Nobel laureates work to identify the smartest responses to the biggest problems facing humanity. ...

This May, more than 30 Nobel laureates and researchers will work together once again to identify the smartest ways to respond to global challenges, based on the latest information about the toughest problems facing our world. ...

First, teams of world-renowned expert economists write research papers on the costs and benefits of a range of investments that address specific challenges. Debate and discussion is encouraged by ensuring that three papers are written for each topic, so that a range of expert opinions is available. This provides a framework with which we can see the full price tag, incorporating all of the costs, benefits, and spin-offs to society from using a limited amount of money in a particular way.

All of this research constitutes a valuable contribution to international development and aid policy. But the project goes a step further. A panel of the world’s top economists—including four Nobel laureates—test and debate the experts’ recommendations, and identify the most attractive possibilities. Alongside the research papers, the Nobel laureates’ prioritized list provides an important input for policymakers and philanthropists.

In a remarkable series, Lomborg summarized each of the issues considered at CC12 and Slate readers ranked the issues according to their importance. Here is the final slate ranking:

See the next post on CC12 Biodiversity.

*Note: I had hoped to stay on top of this but my blogging had to take a backseat to directing and grading 13 senior seminar papers. Graduation was yesterday so today I'm trying to fully understand what all I put on the backburner over the past month.

 

 

 

Can the courts force climate change legislation?

"At issue is whether a small group of individuals and environmental organizations can dictate through private tort litigation the economic, energy, and environmental policies of the entire nation," wrote National Association of Manufacturers spokesman Jeff Ostermeyer in an email. Granting the plaintiffs' demands, he added, "would carry serious and immediate consequences for industrial and economic productivity -- increasing manufacturing and transportation costs and decreasing global competitiveness." The manufacturers' legal brief says the restrictions being sought "could substantially eliminate the use of conventional energy in this country." It also argues that the plaintiffs haven't proved they have a legal right to sue.

The plaintiffs contend that they have standing to sue under the "public trust doctrine," a legal theory that in past years has helped protect waterways and wildlife. It's the reason, for example, that some state government agencies issue licenses to catch fish or shoot deer, particularly when populations are declining. The doctrine has never before been applied to the atmosphere, and it's a trickier prospect, not least because the sources of atmospheric pollution are so diffuse and wide-ranging, extending to other countries whose actions the United States may not be able to influence.

via www.theatlantic.com

Interesting.

That's all.

No flip flops around here

Freakonomics:

Michael Specter has written a good and interesting New Yorker article about the history and current state of geoengineering, called “The Climate Fixers: Is There a Technological Solution to Global Warming?,” which is essentially a New Yorkerized version of Chapter 5 of SuperFreakonomics, all the way down to the Mount Pinatubo explosion and the reliance on scientists Ken Caldeira and Nathan Myhrvold.

Let me be clear: I have no problem whatsoever with Specter’s piece. It is very well done, includes plenty of original reporting in addition to the overlaps with SuperFreak, and is of course not obliged to acknowledge earlier writings on the topic. This is the way journalism is often done.

What’s interesting, however, is that The New Yorker was also home to a particularly nasty attack on Chapter 5 of SuperFreakonomics, by the environmental journalist Elizabeth Kolbert, who argued that everything we wrote about climate change and geoengineering was wrong, wrong-headed, and morally bankrupt.

How to reconcile these two articles, separated by three years, in the same publication?

I have two possible explanations (perhaps you can offer more in the comments below):

1. Despite the conventional wisdom, publications like The New Yorker or even the Times are not remotely the monolithic institutions that readers believe, with baked-in ideologies that hold constant from one writer to the next, one editor to the next, or one year to the next.

2. Maybe even an old man like Eustace Tilley is able to keep learning new things and embracing new ideas.

Whatever the case — I love The New Yorker and am happy to see it publish an article like Specter’s even if it comes about three years too late for my taste. 

Here is a link to the results of a Google search of "Freakonomics climate" at env-econ.net. I doubt if we're a publication like The New Yorker, our incentive-based ideologies are fairly well baked in, so our disagreement with Chapter 5 won't be changing any time soon.

More ridiculous subsidization of green jobs

Matt Kahn:

I sometimes mail out "snail mail".  Anticipating this, I own a large number of 44 cent stamps.  It crossed my mind that the first class rate is no longer $.44 and Google informed that it is now 45 cents.  What is an economist to do?

1. I could walk to the post office and stand in line and wait to purchase a large number of 1 cent stamps.

2.  I could double down and put two 44 cent stamps on my envelopes and over pay and run out of stamps.

3.  I could purchase electronic postage at 1 cent a piece here.

4. I could take the gamble of dropping my 44 cent letter in the mail and see if the Obama Administration is willing to subsidize my "green job" (I am an environmental economist)  at 1 cent per letter.  

via greeneconomics.blogspot.com

Ohioans want their double-dividend

Theory...

The double-dividend hypothesis' suggests that increased taxes on polluting activities can provide two kinds of benefits. The first is an improvement in the environment, and the second is an improvement in economic efficiency from the use of environmental tax revenues to reduce other taxes such as income taxes that distort labor supply and saving decisions.

...in practice:

Ohio voters back Gov. John Kasich’s proposal to raise taxes on shale fracking and use the revenue for an across-the-board state income tax cut, a new poll released today indicates.

“This looks like an issue on which Gov. Kasich has the voters behind him,” said Peter A. Brown, assistant director of the Quinnipiac University Polling Institute, which has been taking surveys in Ohio for several years.

Sixty percent approve of Kasich’s plan, 32 percent are against, the poll shows.

The Republican governor’s proposal is stalled in the GOP-controlled legislature, with several lawmakers worried about increasing any taxes. Kasich has said with energy companies poised to pull billions of dollars worth of oil and gas from the shale underneath Ohio, they can stand to pay more than 20 cents a barrel.

The measure gets support from voters of all stripe: 54 percent to 36 percent among Republicans, 65 percent to 28 percent among Democrats and 63 percent to 29 percent among independents.

via www.dispatch.com

Savages

David Autor, JEP editor, in "The Journal of Economic Perspectives at 100 (Issues)":

JEP has often staged battles between traditional and revisionist economic viewpoints, and it’s far from clear that the revisionists have always prevailed. For example, three of JEP’s 40 most highly cited articles stem from a single 1994 symposium on the value of contingent valuation as a tool for pricing environmental amenities. The most cited of these articles (“Contingent Valuation—Is Some Number Better than No Number?” by Diamond and Hausman) savaged the contingent valuation methodology.

Diamond and Hausman is the #3 cited JEP paper of all time with 534, Hanemann is at #14 with 332 and Portney is #34 with 239.

My guess is that some of those 534 citations aren't applauding the savage efforts of the authors.

 

Earth would be a much less interesting (but more efficient) place if everyone thought like me.

Earth would be a much less interesting place without its full complement of species, but there are also significant economic and cultural reasons for prioritizing species conservation. There are numerous examples in both categories, but the American Bald Eagle is a good example of a cultural icon that was almost lost from much of its range due to pesticide poisoning. Wildlife viewing generates enormous economic benefits worldwide. For example, in the USA $34 billion per year (USFWS, 2007) alone was spent on nature-related products and services. Species provide a vast array of ecological services, including pest control, pollination, medicine, ocean health, etc that equates to enormous financial benefits.

via www.zeroextinction.org

I came across this purpose statement from the Alliance for Zero Extinction while reading a story about the imperiled Golden Poison Frog (the deadliest animal on earth...cue eerie music)--but then I lost the link to the story I was reading, crud. To make up for my lack of organization, I included a picture of the frog to the right.

Did you know that the tiny Golden Poison Frog has enough poison to kill 10 humans within minutes?

Did you know the human head weighs eight pounds, Jerry?

I know I am a crass, unsubtle, economist, but my initial reaction to any statement about the enormous benefits of, well, whatever, is, "but what about the cost?"

I see a pattern emerging

USA Today:

From gas-mileage standards to tax breaks for windmills, public support for "green" energy measures to tackle global warming has dropped significantly in the past two years, particularly among Republicans, a new poll suggests.

Majorities still favor most such tax breaks or restrictions on industry, finds the Stanford University poll to be released today. It shows 65% support gas-mileage standards and 73% support tax breaks for wind and solar power. But just 43% support tax breaks for nuclear power, 26% support increasing gasoline taxes and 18% support hiking taxes on home electricity.

Overall, support for various steps to cut greenhouse gas emissions has dropped an average of 10 percentage points since 2010, from 72% to 62%, lead researcher Jon Krosnick says. "Most Americans (62%) still support industry taking steps aimed at cutting greenhouse gas emissions," Krosnick says, "but they hate the idea of consumer taxes to do it." His group's nationwide polls compared responses from 1,001 people in 2010 to 1,428 people this year.

I agree with Professor Krosnick. I also imagine that most Americans hate the idea of industry passing some of the additional costs of cutting greenhouse gas emissions along to consumers in the form of higher prices.

And cake, they like cake.

 

And it was still hot

My Sendak tribute title came a day too early. From the NY Times news alert email:

Maurice Sendak, Author of ‘Where the Wild Things Are,’ Dies at 83

Maurice Sendak, widely considered the most important children’s book artist of the 20th century, who wrenched the picture book out of the safe, sanitized world of the nursery and plunged it into the dark, terrifying and hauntingly beautiful recesses of the human psyche, died on Tuesday in Danbury, Conn. He was 83 and lived in Ridgefield, Conn.

The cause was complications from a recent stroke, said Michael di Capua, his longtime editor.

Roundly praised, intermittently censored and occasionally eaten, Mr. Sendak’s books were essential ingredients of childhood for the generation born after 1960 or thereabouts, and in turn for their children. He was known in particular for more than a dozen picture books he wrote and illustrated himself, most famously “Where the Wild Things Are,” which was simultaneously genre-breaking and career-making when it was published by Harper & Row in 1963.

My oldest daughter would always touch the page to see for herself when I read "And it was still hot."