Economics – Page 132 – a sibilant intake of breath

Gore’s ten points

Al Gore has recently presented a ten-point plan for the United States to deal with climate change over the course of the next few decades:

An immediate “carbon freeze” that would cap U.S. CO2 emissions at current levels, followed by a program to generate 90% reductions by 2050.
Start a long-term tax shift to reduce payroll taxes and increase taxes on CO2 emissions.
Put aside a portion of carbon tax revenues to help low-income people make the transition.
Create a strong international treaty by working toward “de facto compliance with Kyoto” and moving up the start date for Kyoto’s successor from 2012 to 2010.
Implement a moratorium on construction of new coal-fired power plants that are not compatible with carbon capture and sequestration.
Create an “ELECTRANET” — a smart electricity grid that allows individuals and businesses to feed power back in at prevailing market rates.
Raise Corporate Average Fuel Economy (CAFE) standards.
Set a date for a ban on incandescent light bulbs.
Create “Connie Mae,” a carbon-neutral mortgage association, to help defray the upfront costs of energy-efficient building.
Have the Securities and Exchange Commission require disclosure of carbon emissions in corporate reporting, as a relevant “material risk.”

A much more detailed discussion of the points can be found on Grist. It is safe to expect considerable elaboration in Gore’s upcoming book: The Path to Survival. It will be available as of Earth Day (April 22nd) of 2008.

It is an interesting – and distinctly American – mix. It seems like number one is the uber-recommendation, while the others are more specific subsidiary policies. Exactly how such a freeze could be implemented – politically, economically, and legally – is a massive question. That said, it is a list that targets many of the major opportunities for domestic emission mitigation. It will be interesting to see whether any of these get the endorsement of Democratic or Republican candidates in the run-up to the 2008 Presidential election. If so, it will make for a big break with past half-hearted and voluntary measures.

PS. Those unfamiliar with the American mortgages will understand number nine better if they read about Fannie Mae and Freddie Mac: America’s huge and bizarrely named quasi-government-backed mortgage corporations.

Passivhaus

There has been a lot of talk lately about compact fluorescent light bulbs. Huge billboards of David Suzuki looking like a genie, with a glowing CF bulb floating above his hand, dot the landscape. While these bulbs are a lot more efficient, they aren’t likely to make a huge difference in the long run. Arguably, it would be better to focus on encouraging the building of passive houses, which require no energy for heating, rather than making marginal improvements in existing dwellings. It may be entirely desirable to do both, but when it comes to finding a symbolic signal issue to rally around as energy conservationists, the latter option is a lot more impressive.

To qualify as a passive house, a building must use less than 15 kWh per square metre per year for heating. That works out to less than $1 per square metre at current energy prices in Ontario. Total primary energy usage for such houses (heating, hot water, and electricity) is not to exceed 120 kWh per square metre per year. The technology to do this isn’t absolutely cutting edge: a passive house has been continuously inhabited in Darmstadt since 1991.

Apparently, building super-insulated houses with the ability to heat and cool themselves using just the ambient light and heat in their surroundings does not cost significantly more than building ordinary houses (though it requires different materials and more expertise). Given how virtually none of them exist in North America, it seems fair to say that consumer demand – even with high energy prices – is not sufficient to drive a large scale shift.

A number of different policies could help boost adoption: municipalities could require that a certain proportion of commercial and residential buildings constructed be passive in this way, subsidies or tax breaks could be given to firms that choose to employ such construction methods, and so forth. At the very least, government could make a concerted effort to do most of its own building in this way.

Masses of additional information is online:

As environmental statements go, building or living in such a house is probably much better than driving a Prius.

Chevron’s climate game

Remember when the BBC came up with a climate change game? Well, now Chevron has done so, as well. Apparently, all the data in the game came from the Economist Intelligence Unit. The BBC game suffered a fair bit of well-deserved criticism. I have yet to give the Chevron simulation a comprehensive try, but I am waiting with a fair bit of curiousity for a chance.

You can read a bit more about the Chevron game on R-Squared: a popular energy blog.

[9 September 2007] This game doesn’t really have much to it. By constraining you to the management of a single city over the span of a couple of decades, it excludes both the chronological and geographic scale at which real change needs to take place. Still, it is interesting from a corporate public relations standpoint. Unsurprisingly, the game simply forbids you from using a power balance that excludes petroleum.

Shrimponomics

Here is an interesting blog post analyzing theories about why people are eating more shrimp than was previously the case. In short, people without training in economics seem to focus more on the demand side than people with such training.

One response that surprised me was “a rise in the number of vegetarians who will eat shrimp.” Now, if you are a vegetarian because you think it is wrong to kill cows and chickens for food, that may be a sensible position. If you are a vegetarian for general reasons of ecological sustainability, it is a lot less valid. As fisheries go, shrimp is one of the worst when it comes to bycatch. The UN Food and Agriculture Organization says that the present shrimp catch is at least 50% above the maximum sustainable level. Shrimp also tends to be collected through a process called bottom trawling: where large steel rollers smash and kill everything on the ocean floor.

Shrimp aquaculture is arguably even worse. There are all the problems attendant to all agriculture – close quarters, disease, harvesting other creatures unsustainably to turn into feed, antibiotics, etc – and then there is the fact that mangrove swamps are ideal for conversion into shrimp farms. The UN Environment Programme estimates that 1/4 of the total destruction of these important ecosystems has been brought about by shrimp farming.

From an ecological standpoint, vegetarianism (and probably veganism) remains a far preferable option, compared to eating meat.

Chronic disease worldwide

People tend to think of heart disease and cancer as the diseases of the rich world, while AIDS, malaria, and tuberculosis afflict the poor. The latter idea is certainly true: among those, only AIDS kills an appreciable number of people in rich states (though antibiotic resistant tuberculosis may start changing that).

Just because infectious diseases tend to kill a lot more people in poor states than in rich ones, it does not follow that infectious diseases are the greatest health threat there. According to the World Health Organization, heart disease and cancer kill more people in poor states, as well, and together cause 45.9% of all global deaths. Add in diabetes and other chronic diseases, and you find that 63.5% of all deaths are caused by chronic diseases, compared with 29.7% for all infectious diseases (injuries kill 9.3%).

A forecast for the period between 2006 and 2015 predicts that deaths from infectious diseases will fall by about 4% in poor countries, while deaths from chronic illnesses will rise by about 20%. Partly, this is the result of growing affluence – particularly the ability to afford cigarettes. People in China, Russia, and Indonesia already spend between five and six percent of total household income on cigarettes.

The Millennium Development Goals include two targets relating to infectious diseases:

Halt and begin to reverse the spread of HIV/AIDS
Halt and begin to reverse the incidence of malaria and other major diseases

While these are obviously worthy and important goals, there is a danger of funds not being well matched to where they can do the most good. Shedding a few misconceptions about the relative health challenges of rich and poor states may help avoid that. So too, the further recognition that lifestyle factors like diet, exercise, and smoking have an enormous influence on overall morbidity and mortality.

The trouble with jets

Air travel is one of the trickiest ethical issues, when it comes to climate change. In most situations, the difference between a high carbon option and a zero carbon alternative is essentially a matter of cost. If we are willing to spend enough, we can replace all fossil fuel power with renewables. We can get electricity, heat, ground transport, and energy for industry from sources that do not contribute to climate change. Air travel is different. Even for one million dollars a ticket, there is no way to get someone from New York to London in about eight hours that does not release greenhouse gases. Likewise, there is no feasible way to capture those gases for later storage.

Let’s consider a series of propositions:

Climatic science strongly suggests that allowing global greenhouse gas concentrations to rise beyond 500-550 ppm of carbon dioxide equivalent will have very adverse affects. These will be concentrated in the poorest states. It is highly likely that exceeding these limits will directly lead to large numbers of deaths, especially in the developing world. (See: these Stern notes)
At present, per-capita emissions in developed states are far higher than those in developing states. Canada’s emissions per-capita are about twenty times those in India.
Essential human activities, from heating to agriculture, produce greenhouse gasses.
People have equivalent moral claims to the basic requirements of survival.

If we accept these claims, we find ourselves in a tricky spot. To stabilize the level of a stock, you need to reach the point where inflows are equal to outflows. Even if we ignore how global warming is reducing the ability of the forests and seas to absorb carbon dioxide, it is clear that such stabilization requires deep cuts in total emissions. At the same time, taking the last two points seriously means acknowledging that developing states do have the right to comparable per-capita emissions. As such, the only option that is fair and capable of stabilizing overall concentrations requires very deep cuts in developed states.

Aside from being inextricably linked to fossil fuels, modern air travel compounds the harm done by the burning of that kerosene. This is partly because of where in the atmosphere it is deposited. It also seems likely that jet aircraft affect clouds in ways that increase their impact on climate change.

Imagining a world stabilized at 500 ppm, with reasonably similar per-capita emissions for all states, it seems quite impossible that there can be air travel at anything like contemporary levels. It is possible that some miracle technology will allow high-speed flights to occur without significant greenhouse gas consequences, but no such technology is even within the realm of imagination today.

As someone who has long aspired to travel the world, this is a very difficult conclusion to reach. It now seems possible that air travel bears some moral similarities to slavery. Before people become overly agitated about the comparison, allow me to explain. Just as slavery was once a critical component of some economies, air travel is essential to the present world economy. Of course, economic dependency does not equate to moral acceptability. If our use of air travel imperils future generations – and we are capable of anticipating that harm – then flying falls into the general moral category of intentional harm directed against the defenceless. After all, future generations are the very definition of helplessness, in comparison to us. We can worsen their prospects by fouling the air and turning the seas to acid, but they will never be able to retaliate in any way. (See: these Shue notes)

While I personally fervently hope that some solution will be found that can make continued air travel compatible with the ethical treatment of the planet, nature, and future generations, I must also acknowledge the possibility that people in fifty or one hundred years will look upon us as sharing some moral similarities with plantation owners in the United States, prior to the civil war.

Freight shipping and greenhouse gases

Travelling 100km by car produces about 10.8kg per person of carbon dioxide (assuming an average of 1.5 passengers per car). Doing the same by bus produces about 1.3kg, while taking a modern electric train produces about 1.5kg (based on the energy balance in the UK). What is remarkable is that shipping freight by truck produces 180 grams of CO2 per kilometre, while doing so by train produces just 15. Clearly, switching freight transport modes offers considerable scope for emission reductions (as does reducing the total amount of freight shipped).

When you factor in how much damage heavy trucks do to roads – as well as the expense and carbon emissions involved in rebuilding them – it seems pretty clear that disincentives to ship freight by road make sense. Yet another externality that road pricing and carbon taxes could help address.

Botnets

The rise of the botnet is an interesting feature of contemporary computing. Essentially, it is a network of compromised computers belonging to individuals and businesses, now in control of some other individual or group without the knowledge or permission of the former group. These networks are used to spread spam, defraud people, and otherwise exploit the internet system.

A combination of factors have contributed to the present situation. The first is how virtually all computers are now networked. Using a laptop on a plane is a disconcerting experience, because you just expect to be able to check the BBC headlines or access some notes you put online. The second is the relative insecurity of operating systems. Some seem to be more secure than others, namely Linux and Mac OS X, but that may be more because fewer people use them than because they are fundamentally more secure. In a population of 95% sheep, sheep diseases will spread a lot faster than diseases that affect the goats who are the other 5%. The last important factor is the degree to which both individuals and businesses are relatively unconcerned (and not particularly liable) when it comes to what their hijacked computers might be up to.

Botnets potentially affect international peace and security, as well. Witness the recent cyberattacks unleashed against Estonia. While some evidence suggests they were undertaken by the Russian government, it is very hard to know with certainty. The difficulty of defending against such attacks also reveals certain worrisome problems with the present internet architecture.

The FBI is apparently on the case now, though the task will be difficult, given the economics of information security.

How risky is climate change?

On his blog, Lee Jones posted a link to this book review. Basically, the argument is that people are (a) exaggerating the dangers of climate change and (b) using climate change as an excuse to pursue other ends. I would not deny either claim. The Intuitor review of The Day After Tomorrow is evidence of the first, and more can be found in many places. Of course, their review of An Inconvenient Truth suggests that not everyone is guilty of misrepresentation. As for smuggling your own agenda into discussions about climate change, I suspect that is equally inevitable. The question of how to behave justly in response to climate change is fundamentally connected to the history of economic development.

In an unprecedented move, I feel compelled to quote my own thesis:

While the IPCC has generated some highly educated guesses, the ultimate scale of the climate change problem remains unknown. On account of the singular nature of the earth, it is also somewhat unknowable. Even with improvements to science, the full character of alternative historical progressions remains outside the possible boundaries of knowledge. As such, in a century or so humanity will find itself in one of the following situations:

Knowing that climate change was a severe problem, about which we have done too little

Believing that climate change was a potentially severe problem, about which we seem to have done enough

Believing that climate change was a fairly modest problem, to which we probably responded overly aggressively

Observing that, having done very little about climate change, we have nonetheless suffered no serious consequences.

Without assigning probabilities to these outcomes, we can nonetheless rank them by desirability. A plausible sequence would be 4 (gamble and win), 2 (caution rewarded), and then 1 and 3 (each a variety of gamble and lose). Naturally, given the probable variation in experiences with climate change in different states, differing conclusions may well be reached by different groups.

As such, what it means to make informed choices about climate change has as much to do with our patterns of risk assessment as it does with the quality of our science. Exactly how it will all be hashed out is one of the great contemporary problems of global politics.

Tragedy of the commons

As a discipline, International Relations is packed with parables. Sometimes, they are hypothetical stories and sometimes they are interpretations of historical events. In each case, they are meant to demonstrate something important about how world politics works. Almost without exception, some aspect of their validity can be questioned on either historical or logical grounds.

When it comes to global environmental politics, perhaps the most well-known such parable is the ‘tragedy of the commons.’ Garrett Hardin is generally credited with coming up with the idea in a paper published in 1968. That said, the same idea was expressed in Michael Graham’s 1948 book The Fish Gate, in which he described how fisheries where access is unlimited will inevitably become unprofitable and fail. The logic of an individual who cannot control the entirety of a resource grabbing as much as possible before its inevitable destruction is the key feature of both analyses.

Personally, I would rather give the credit for the idea to Graham, rather than to Hardin (though it probably far precedes either of them). After all, the latter thinker went on to write such logically and ethically dubious documents as Lifeboat Ethics: the Case Against Helping the Poor. In an illustrative passage, Hardin says:

A wise and competent government saves out of the production of the good years in anticipation of bad years to come. Joseph taught this policy to Pharaoh in Egypt more than 2,000 years ago. Yet the great majority of the governments in the world today do not follow such a policy. They lack either the wisdom or the competence, or both. Should those nations that do manage to put something aside be forced to come to the rescue each time an emergency occurs among the poor nations?

His assertion that affluent societies are such because their leaders have set aside a surplus in times of plenty, whereas the leaders of poor societies have not, represents a massively myopic and superficial understanding of the processes of wealth accumulation, as well as the interactions between historically dominant and historically oppressed states. Explaining patterns of development in such a simplistic way obscures important elements of world economic history. Going on to justify a cold-hearted ethic of indifference to suffering and injustice outside the rich world likewise represents inappropriate extrapolation and faulty thinking.