Ferraris for all

Spiked has published my article on the British government’s Stern Review on the economics of climate change. My piece can be viewed here.

Labels: Africa, climate, economics, energy, environment, spiked

Steve Milloy has written an interesting article on the Fox News website arguing that the British government’s Stern Review on the economics of climate change is based on “junk science”. Milloy contests the catastrophic “tipping point” scenario, on which the Stern Review’s economic conclusions are apparently based, as flawed. For Milloy the junk science embodied in Stern inevitably leads to junk economics.

I take a different view. Even if we are on the verge of a tipping point - which is far from certain - the government’s favoured combination of rationing and behaviour modification is unviable. It is undesirable and unlikely to be accepted by the public. Instead we need to work out how to use more energy and tackle climate change at the same time. A richer society will be better able to handle the challenge of global warming.

Labels: climate, environment, science

I appeared on Sky News again this morning debating Ashok Sinha of Stop Climate Chaos. The subject of the debate was the announcement by David Miliband, the environment secretary, of a “climate revolution”. At the time of broadcast it was not clear what this would involve but it seems certain to be centred on the government’s favoured approaches of rationing and behaviour modification. Evidently he also wants to reward companies for energy efficiency rather than energy production.

I made the point that a strategy based on rationing was undesirable and unviable. Over time we will inevitably use more energy even if we become more energy efficient. The challenge is to make society richer so that it is better able to deal with climate change and other problems it faces.

Labels: climate, environment, media appearances, television

The World Wildlife Fund (WWF) has published its latest Living Planet Report (PDF), its biennial statement on the state of the natural world. Its Living Planet Index suggests that global biodiversity has declined by 30% since 1970 and its Ecological Footprint indicates that the UK is living a “three planet lifestyle”.

WWF’s UK website welcomes the adoption of these ideas by the British government but argues it needs to go much further:

“The good news is that the language of One Planet Living is being rapidly and widely taken up by people including David Miliband, Secretary of State for the Environment. However a commitment to One Planet Living must include a commitment by the UK government to adopt Ecological Footprint as a sustainable development indicator and set targets for year on year reduction.”

As previously argued on this website the ecological footprint is essentially a tautology (see 9 October 2006 dispatch). In reality, to the extent it makes sense to talk of an “ecological footprint”, it changes as the efficiency of resource use increases. But this and the discussion of biodiversity deserve a more thorough critique.

Labels: economics, footprint, sustainability

Monitoring the alleged sins of modern life

Evidently showering is good - it uses less energy than baths - but singing or thinking in the shower are bad. Time spent not actually cleaning yourself means using more energy which in turn means more global warming. According to a helpful press release (PDF) from Energy Australia, which has been monitoring such things:

"Brushing teeth, playing with toys and just day dreaming are some of the reasons why young children are showering longer, while for parents relaxing, exfoliating or shaving were the reasons given for keeping the hot water running."

So showering is OK as long as you don't enjoy yourself or do anything else at the same time.

Labels: sin tracker, technology

Will Wilkinson, a policy analyst at the Cato Institute in Washington DC, has written a useful critique of a central assumption of “pro-happiness” thinkers. An article in Policy, the journal of Australia’s Centre for Independent Studies, argues “against the politics of relative standing”. It takes on one of the key arguments put forward by the likes of John Cassidy, Richard Layard, Richard Wilkinson and Robert Frank.

Such thinkers often argue that human beings are caught in a futile battle for status between each other. Often they use studies of the battle for dominance between velvet monkeys or baboons to draw conclusions about human behaviour. But, as Wilkinson argues, humans are immensely more complicated than other primates:

“Real and profound differences are … glossed over by failing to acknowledge what is peculiar to humans. For one thing, we are uniquely cultural creatures, and this fundamentally transforms the zero-sum logic of the primate dominance hierarchy. Even universal human psychological traits are highly mediated by diverse human cultural formations. Like monkeys and chimps, we all eat. But some eat with fingers, some with forks, some with a waiter and muzak, some squatting in the bush over a bloody wild pig.”

Labels: happiness

Mark Lynas has a cover story in the New Statesman on the need for carbon rationing which at least has the virtue of logical consistency. Rather than use euphemisms such as “mitigation”, as many environmentalists do, he is explicit in his demand for austerity. Like George Monbiot and Joss Garman – between them the three run the turnuptheheat website – he argues that the need for austerity is given by the science of climate change:

“Defeating global warming must be our priority today, or we will lose this war, and with it our very existence as a civilisation.

“At an international level, some variant of rationing is nothing less than a mathematical inevitability.”

What this misses, among other things, is that there are alternatives to rationing. For example, nuclear power and hydroelectric power do not emit greenhouse gases. Carbon sequestration can take carbon dioxide out of the atmosphere. We can adapt to the effects of climate change by such measures as building modern flood defences. Over the long-term there are also other possibilities such as geoengineering (weather modification) and nuclear fusion as a source of energy.

In any case it should not be taken as given that the worst case scenario in relation to climate change put forward by Lynas is correct. In addition, it needs to be remembered that rationing would literally leave billions of people mired in poverty.

Labels: climate, energy, environment

Spiked has published my article on how the United Nations has co-opted Lonelygirl15, a popular internet character among teenagers, to win support for the Millennium Development Goals. The article can be viewed here.

Labels: development, spiked

One of the oddest arguments around at present is that we are facing a global water shortage. Michael Specter recently expressed this view in the 23 October issue of the venerable New Yorker. Although the article is not available on the website an online interview with him can be found there.

Given there is so much water in the world it is hard to see how there can be a shortage. Desalination makes it possible to draw on the world’s vast reserves of sea water to convert into fresh water. In any case, water is a highly recyclable resource. Water that is used in some way, perhaps in agriculture or industry, finds its way back into the environment.

Labels: environment

Air travel is becoming a particular target for climate change campaigners. Although air transport currently only accounts for a small percentage of global emissions the proportion is expected to rise rapidly in the coming years. The question is discussed in more detail in a report (PDF) from Oxford University's Environmental Change Institute published yesterday. It also had extensive media coverage including an item with BBC Newsnight’s “ethical man”.

Although the subject demands detailed examination some reasons to question the consensus are already clear. Certainly the argument that most flyers are relatively rich - which is no doubt true - should not be used against cheap flights. The point is that more people than ever can afford to fly and that number should be increased much further. Mobility has both enormous economic benefits and is a key component of freedom.

Paul Charles, a spokesman for Virgin Atlantic, also makes a good point in an article on the report on BBC online: "We've suggested starting grids at airports, so that planes don't have to run their engines for half an hour all the way to the runway while they're queuing up. That will cut millions of tonnes of CO2 emissions." So building larger and better airports could help reduce emissions.

No doubt over time aircraft engines can also be made even cleaner and more efficient. They are already much better than they used to be and this trend will continue.

Brendan O’Neill has written an article on the snobbery surrounding cheap flights on spiked and there is a debate on the subject at the Battle of Ideas.

Labels: speeches, television, transport

Monitoring the alleged sins of modern life

The naïve might assume that MP3 players, including iPods, would be welcomed by environmentalists. Virtual music does not involve manufacturing CDs or shipping them all over the world. But it should be clear by now that environmentalists are never satisfied. For example, an article by Leo Hickman, the chief ethical guru of the Guardian, points out that online music can be “burned” onto CDs at home. In addition, MP3 players are frequently replaced so that uses unnecessary resources. And of course such devices include toxic substances such as cadmium, beryllium and lead. If only the miserabalists would start playing a different tune.

Labels: sin tracker, technology

I appeared today on the Counterpoint programme on ABC Radio National in Australia talking about Bono's Product RED initiative as well as related issues such as ethical consumption and economic development. You can listen by clicking here.

Labels: consumption, development, ethics, media appearances, radio

It is a sign of the times that Muhammad Yunus and Grameen Bank have won the 2006 Nobel Peace Prize “for their efforts to create economic and social development from below" (quoting the official statement ). Yunus and the Grameen Bank he founded in Bangladesh in 1976 have pioneered the development of microfinance – providing tiny loans to the poorest of the poor. Microfinance is presented as a tool for development but there are reasons to be sceptical:

* Its focus on the poorest of the poor. Microfinance fits the current orthodoxy which holds that the emphasis should be on reducing the grossest forms of poverty rather than making society overall wealthier.

* Grameen Bank is highly profitable. It is probably better seen as a niche financial institution rather than anything to do with development.

* Grameen imposes strict and intrusive conditions on its lending – known as the “16 conditions” - including insisting that borrowers have smaller families. It can be viewed as a form of social and population control.

Labels: development, economics, finance, inequality

The fact that the number of Americans is predicted to hit 300 million this coming Tuesday – up from 200m in 1967 – has provoked a mixed response. Lester Brown, a veteran environmentalist, is predictably miserable. In a recent dispatch from his Earth Policy Institute he argued that:

“Population growth is the ever expanding denominator that gives each person a shrinking share of the resource pie. It contributes to water shortages, cropland conversion to non-farm uses, traffic congestion, more garbage, overfishing, crowding in national parks, a growing dependence on imported oil, and other conditions that diminish the quality of our daily lives.”

Much more positive and accurate was an op-ed piece entitled “The kids are all right” by John Tierney in the New York Times on 14 October. He made the correct point that human beings are producers as well as consumers. In other words, we may create problems but we also have the capacity to solve them. Or, as he eloquently put it:

“In the long debate about overpopulation and famine, none of the gloomy projections by intellectuals proved to be as prescient as an old proverb in farming societies: “Each extra mouth comes attached to two extra hands.” No matter what problems lie ahead, the good news on Tuesday will be that America has 600 million hands to solve them.”

Labels: America, progress

This morning I appeared on Sky News debating the economics of climate change with Friends of the Earth. The environmentalist group had commissioned a report from Tufts university (PDF) which argued that immediate action was needed to stop climate change becoming a catastrophic problem. My counter-argument was that the richer we are as a society the better able we should be to tackle climate change and other challenges facing humanity. The debate can be viewed on YouTube by clicking here

Labels: climate, media appearances, television

Madonna has found a new way of expressing herself: she is adopting a little black baby from an orphanage in Malawi. Whereas ordinary people sometimes wear white wristbands or flash American Express RED cards to express their piety the mistress of makeovers evidently needed something more. She chose a baby from the children in the orphanage in a similar way to a shopper choosing a pair of shoes.

The symbolism of Madonna’s adoption of baby Davie was clear to an unnamed source at the orphanage quoted in today’s Sun: “She … carried him on her back, which was very symbolic as that is the way Malawian mothers carry their children.” Presumably this blatant display demonstrates what a worthy person she is. Madonna follows Angelina Jolie, actress and UN Goodwill Ambassador, who has adopted an Ethiopian and a Cambodian baby.

Such expressions of celebrity colonialism do no good for the third world but no doubt they help celebrities feel they are somehow spiritually pure.

Labels: Africa, development, ethics

The United Nations is using YouTube in an attempt to win support for its official anti-poverty goals. According to yesterday’s Wall Street Journal it has got Y&R, one of the world’s largest advertising agencies, to design videos featuring LonelyGirl15, a character in a popular web series. The videos are already being aired in the run-up to the UN’s anti-poverty initiative - stand up against poverty - this coming weekend.

Strange that the campaign seems to be presenting itself as the authentic voice of the teenager when it is designed by a professional ad agency. Even more odd that the goals that it is supporting are those endorsed by the world’s leaders in 2000.

Labels: development

Today is the day the world goes into ecological overdraft, according to the lead story in today’s Independent. A report by the New Economics Foundation, in partnership with the Global Footprint Network, finds that until 9 October the world’s population was using up sustainable resources. But from now until the end of the year it will be drawing on resources that cannot be replenished. The implication is that the world should only be using three-quarters of the resources it is currently using. As the Independent argues:

“Global Footprint estimates that the human race is over-using the Earth's resources by 23 per cent. While each individual should use up no more than the equivalent of 1.8 hectares of the Earth's surface, the actual area we use is 2.2 hectares per person.”

The lack of details on how this measure is calculated is striking. Both the newspaper reports and the information on the New Economics Foundation website seem to be based on pure assertion. There is more on the Global Footprint website but it is lacking in detail. However, a similar report four years ago by the World Wildlife Fund (WWF) was subject to rigorous examination by the Economist. (“Treading lightly” 19 September 2002). The article argued that:

“The approach builds in questionable assumptions. Crucial is an implicit, and very strict, idea of sustainability, which in effect denies that natural resources can often be replaced or augmented by man-made ones.

“This aside, the main drawback of the analysis is the way it treats energy. WWF defines the footprint for fossil fuels as the area of forest required to absorb emissions of CO2 (excluding those absorbed by the oceans). Growth in the energy footprint then drives almost everything else. The energy footprint increased from 2.5 billion hectares in 1961 to 6.7 billion in 1999, the fastest-growing component of the overall footprint—and, by the end of the period, very much the biggest.”

The piece went on to point out that it does not follow that any increase in carbon dioxide is problematic. And even if it was there are alternative energy sources such as nuclear and renewables.

The Economist article was based on a report (PDF) by Bjorn Lomborg’s Environmental Assessment Institute in Denmark.

Despite the crudeness of the “footprint” measure it is increasingly popular in government circles. For example, see my 30 September dispatch on “One Planet Living”.

Labels: economics, footprint, sustainability

Brendan O’Neill has written an important article on climate change denial for spiked. The piece argues that the censorious climate around global warming is having a chilling effect on political debate and is bad for science too:

“Effectively, campaigners and officials are using scientific facts – over which there is still disagreement – to shut down what ought to be a political debate about what humans need and want. This is the worst of it. Whatever side you take in the climate change clash of facts, this undermining of debate should be a cause of concern.”

Labels: climate, spiked

There follows a first attempt by me to discuss the economics of climate change. It is from the 2 October issue of Fund Strategy magazine. I intend to return to this topic in the near future.

The consensus that cutting carbon emissions is the only way to tackle climate change is almost universal. Even the few who were sceptical about the need for a low-carbon economy are dwindling in number.

Several fund management groups have already discussed the possibility of specialist firms benefiting from the development of new technology to mitigate climate change.

However, the costs of mitigation, which could affect huge swathes of the economy, have received little attention. To assess the overall economic and investment impact of curbing emissions of carbon dioxide it is necessary to balance these factors against each other. It should not be assumed automatically that mitigation is the only way of tackling climate change, let alone the best.

The consensus in favour of mitigation is certainly striking. Many have long favoured such a strategy, but now almost everybody does.

Under Arnold Schwarzenegger, its Republican governor, California has recently become the first American state to legislate curbs on greenhouse gas emissions. Shortly afterwards the state announced it was suing six of the world's largest carmakers for their responsibility for global warming.

Meanwhile, Rupert Murdoch, long known as a sceptic on climate change, has announced that News Corporation is to go carbon neutral. This outlook is already being reflected in his newspapers, including articles in the Sun such as "going green can be so, so sexy" and "we're on the erode to hell".

Richard Branson, long a target for environmentalists because of his involvement with airlines, has tried to clean up his image with the announcement of a $3bn (£1.6bn) investment in alternative energy over the next decade. He has also called on the global aviation industry to cooperate to help tackle climate change. Although some environmentalists are sceptical of these moves, they do raise the possibility of heavy investment in alternative energy.

In Britain the government is stepping up its pro-mitigation initiative still further. As David Miliband, the environment secretary, told last week's Labour Party conference: "Today I propose we adopt a new goal as a country: to aim to live as a nation within the limits that the environment can tolerate - One Planet Living."

Companies are coming under pressure to live to share Miliband's planet. The new company law, which should be enacted soon, will make it a statutory duty for directors of quoted companies to take into account environmental factors when making decisions. Businesses have countered that such a requirement will increase the regulatory burden they have to bear.

Margaret Hodge, the industry minister, reportedly signalled that the process could go even further at a Labour Party fringe meeting where she argued that private companies too should have such an environmental obligation. Although in a later statement Alistair Darling, the trade and industry secretary, denied this was the government's intention.

Even before the introduction of such legislation most large British companies seem to be moving towards mitigation. According to a survey of FTSE 350 companies by Investec published in July, more than three quarters of respondents claim to measure their emissions and two thirds report on them. More than half are trying to cut emissions.

Under such circumstances those funds that invest in environmental technology could benefit. Those that specialise in this area include the Impax Environmental Markets investment trust and Merrill Lynch New Energy Technology. There are also numerous specialist open-ended environmental funds.

However, despite the overwhelming consensus in favour of mitigation, and the opportunities that could flow from its implementation, it is important to remember it has costs. For many sceptics the costs could be exorbitant. For example, fossil fuels are still by far the cheapest and most efficient form of energy in many cases, and are likely to remain so for a long time. So forcing people to switch to other forms of energy could slow growth or even cause an economic reversal. If the litigation against carmakers is successful, the impact on global growth could be even greater.

Those who suffer most as a result of mitigation are likely to be the developing countries. At present even China, with its rapidly industrialising economy, is responsible for far less greenhouse gas emissions per person than America or the European Union (see bar chart).

If China reaches the level of emissions per head of the EU or Japan, let alone America, the total level of emissions would increase enormously. But that could be the price necessary to raise China out of poverty. The sceptics would argue it is not up to rich Westerners to deny the Chinese, or the rest of the global poor, the benefits of affluence.

The mainstream counter-argument to this stance takes several forms. Some contend that it would be relatively quick and easy to switch to low-carbon technologies. If that is true the economic costs would be lower. At the Labour Party conference Gordon Brown proposed a $20bn global fund to help the poorer countries develop alternative energy sources.

Despite this apparently optimistic talk of new technology many are, more or less explicitly, arguing that economic development needs to be curtailed. That was certainly the implication of Miliband's "One Planet Living" remark at the Labour Party conference. The idea is that Third World development should be limited - or made "sustainable" - and Westerners should curb their living standards too. Understandably, such talk is not popular with the general public.

It is hoped that the Treasury's Stern Review on the economics of climate change, due to report soon, will help answer these questions. But the discussion paper already published on its website . is decidedly skimpy on how much mitigation is likely to cost: "For all countries, understanding the costs of mitigation will be critical. Existing estimates vary considerably.

"One important factor in the variation of these estimates is the assumption made about the nature of technological progress, specifically whether innovation can be stimulated by policy. If policies to reduce emissions are assumed to accelerate the development of these technologies, then the costs of mitigation will look much lower than if technological development is assumed to happen exogenously."

Of course many environmentalists would argue that whatever the economic costs of mitigation it should be implemented. In their view the planet is facing such a serious threat that an immediate switch to a low-carbon economy is essential.

However, even if such environmentalists are right on the science - and there is debate about whether we are facing a catastrophic scenario as opposed to just a serious one - there are other ways to deal with climate change.

The most widely discussed alternative is adaptation, which involves such measures as constructing better flood defences, building at or above current sea levels and developing new crops. Indeed, the preliminary papers on the Stern Review point out that in any case adaptation will be necessary as the climate is set to warm whatever happens.

A more ambitious approach is what could be called geo-engineering or weather modification. For example, Paul Crutzen, a Nobel laureate in chemistry, has raised the possibility of injecting sulphur into the atmosphere to promote cooling. Others have suggested putting trillions of lenses into orbit to divert some of the sun's rays. Although such initiatives may appear like science fiction, it does not mean they cannot play an important role in the future.

The answers to these questions will have a substantial bearing on future economic and investment prospects. For the more optimistic proponents of mitigation there can be a smooth transition to a low-carbon economy without significant economics costs.

For the more pessimistic advocates of mitigation such a strategy is vital to save the planet, to the extent that the economic costs are unimportant. Such pessimists see austerity as a necessary part of the response to global warming.

For the sceptics a strategy based on mitigation is generally seen as bearing high economic costs. It could stunt development in the Third World and undermine economies in the West. They advocate alternative strategies such as adaptation and even geo-engineering as the best way to tackle the threat posed by climate change.

The outcome of this debate is likely to have enormous consequences. At present the proponents of mitigation are overwhelmingly in the ascendant, but it does not necessarily follow that they are right.

Labels: china, climate, economics, environment, Fund Strategy, sustainability

On closer examination it seems that the idea of “one planet living” originated with the World Wildlife Fund (WWF) rather than the government (see 30 September dispatch). David Miliband, the environment minister, credited the WWF with the idea in a speech on the idea of an “environmental contract” on 19 July. He also wrote a joint article on the “environmental contract” with Douglas Alexander, the transport minister, on the BBC website on 25 May. Using apparently radical language the two ministers argued that:

“In the last century, progressives forged a social contract that saved capitalism from itself. In this century, the task is now to address environmental degradation with the same moral passion and practical rigour as we continue to address human degradation.”

Labels: economics, environment, footprint, sustainability

Stuart Simpson has written a useful essay to complement the Battle for Affluence session at the Battle of Ideas. He argues that it is a problem that society has become redefined in terms of consumption. Not that consumption is a bad thing but the one-sided emphasis on it distorts our understanding of humanity:

“In the battle for affluence we need to redefine an affluent society as one that produces wealth for its citizens, not one that consumes the world's resources and produces only pollution and waste. It is only through generating a more affluent society that we can begin to address any of the issues that legitimately concern us today. But more than this, the problems that are often understood to be the consequences of too much consumption, and hence too much affluence, are often the result of the contrary.”

Labels: happiness