Category: Economics

Matters of money

Rich and poor, under the Kyoto Protocol

This article in Slate makes a convincing case that the definitions of rich and poor states under the Kyoto Protocol make no sense and produce distorted outcomes:

The original climate negotiators had a simple way of defining wealth. First, they took the list of 24 countries that were part of the Organisation for Economic Co-Operation and Development, a pre-eminent club of wealthy, democratic, free-market states that was formed in 1961; these included the United States, most of Western Europe, Japan, and a few others. Then they added several states of the former Soviet Union, like Russia and Belarus, as well as a handful from Eastern Europe, like Poland and Slovenia. This was basically Cold War logic on cruise control: First World and so-called Second World countries were rich; Third World countries were poor. The Kyoto Protocol, concluded six years later, maintained the same division. Rich countries agreed to institute caps on their greenhouse-gas emissions while poor countries agreed to do nothing.

The resulting deal had its flaws then. It makes absolutely no sense today. Belarus, for example, is lumped together with the rich countries, despite a GDP per person of about $10,000. As a result, it has an emissions cap like those in place for Europe and Japan. Kuwait, meanwhile, is considered poor. That means the oil-rich emirate is spared any obligations, despite the fact that its residents are about five times wealthier than the Belarussians.

Future climate deals will need to do a better job of distinguishing between those who have already developed and become wealthy (largely on the basis of CO2-generating greenhouse gas emissions) and poor states that are likely to suffer the worst effects of climate change after contributing disproportionally little to its emergence.

It makes sense to shift some states from the poor category to the rich one, and vice versa. It also makes sense to establish a special category for states that are (a) major emitters (b) relatively poor and (c) experiencing relatively rapid growth in emissions. An effective climate change treaty will need to address emissions from these states (such as India and China) as well as those from unambiguously rich states like Canada, Australia, and the United States. While the biggest issues in relation to the very poorest states concern how people will adapt to climate change, starting all major emitters (regardless of wealth) on the path to low carbon economies is the only way to avoid the worst consequences of climate change. Of course, establishing a new category doesn’t answer the tricky moral question of who ought to pay how much, in order to achieve the stabilization of atmospheric greenhouse gas concentrations.

Extreme environmental recklessness

As a metaphor for better understanding the relationship between humanity and nature, some people have used the image of a lifeboat. A more appropriate one is that of a submarine. It captures the complexity of our surroundings, as well as the real danger that messing around with critical systems in an unenlightened way will have dire consequences. Right now, humanity is in the process of setting fires that test the air filtration capabilities of the machine, altering the gas mixture in ways likely to produce unexpected results, and banging away at the outer hull with wrenches, based on the unthinking assumption that our ignorant pounding won’t produce critical leaks.

When one looks at the state of our resource, pollution, and climate policies and actions, one is left with little hope that the future will be a long or pleasant one for humanity. This is not a matter of protecting endangered species or pristine areas of forest; it is about not compromising the basic physical and biological systems that provide the fundamental requirements of human prosperity and existence.

Private Copying Tariff increase

Canada has increased its Private Copying Tariff on writable CDs from 21 cents to 29 cents. Supposedly, the purpose of the tariff is to pay artists back for unauthorized copying. In total, the levy generates about $30 million per year. 66% of the revenues go to eligible authors and publishers, 18.9% to eligible performers, and 15.1% to record companies. That being said, the tariff does not give consumers a clear right to make copies of their music. It certainly will not do so if the new copyright bill tabled by the Conservative Party becomes law.

It is clearly unfair to assume that all writable CDs will be used to copy commercial music. It is also clearly odd to levy the tax on CDs but not DVDs, and to not make clear what rights are conveyed by the existence of the tariff.

Hopefully, we will see this system rendered more rational through future government policies and court decisions. Whatever your feelings on the ethics of copyright, the current arrangement is an ugly muddle.

Obama’s energy secretary

President-elect Barack Obama’s choice for energy secretary seems impressive: Nobel laureate Steven Chu. He is an experimental physicist, so he will be able to separate scientifically accurate information from bunk. He is also an advocate of alternative and renewable energy.

Since 2004, he was the head of the Lawrence Berkeley National Laboratory and concentrated his efforts on climate change. Hopefully, the choice reflects a commitment to addressing climate change, despite all the immediate clamour and apparent urgency of economic policy-making.

On an odd side note, about two thirds of the budget of the US Department of Energy is spent on nuclear weapons research and maintenance.

Ottawa, plans, and families

Ottawa in general, and the federal civil service in particular, seem ideally suited to those who want to get a mortgage, buy a house, and start having children. The benefits associated with government jobs are most valuable for those who have these kinds of plans; the same is true for the strong job security and minimal requirements for overtime hours or late evenings.

Personally, I feel like I have more in common with undergraduate students than with people who are at that stage of their lives. I don’t see my present situation as the base of a hill to be slowly climbed over the course of decades. I see it as another interim stage, albeit one from which it is hard to anticipate the character of the stage that will succeed it.

Stop selling off UBC

It seems that the University of British Columbia has granted a temporary reprieve to the on-campus farm, deciding that it will not be converted into housing “as long as the university’s housing, community development and endowment goals can be met through transferring density to other parts of campus.” While this strikes me as a modest victory, I have long had the feeling that UBC has had its priorities wrong in terms of campus development. Often, it seems to behave like a tax-exempt land management company in possession of a lot of prime real estate in Point Grey. The fact that the company happens to run a school can seem incidental.

The UBC endowment lands are meant to exist as a perpetual legacy for the university. It isn’t clear to me why selling so many of them for commercial development has been beneficial for the student body. To me, it seems the best course of action would be a freeze on new construction not related to students, coupled with a renewed focus on education, rather than property management.

Dealing with the oil sands is not enough

An intelligent article in The Calgary Herald makes the case that dealing with the oil sands is not a sufficient Canadian contribution to climate change mitigation. Firstly, this is because they represent a small fraction of total Canadian emissions and, even in the worst-case projections, are still a minority of emissions in a few decades. Secondly, it is because technologies developed to de-carbonize the oil sands are likely to be less generally applicable than those created for more widespread industrial activities. Thirdly, it is because many of the emissions associated with the oil sands occur wherever the fuels being produced are burned, rather than at the point of production, where they might be captured.The second point is an interesting one, and the overall case is strong:

The oilsands now produce about four per cent of Canada’s emissions; if production were to triple with no change in technology and all other emissions stopped growing, they could be as high as 10 to 15 per cent around 2025.

This is a big number, and it’s going in the wrong direction since if we want to avoid dangerous climate change, we should be driving our emissions to zero sometime soon after 2050. However, even if we shut down all oilsands operations tomorrow, Canada would still be one of the top greenhouse gas emitters’ per capita in the world. Fixing the oilsands will not get us off the hook.

While I think the authors are somewhat overconfident in the applicability of carbon capture and storage (CCS), they are right to say that dealing with the oil sands must be only one part of Canada’s overall climate change strategy.

In addition, we need to prevent the construction of new coal power plants (at the very least, those without effective CCS) and phase out those that already exist. We need to seek and exploit mitigation opportunities in all sectors – from agriculture to transport to heavy industry – with the ultimate goal of carbon neutrality. One important mechanism for creating the right incentives for lowest-cost across-the-board reductions is putting a price on carbon. That is not, however, sufficient to address all the externalities relating to climate change. Government also needs to work to improve standards and build intelligent infrastructure, supporting the choices that will lead to the emergence of a low-carbon society.

Metal detectors and carry-on restrictions for Greyhound travel

The policy of restrictive carry-on rules appears to be spreading from planes to Greyhound buses. Apparently, as of December 15th, passengers boarding them in Ottawa will be forced to put everything aside from “medication, baby formula and small handbags” in checked baggage. No matter that those rattling baggage holds are hostile territory for cameras, computers, and other delicate items. Likewise, no matter that the logic of security on intercity buses differs substantially from the logic for aircraft, as I have written about previously. The system has already been introduced in Edmonton, Calgary and Winnipeg.

To summarize my earlier post:

  • With a plane under their control, hijackers can fly to distant states that might assist them. The only way to stop them is to shoot down the plane, killing everyone on board. Buses are comparatively easy to stop.
  • [S]omeone in control of an ordinary plane can kill a lot of people. They can certainly kill everyone on board. They can also kill many people on the ground. Similar risks do not exist in relation to buses.
  • [I]t isn’t clear that this strategy won’t simply displace any violence that was to occur to a different venue. If I want to harm a particular person, I can do so in a place other than a Greyhound bus. The same is true if I just want to hurt people at random.
  • If you are really determined to hurt people on a bus, you can get on at a rural stop, rather than a bus station with metal detectors

It seems that the best low-cost and relatively low-carbon form of intercity travel is about to be needlessly constrained. It remains to be seen whether Greyhound proves enduringly committed to the new procedures once customers start appreciating just how inconvenient and unnecessary they are.

Alcoholic analogies to climate change

Two critical aspects of the problem of climate change can be well understood by means of alcohol-based analogy: the time lag between emissions and climatic consequences and the one-off nature of our decisions.

The last few decades have seen a surge in global greenhouse gas emissions. Due to lags in the climate system, the effects of those gasses are not yet felt, whether in terms of temperature or other climatic phenomena. It is as though we have started doing shots of vodka every thirty seconds. Even after the tenth shot, it is entirely possible that you are feeling lucid. You can talk, walk around, and drink more vodka. If you keep drinking at such a rapid pace until the point where you really feel the effects of the first shots, you have a whole mass of additional (and probably rather unpleasant) impacts still to come.

The reason this is so dangerous is that we only get one chance to decide when to stop drinking. Most people probably have a few experiences of youthful exuberance and realize they need to take into account the anticipated consequences of drinks, rather than just keep drinking until they cannot do so any longer. There is scope to learn from experience. As with global thermonuclear war, climate change offers no opportunities to learn by experience. We have one planet and, by extension, one timeline for greenhouse gas emissions and their atmospheric concentrations. If we are going to stop before we go too far, we are going to need the wisdom to anticipate consequences (as the IPCC and other scientific bodies have already done) as well as the will and good judgment to heed that advice.

The final issue to bear in mind is that of where the costs fall. The danger of drinking yourself to death is one that each individual engages with directly. By contrast, most of the dangers associated with climate change are inadvertently borne by those in future generations. Continuing to emit greenhouse gasses is thus somewhat equivalent to drinking while pregnant. While some of the health consequences might be borne by the drinker, most will be borne by the next generation and, in turn, by those who follow.

There are actually a couple of additional valid ways in which this analogy can be extended. One is to appreciating the difference between stocks and flows. Cutting annual emissions is like reducing how much vodka is in each shot. When emissions are rising, each shot is bigger. When emissions are falling, successive shots are smaller. Nonetheless, even small shots still increase your blood alcohol level. Right now, rising global emissions mean the planet is downing a bigger shot of greenhouse gasses every year. Stopping that growth is the first step, but it is no more of an adequate response in the long term than capping the size of the shots being taken at regular intervals.

A related extension has to do with carbon sinks. In this analogy, they are akin to your liver. They can absorb a certain quantity of greenhouse gasses before they fail. After that point, the further climatic effects of emissions are unmitigated. In the period when your liver is still functional, you can still drink small shots every thirty seconds. Eventually, however, you need to cut your intake/emissions to zero, before your liver/sinks fail.

Video on copyright in Canada

Why Copyright? Canadian Voices on Copyright Law is a 50 minute film about copyright in Canada, produced by Michael Geist and Daniel Albahary. It is largely a response to the Conservative government’s deeply problematic proposed copyright legislation.

Equitable copyright laws are an important issue. In the first instance, that is due to the overwhelming importance of information, who controls it, and who can do what with it. Secondly, it has to do with societal decisions about what kind of conduct is acceptable, who enforces the rules, and what the consequences for violating them can legitimately be. Rules on when technical means of copyright enforcement can be legitimately circumvented are especially important, since that is a new sort of right potentially being extended to content owners. As such, the balance between the societal interest of fair use and the content owner’s claim to protection needs to be evaluated in a more profound way than has occurred so far.

As with many of the new developments on this issue, I found out about it through BoingBoing.