The Economist on Corn Production over 30 degrees

The Economist gives a positive spin to the article ““Nonlinear heat effects on African maize (corn) as evidenced by historical yield trials”, Lobell et al.” in Nature : Climate Change. I posted the following comment:-

Experimental conditions must be controlled to get comparable results. But this is not real world conditions. In the real world farmers will seek to optimize output given the constraints. When temperature, or rainfall changes, farmers will adapt. It is part of the human condition to adapt, which is why there is agriculture to be found in Southern Sweden and the blazing heat of Minas Gerais. Corn production is to be found in Edinburg, Texas with 136 days a year above 30 degrees. This is achieved through both planting and harvesting earlier in the year than further north.

As well as looking to the negatives of warming, we should look to the positives. More temperate climates should, ceteris paribus, see increasing yields as temperatures get warmer. For instance, Northern Europe, the Steppes of Central Asia and the Canadian plains should benefit from higher temperatures. Also higher temperatures will be caused by higher CO2 levels. Experimental studies have shown a doubling of CO2 will increase maize biomass by around a third. Finally, according to Al Gore, precipitation increased by 20% in the last century, mostly in above mentioned areas, Southern South America and SE Australia.

One of the biggest risks for climate change is supposedly to the stability world food supplies, with possible famines. But, as Amartya Sen has shown, the biggest famines are made serious not by natural factors but by adverse terms of trade. The Bengal famine of 1943, in which more than 3 million died, was exacerbated by a ban on exports between provinces in India, at the same time as extra demand was present from those supplying the troops fighting in Burma.

 

http://wattsupwiththat.com/2011/03/14/which-group-is-smarter/

 

http://www.co2science.org/data/plant_growth/dry/z/zeam.php

Al Gore : An Inconvenient Truth pages 114-115

http://www.economist.com/node/4293198

Limits of an Economists Policy Tool Kit

Tim Worstall on the ASI Blog looks at the robust economic tools that are available to control externalities. Here I enlarge on a blog comment looking the limits of these tools in combating climate change.

Although economic solutions may be “hugely cheaper than the sort of command and control systems”, that does not mean they are a solution in every circumstance. In the area of climate change mitigation there are four practical areas where such solutions may have higher costs than the original problem.

  1. The economic policy is applied too far. The benefit to cost ratios will fall the greater the desired change. A 1% reduction in CO2 can be achieved, ceteris paribus, by economic solutions at a benefit to cost ratio of much greater than 1. The costs will rise exponentially after that, so for a given state of technology, the ratio will quickly reduce to less than one. This is the implication of Richard Tol’s 2010 paper “An Analysis of Mitigation as a Response to Climate Change” (2.5MB pdf). Looking at various scenarios, reducing the total amount spent on climate change mitigation from $2.5 trillion to a twentieth of the size increases the benefit to cost ratio from 1/100 to 3/2. I try to graph this here.
  2. Any Cap and trade or Carbon taxes will not be implemented in their purest form. Public Choice theory (or practical examples) will predict that special interest groups will seek to maximize their returns. Those businesses that will be harmed will seek to reduce the effectiveness. Those who can make easy gains (and thus have permits to sell) along with any potential administrators of the scheme will be keen to promote it. There is a long policy chain linking the pure theory and the final outcomes. These various levels of policy formulation and implementation diminish the benefit / cost ratio as I attempt to outline here.
  3. Scheme avoidance. For either a carbon tax or a carbon trading scheme, if there is competition from those outside the area of the scheme that is not proportionately shared by all emitters, then those facing the competition will have the gravest effect on their business. For instance both the steel industry and fossil-fuel power stations are huge CO2 emitters. The European steel firm cannot pass on the cost of the permits to its customers, as it is competing with firms in emerging economies with little or no carbon-trading. A British coal or oil power station does not have this competition, and its main competition comes from the more expensive nuclear power stations, the less reliable wind and the finite hydro-power stations. In the short-term it can pass on the costs. Protectionism is not a solution as it imposes extra costs.
  4. The more encompassing a cap and trade scheme, the greater the number of participants and the complexity. The greater of severity of the scheme, the greater the potential economic gains and losses. Combine these two areas and you create large potential gains from out-right corruption, or engineering biases through the political system, or having unidentified inefficiencies.

     

    The economic tools might be quite powerful and robust, but put into the hands of inexpert users can create a lot of harm. A bit like a hot-hatch in the hands of 17-year-old trying to impress his mates on a night out.

Climate Change in Perspective – Part 2 of 4 – The Mitigation Curve

 

The previous posting developed a simple graph showing the consensus case for climate change mitigation. This posting looks at the policy arguments, suggesting a huge gap between what is believed to be theoretically possible and what may be realistically achieved. The conclusion is stark. Mitigation policy optimization requires a political process that cannot deliver a result that will leave the world better for future generations.

The Mitigation Cost Curve

The previous posting presented in graphical form the consensus argument (UN IPCC & Stern) for stabilizing CO2 at around double the pre-industrial level, along with stabilizing other greenhouse gas emissions. That is that the costs of constraining the growth in levels of CO2 – are much less than the costs of allowing greenhouse gases temperature rises to go unchecked. Mitigation is essentially a cost minimization strategy with the Stern Review claims the benefits outweigh the costs 5 to 20 times. To put this into context, the Review states that the expected mean costs of mitigation will be annually 1% of annual global product (GWP). The costs of the actual climate change impact could be 5% of GDP or more.

The Prudent approach from this graph is to aim for point P. That is not the absolute minimum costs, but still much lower cost than the likely costs of doing nothing.

What is important to note is that the policy is not to reduce CO2 levels from the current levels of around 380ppm, but to stabilize the growth in emissions. This growth in emissions will come from the emerging economies, in particular from China where emissions per capita have recently been growing by 12% a year. The OECD countries have had largely static emissions per capita, and the population is very slow growing as well.

To turn theory into successful stabilization of CO2 at 550 to 600ppm, requires quite a extended process. I have attempted to break down this process into a flow chart showing the major steps. Next to each step is an arrow suggesting the direction the curve will move if the process is less than perfect.

 

The graph below shows the impact on the mitigation curve of a movement in the arrows.

A movement to the right will shift the curve from M to M’. This is when the marginal costs increase. A movement upwards will shift the curve from M to M”. This is when costs are incurred that totally ineffective in influencing on CO2 levels. Finally there are policy shifts upwards and to the right, from M to M”’, which is a combination of higher marginal costs and ineffective elements.

Looking at the issues in turn.

Economic Theory

I will assume that the shape and position of the curve is correct. That is, there is a set of policies or actions in the real world that if applied will achieve the outcomes desired. However, these have to be discovered. Some low-cost constraints will be quite easy to discover. Others might be more difficult, relying on estimates from self-interested parties. The optimal policies will not be given for long periods, but could change over time with relative costs and technological advances. For instance, a technological breakthrough enabling much cheaper and compact batteries could transform the viability of electric cars. Therefore the switch from gasoline and diesel could be achieved with little or no subsidies.

A second assumption is that although the right economic policies will cost money, the optimal policies will have absolutely no impact on economic growth. This is a crucial assumption of the Stern Review. The policy costs will amount to around 1% of GDP at the end of the century, against costs of around 5% of GDP of climate change impacts if nothing is done. However, if growth rates are reduced by just 0.1% then in ninety years output will be over 9% lower. It is quite conceivable that a drastic change in climate policy would reduce China’s growth rate by 0.5%. By 2100 this would mean output was a full 35% lower than without the policy change. If growth by then has slowed to 3% per annum, living standards would lag 25 years, or a generation, behind where they would have been. Even if the 0.5% growth reduction is for just the first 40 years, output is still 17% lower. There may be a preference of trading a 9% lower living standards with certainty, to possible suffering from the harmful and random effects that will costAny policy that fails to recognize this

Equity

A simplistic analysis would take into account the actual costs. The cheapest ways to constrain growth in emissions is to impose a uniform policy globally. A country like Ethiopia, for instance, has nominal GDP per capita of less than 1% of the OECD average ($330 against $39473) according to World Bank Data. The real impact of a uniform carbon tax will be disproportionately felt by the poorest. The UNIPCC and Stern recognize this, but have not made an adequate provision allowance. The proposals are for the rich countries bear the overwhelming burden of the constraint in emissions and for monetary transfers to enable the poorest to grow economically without increasing their CO2 emissions. Stern recommends that the rich countries reduce their emissions by 80% per capita by 2050. However, this split will not be totally equitable. Within countries there are large inequalities in income and wealth. For instance, the richest 10% in Brazil have far better life styles than the poorest 10% in the United States. Any split between countries will leave many of the rich and powerful untouched by the policies, whilst leaving the poor in the OECD countries worse off.

Policy Identification

There are a number of possible tools to achieve a cost effective containment of CO2 growth. These include Cap and Trade; Carbon Taxes; encouraging technological development; carbon sequestration; building (or regulating the building of) new carbon-neutral power stations; and promoting energy saving through subsidies and regulation. Minimizing the costs and maximising the effectiveness of this containment requires optimizing these alternatives in terms of extent, combination and timeliness. As we do not know when to use each of these in terms of time and place, there needs to be learning through experience. When policies or initiatives are not producing results, there needs to be quick and decisive actions in constraining, changing or abandonment. Yet these decisive decisions need to be taken in the context of often only vaguely perceiving, even retrospectively, whether we are taking the best course of actions. Are we pursuing the right sort of alternative power supply? Is funding for our favoured form of future technology the correct one? If that technological preference is broadly the best are we favouring the best approach, or disregarding a far more efficient alternative? Are we applying Cap and Trade too far, or is the design of the policy inappropriate to achieve optimal result? Are any carbon taxes delivering reductions in CO2 with our cost constraints?

If we fail to optimize then policies like Cap and Trade will generate marginal costs much higher than planned. The curve shifts to the right. If the research for new low-cost carbon neutral energy consumption fails, then the curve shifts upward as we waste money. So overall, sub-optimal policy choice will shift the curve upwards and to the right.

International Negotiation

Climate change policies need to be spread broadly to be effective. If major countries are excluded, then the burden of constraint on the others will be that much greater. Yet mitigation policy is to inflict some costs now to avoid much greater costs in two, five or twenty generations down in the future. To get

  • Overstate the urgency and the extent of the problem.
  • Understate or fudge the immediate cost implications.
  • Alienate any who raise the slightest question about the efficacy of such agreements. There are plenty of NGOs to do this.
  • Understate the alternatives.
  • Provide a world stage for the leaders, including those would normally be ostracized. (Such as here and here).
  • Leave aside the implementation problems.

 

International Polices & Targets

The fudging is likely to affect the final policy. Nation states do not accept strict targets within cost constraint, with punishments meted out to those that fail. They will not relinquish part of their sovereignty and possibly their economic growth easily. But the poorer ones, with promises of cash to help them out, will be enthusiastic. Therefore any final agreement will load costs on those keenest on the policy, and plenty of loop-holes to allow those with other priorities, or those with a weak political grasp on power, to fudge. This does not have to be a permanent fudge

National Policies

There will be a number of different approaches. Cutting or CO2 levels or constraining the growth requires long-term policies, with short-term plaudits. In Britain’s case the implementation CO2 reduction target of 80% gained much praise in the international community. But the costs are mostly left to successor governments. The favoured form of green energy is easy to promote, but the rising energy costs and the prospect of future energy blackouts on windless and frost winter nights will be blamed on later governments.

In the short-term there may be some job benefits and subsidies. Promoting Cap and Trade will create jobs for those administering the scheme and large profits for those who can easily reduce their emissions and sell on the carbon credits. There are also jobs to be had in climate research and the development of new technologies.

There is also political benefit to be had from providing a reason to raise taxes. In Britain the green taxes have mostly been loaded onto the motorist. Yet such a policy is likely to have very little marginal impact on CO2 emissions for precisely them same reason that it is a very good way of raising extra tax revenue – demand is very inelastic with respect to price. It is only with viable and cost-effective substitutes (electric to replace the internal combustion engine) that we will see a switch.

The nature of deriving and maintaining political census will be to have little project management from the top down. Therefore, there will be initiatives that were sub-optimal to start with and less effective moving forward. There will be little focus on research, but plenty on public relations. Rather than maximizing effectiveness and minimizing costs, there will be other, self-justifying matrices developed. The biggest justification will be international obligations.

Policy Outcomes and Policy Feedbacks

There may be plenty of policy and much more rhetoric, but the policy outcomes are likely to be feeble at great cost. However, to obtain and maintain the optimal policies, there must be a feedback process. This feedback needs to influence every level, including the economic theory as shown below.

This needs to be a continual and dynamic process. For this to happen there needs to be objective and honest analysis of results to better refine and amend our view of the optimal policies at both national and international level. The size of the arrows indicates my personal assessment of the importance of each aspect. The biggest feedback is in the continuous altering of national policies, to bring into line with optimal policies. But there must be an ability to easily change course at all levels. This requires not just openness and flexibility, but surrender of policy in this area to an international body. But countries will not easily agree to shoulder more of the burden, or lose subsidies. They will not easily be told that they must change course. Vested interests in the environmental matters do not have a unique humility and objectivity that is absent in other groups. Neither will politicians easily admit that they have made errors of judgment, or that there are areas where they have neither the competency nor power to act upon.

Conclusion

The process of implementing an optimal policy, requires an openness and flexibility that does not exist. The whole policy process works against this. Politics is about negotiation and compromise between competing interests. It is about jostling for power, rewarding supporters and undermining the influence of opponents. It is also about other priorities as well, which in the short-term are more pressing. In the section on economic theory we I showed how a small reduction in economic growth can more than offset the worst consequences of the policy.

The problem now becomes two-fold.

  1. Guaranteeing how the revised optimal policy P”’ will be less costly than doing nothing and letting the total climate impact costs reach CCImax.
  2. Justifying to the developed nations why they should be significantly worse off than doing nothing.

In the next posting I will look at the validity of the estimation of the costs of climate change.

 

Climate Change Policy in Perspective – Part 1 of 4

Introduction

In the Climate Change policy there lacks a simple framework to assess the policy. There is a large consensus of scientists telling us that a large rise in global temperature will occur, and that the only policy in offer is to constrain the growth in greenhouse gas emissions globally. Presented below is a simple graphical model to encapsulate the central policy arguments of the UNIPCC and the 2006 Stern Review. That is, there are policies that can be implemented that though costly, will be an order of magnitude less than the disastrous consequences of letting global temperatures rise unchecked. These consequences will not only affect the human race and for the rest of the planet. Use of this model allows analysis of the relative importance of various issues in devising policy and implementing global policies needed to achieve the consensus objectives.

The starting point for the analysis is to assume that two propositions are correct. First, that if we do nothing in two centuries global average temperatures will be at 5-10oC warmer than at present. Second, that there exists in theory a set of policies that will comfortably constrain CO2 emissions to prevent the atmospheric CO2 levels going above 600ppm and thus preventing global temperatures rising more than 2oC above current levels. I also start from a moral basis for policy that few will disagree with. Political action should only be taken if there is a reasonable expectation that the resulting outcome be a better situation than if no action was taken at all. The treatment, if not a full cure, should at least be expected to leave the patient in a better condition than without treatment. This, I would claim, is an absolute minimum requirement for action, as it can still leave moral dilemmas. For instance, if the policies cause the deaths of a million people, but prevents a 10% chance of 11 million people dying, then it is justified on this rule.

There are four parts to this explanation, which I will divide into separate blog postings. Part one, below, develops a graph replicating the standard consensus argument of the overwhelming consensus case for action. Part two addresses the issues with policy, relating this through movements in the policy curve. Part three evaluates the impacts of that warming, showing how changing the analysis of risk and time can radically change our perception of the costs. Part four brings these together for an overall conclusion, with indications of areas for further research.

The basis of the model is that global warming will create costly consequences, both for the human race and for the rest of the planet. Proposals to resolve this we also be costly. It is therefore to economics that we must turn to understand the issue from the top-down.

Part One – The Consensus Argument for Mitigation in Graphical Form

The following aims to replicate the mainstream consensus case of catastrophic climate change and the mitigation policies deemed necessary to combat it.

The Costly Consequences of Global Warming

We are already seeing some of the minor consequences of increasing greenhouse gases through disrupted climate. But the scientists tell us this will be as nothing compared to what will happen if greenhouse gases continue to increase unchecked for the next century or more. The large increases in temperature – around 4oC to 7oC or higher – would cause massive disruption to the climate system. It is fair to say that as global temperatures increase, these costs would increase exponentially. These “costs” are in the broadest sense. They are not just the human costs of property damage, failed harvests, population migrations and land being submerged by rising seas. These include the damage to the eco-systems and species extinction. Graphically it would look something like this.

There is no scale on this graph. It cannot be predicted how far temperatures will increase if the growth in anthropogenic greenhouse gas emissions are not curtailed, nor at what point the catastrophic consequences will set in. What is essential to recognize is that allowing temperatures to increase will be many times worse than stabilizing that increase at lower temperatures. Without a check, it is near certain that the planet’s temperatures will climb to the top end of the graph with the level of costs predicted.

The Costs of Mitigation

The solution to the problem of climate change is to remove the cause of that change. To remove anthropogenic greenhouse gas emissions totally would be hugely costly. The economic wealth of the rich countries is based upon fossil fuel energy consumption. Stop the energy consumption and you not only stop economic growth, but potentially cause economic collapse. Instead, there must be a rapid but orderly switch in energy use to clean energy sources. This may actually spur economic output as the switch is made, but is more likely to be costly, but have at most a negligible but negative impact on economic growth. Similarly, in the emerging BRIC (Brazil, Russia, India & China) economies, satisfying their rapidly-rising energy demands from carbon-neutral sources need not constrain their economic growth. Indeed for China and India real living standard could rise more rapidly, as the cities suffer less from the choking effects of the pollution from burning fossil fuels. How will these costs map out? To stop climate change now and reverse the impacts would be hugely costly. Even to stabilize emissions at current levels globally would be hugely expensive. In particular with China and India increasing their emission levels rapidly, to stabilize globally would require huge cuts elsewhere. Far less costly would be to stabilize at some higher level than at present.

The shape of the cost of mitigation graph can be represented like this.

The costs of doing little are very small, whilst those of stopping global warming in its tracks, or even reversing the warming that has already occurred, are huge. We are able to choose the policy to pursue.

The Combined Costs of Climate Change and Mitigation

Climate change will incur costs of CCI. Combating climate change involves mitigation costs M. For any temperature that stabilization is reached, the total costs TC will be CCI+M.

The question as to which level of policy to pursue now becomes clearer. A highly aggressive policy could be just as damaging as doing nothing. However, we are left with a large middle ground. By stabilizing the temperature increase from pre-industrial levels at around 2-3oC is generally thought to be where this middle ground lies. However, as there is some uncertainty as to what average temperature the worst effects of climate change start to come into play, a prudent policy is to aim at stabilization at the lower end of the temperature range. Prudent policy is at around point P.

Climate Change in Perspective Part 2 – The Mitigation Curve

Interpreters of Interpreters to the nth degree

James Delingpole has attracted some ire for saying he is an “interpreter of interpreters”. I commented on Bishop Hill’s Blog

Wasn’t the original hockey stick paper an “interpreter of interpretations”? That is it gathered together a selection of data studies of past climate proxies and tried to give an interpretation – with some elements of bias. The IPCC, liking this paper’s conclusion then interpreted this as being definitive, despite its conclusions being contrary to many other studies. Learned societies, not least the Royal Society then interpret this as being the final argument, being the opinion of 2500 leading scientists. With learned pronouncements from the leading scientific organizations, the BBC, Guardian etc interprets that the science is settled, so the subject is closed. James Delingpole, in putting himself as a second tier interpreter, might be over-reaching himself in the ranking. However, he actually considers the arguments, unlike those who rely on multi-layered interpretations.

But more important than lowly a person is in the interpretation chain, is the reliability of that opinion compared with the ultimate reality that we are interpreting. Scientific enquiry must positively endeavour to free itself from biases. That was part of Popper’s injunction to make hypotheses capable of falsification. But with climate science

In the Hockey Stick Studies you will find (See “The Hockey Stick Illusion”)

  • Positive efforts to choose the limited number of data interpretations that suite the conclusion desired (with some having their own strong biases)
  • Giving these favourable studies an undue statistical bias against those that come to no, or contrary, conclusions.
  • Choosing the statistical tests that give favourable results.
  • A clique of people providing similar results through using similar methods around a core group of papers.
  • Peer review being used as a means of peer pressure in promoting favourable comments and papers, whilst obstructing contrary views.

The IPCC has been set up to act as a biased interpreter. It is there to argue the case for action on global warming climate change, not to arrive at a balanced opinion on the science.

The bias is upon interpretation in one direction is at every level of science and opinion.

  • Funding of research is based on conformity.
  • Pressure groups exist to “out” the non-conformists, like the McCarthyists of two generations ago.
  • There is also pressure on scientific organizations to declare unequivocal support.
  • There is severe censure and libelous statements made against any who dissent.

     

So, however much Delingpole may provide interpretations of interpretations without reading all the original literature, his opinions might be more valuable than those prestigious scientists who conform.


 

Bishop Hill and Comment Moderation

BishopHill has been having problems with comment moderation.

The comments are getting completely out of hand. Once again, please do not call people names. Stay on topic. I’m simply snipping whole comments now, because I do not have time to edit our people’s poor behaviour.

 

Perhaps if people would have more courtesy towards their opponents they would start to understand the opposing arguments. Then they may contrast it with their own and moderate their views.

Dogmatically assuming that your side is right and by implication that the opposition are either betrays our own fallibility. It is only by demonstrating an overwhelming and coherent case that one can legitimately use this in current debates without appearing out of touch with reality.

We must remember that the burden of presenting the case is on the side those who say we must act to prevent catastrophic global warming
climate change climate disruption. That just not just mean showing the case for the science is, on balance, correct. Simplified it means

First to demonstrate that CO2 and other greenhouse gases can cause a bit of warming, and how much
AND THEN
Show that this small temperature rise will lead to an increase in water vapour at high level to cause massive positive feedbacks (despite negative feedbacks being the norm in science)
AND THEN
Show that this warming will be of massive net harm to humanity and the planet (and that neither human society, nor the other creatures, nor plants will be able to adapt – despite much evidence to the contrary).
AND THEN
Show that mitigation policies – carbon taxes, cap n’ trade, subsidies to “clean” energy – will reduce greenhouse gases in THEORY, so long as all countries participate.
AND THEN
Show that when most of the emerging nations, particularly China and India, do nothing to curb emissions, that curbing emissions in theory will still work for the OECD countries.
AND THEN
Show that the governments pursuing the policies are capable of delivering the theoretical results. That is only taking on policies that meet the cost criteria laid down by the IPCC or Stern. Then project managing in fine detail and quickly ending failing projects.

As well as making the case for each of Forecast, Consequences, Policy theory and policy Implementation (FCPI), it must be combined together to show that, on balance, there is an expectation that the policy outcome will be better than if nothing was done. I believe that it is only on the basis of extreme and untenable assumptions in ALL of these four areas that the current policies can be justified.

My concern is that the “consensus” quickly grasps onto obscure bits of detail, or fine points of theory, or relies on prestige and opinion when challanged. Alternatively they question the motives of the critics.


Strong Deficit Reduction is the Prudent Approach

Today the last quarter’s economic growth estimate was published. Should the shrinkage of the economy of 0.5% be replicated in the current quarter, we will have a double-dip recession. New shadow chancellor Ed Balls and others will be quick to say that the cuts are too steep and should be reigned in. Even the consensus of the economists thing this is a bad thing.

My belief is out of kilter with the consensus. The primary responsibility of Government is to avert the biggest risks over smoothing out fluctuations. As a result of the last Labour government and the recession, the British government has a huge structural deficit. It means that if there are shocks to the economy before that deficit eliminated, then the Government could face the stark choice of slashing expenditure and raising taxes on the downturn, or default on its debt. This could occur if more European nations need bailouts. It could also occur if the Government loses the political impetus and resorts to higher spending. Or it could occur if, like the last Labour government, the decisions are put off until the conditions are correct all the way through the current weak economic cycle.

Remember that the deficit problem is so large because Labour built up a structural deficit in the good years, and ducked doing anything about it. Then they ducked tackling the deficit earlier as a general election loomed and they had a leader who did not like to make tough decisions. They put spin before the good of the country and now we are paying the price.

If they a better model of the economy than anyone else, and a policy that does not have the contingent risks, then they should tell us. But they had no gumption to make the right and prudent decisions when in government. No gumption to own up now to their wrong decisions. They will have no gumption to enact the corrective policies if they were back in government.

The current Government may need to make even bigger cuts now, not less. The reason is that most of the deficit reduction relies on strong economic growth assumptions

See my earlier blog postings on the issue

The Impact of Labour on the Current Crisis

The Economic Legacy of Labour – A Summary for the Tories

Boris Johnson spoils a good polemic on Fuel Costs

Boris Johnson is in great form in today’s Telegraph on the escalating cost of fuel. However, he is wide of the mark on the costs side.

The cost of the fuel for deliveries does not impact not through greatly price of goods in the shops. Our distribution systems are fairly efficient – though the low volumes to small shops proportionately big impact than deliveries to Tescos or Sainsburys.

It is on the consumer that this pays a larger impact, but less than you might think. Take somebody with a 1995 petrol Toyota Previa living in London and doing 5000 miles per year at around 18mpg. That is 278 gallons per annum, or 1264 litres. With petrol at £1.29 per litre, that is £1630 per year. That seems a lot. But add in £1000+ for maintenance and the MOT, £1000+ for insurance (if a VIP it gets quite steep), £200 tax, and £200 for depreciation, then it is not a huge cost. Trading in for a more modern monster could make out jolly Mayor worse off. Spending £15,000 on a secondhand Galaxy Diesel will save on fuel, the occasional big maintenance bills, maybe nothing on the insurance, but will cost £2000+ more on depreciation.

Consider also

The electric revolution is happening, but it will not be overnight. The up-front cost of the vehicles remains high, and there is still no electric people carrier. For the foreseeable future, millions of people will have to invest not just in a car but in an overpriced lagoon of fossil fuel.

The reason that the costs of fuelling electric cars are so much cheaper is that the only taxes for domestic customers are the additional 5% VAT.  The excise duty and petrol, plus the 20% VAT add more than 100% to the cost. They may be more fuel efficient because they are so much lighter. Furthermore, a new electric car can only have a comparable cost to an efficient diesel with huge subsidies. If you look at the true cost per mile excluding tax and subsidies, then it would be twice the cost. And the cost distinction will get worse not better. The chemicals in the batteries are scarce, so the phenomenal push for electric cars will push up the costs of the chemicals exponentially. And this government does not help – the ConLib Coalition one. The government’s plans for new “alternative” electricity supplies will push up real costs by at least 30% in coming years and even more when it cannot keep up with the extra demand.

       The worst part is the government finances. When Mayor Johnson gets his electric people carrier, he will deny his government £800 a year in taxes, have a subsidy of £5,000 from the worse off to help pay for it and still be out of pocket. Oh – and the people carrier will be more Meriva than Previa in size.

Extremist Global Warming Paper Taken Down

The Guardian reports that a paper that report predicting that global temperatures would rise by 2.4oC or more by 2020, has now been dropped from the
Eurekalert!, a news service operated by the American Association for the Advancement of Science (AAAS). It was checked by Osvaldo Canziani, Nobel-prize winner and a former co-chair of the UNIPCC.

Problems with the report are

Expert Review

The report was meant to have been checked by Canziani. At a minimum that means that the reports major prediction is validated. As it was based upon the UNIPCC climate assessment report of 2007, then any figures that were substantially out of line should have been carefully justified. Instead, the author, Ms Liliana Hisas, says that instead of withdrawing the report

We are just going to go ahead with it. I don’t have a choice now. The scientist I have been working with checked everything and according to him it’s not wrong.

Therefore, the report is correct because a distinguished person put their name to it. However, they appear not have done basic checks, so the validation process has failed. Very much like the peer review

Ignoring Adaptation

The claim that the 900 million people extra people by 2020 will go hungry relies on some ignoring some basic adaptive facts.

  1. Changes in climate can be partly met by changes in crops. A slightly warmer climate in Europe can be met be changes in crop varieties.
  2. One of the countries with lower yields across crop varieties is Brazil. Having visited Brazil a number of times, I have observed vast tracts of farm land that are underutilized. I have picked oranges from trees that act as wind breaks, and where most of the fruit rots. I have sampled star fruit and large avocados from trees where the fruit is never commercially harvested. Similarly for large papaya, watermelons, bananas and cassava. Increased food prices have been, and will continue to increase outputs. It is not just in Brazil, but in the Russian Steppes, much of Africa and the plains of Canada that agricultural productivity can be increased.
  3. Low productivity is more often due to poor economic policies than natural factors. In the extreme, the greatest famines of the twentieth century are due to the collectivization of agriculture. Even the lesser famine of Ethiopia in 1984, where “only” 500,000 died was partly due to the collectivization policies of the communist government, and the need to feed the city populations where disaffection was centred.

Ignoring the Burden of Government

The claim that the 900 million people extra people by 2020 will go hungry relies not only on the rapid warming claim, but also upon no change in government policy. World food prices have doubled in the last few years due to vast areas being given over to growing fuel for cars. Repealing the subsidies and ethanol content regulations in fuel will release vast acres for food production. Back to Brazil, there are thousands of square miles given over to sugar cane production for ethanol production. Growing food instead in Brazil would probably close half the global gap. In Europe, where the less productive sugar beet is grown for ethanol (or USA where maize is used), then switch to food production could have similar dramatic impacts on food production. A lesser increase in productivity could be made from abandoning organic farming for more intensive varieties. Most studies have shown no difference in quality, or health effects with artificially-fertilized production. Also, by adapting more GM crops, which can vastly increase productivity and provide greater resistance to extreme weather.

Extreme position also requires Extreme Climate Disruption

The claim that the 900 million people extra people by 2020 will go hungry relies is based not only on the rapid warming claim, but also that this results in extreme weather and changed climate patterns. Even if we accept that the 2.4oC+ of warming is likely, the forecast changes in the weather as a result are speculative. Any mitigation policy should cost these as a risk, not as a certainty. The likely cost therefore should be weighted downwards by a risk factor.

Alarmist Policies Discriminate Against the Poor

The report is from a group trying to justify more intensive mitigation policies, whilst believing “in the need for a more equitable society, especially for those living under underprivileged circumstances.” That means that they should consider whether the policies will leave the poor in a worse position than if nothing was done at all. But the main policies of Cap-n-Trade or a Carbon Tax are highly regressive. It is those on the margin who will have to give up their cars and central heating, or hundreds of millions in developing countries who will be denied the opportunities to every obtain what is viewed as the staples of life in Europe. To work, both must impose economic pain, and that pain is greatest for the poor. Furthermore, if policies are imposed that are ineffective in controlling CO2, (such as windmills) then society as a whole will be made poorer for no benefit.

 

The Universal Ecological Fund (Fundación Ecológica Universal FEU-US) has produced an extremist report in more ways than just having a silly forecast. In failing to consider the wider adaptive ability of the human race, it is overstates both the likely consequences, whilst understating the harm to the poor of the policies it advocates. The author states

“Scientific information is usually not easy to understand. Communicating climate change is often also complicated. As a result, the understanding of climate change has led to misconceptions.”

 

A report that spreads undue alarmism is the enemy of true science, and will entrench the misconceptions.

 

 

Donna Laframboise at

Why China will not Constrain it’s CO2 Emissions

There is an interesting and simple explanation of why it is not possible for the West to emulate China’s growth rates at the ASI Blog. This is basically Robert Solow’s exogenous growth model – that is explained graphically at Wikipedia. China is increasing it’s output per capita by increasing it’s capital per worker on by moving up the current technological production frontier. They are still on the lower part of the curve, so the returns to substituting capital goods for labour are quite large. The western countries are at the top end, so returns can only come from moving to a higher technological boundary.

This does not explain all of the phenomenally high growth rates of China against the West. A clue is that it is not the traditional manufacturing industries that China is entering, such as steel, shipbuilding and textiles. It is also the production of the latest high-tech gadgets invented in the West. The reason is that the time taken in turning prototype to mass production is much quicker in China, due to a lack of regulations and statutory planning consents. Yet most of the profits from the last innovations come before anyone can replicate them. A saving of a few months or weeks for the latest mobile phone or digital camera can mean the difference between millions sold at very high margin and tens of thousands sold at a much lower margin.

China’s high growth rates are also accompanied by a rapid increase in energy production. Much of this comes from coal and oil. The advantage of fossil fuel over clean energy is primarily one of cost, but there is time and convenience as well. Coal is based on well-established technologies and China has large reserves of its own, as well as cheap and reliable supplies from elsewhere. Oil-fired power stations are easy to turn on and off. Against this nuclear power stations take a long time to build (and longer to de-commission), along with higher unit costs. Wind power and solar power are highly expensive, and have an extreme mismatch between the timing of the power supply and power demand. Hydro is limited in availability, takes a long time to build, and (like the Three Gorges or the Itaipu dams) cause environmental damage and the displacement of large numbers of people. To constrain China’s growth in energy will create a slowing down in the ability of China’s entrepreneurs to create new output, and therefore constrain a major advantage of manufacturing in China. The Chinese officials will attend the Climate Summits, smile politely and undermine any binding global commission agreements. It is not out of obstinacy that they do it. Rather they understand that the potential costs of constraint far outweigh any benefits.