Home > Economics - General, Environment > Prices and quantities in climate change

Prices and quantities in climate change

May 29th, 2006

My piece in last Thursday’s Fin (over the fold) was on the economics of climate change. Paul Krugman in the NYT was writing on the same topic.

Pricing a change of climate

Prices and quantities are the bedrock of economics, yet confusion about the roles they play, and the way they are determined in markets, continues to bedevil government policy. This is obvious in relation to the water crisis, where continued resistance to any serious role for prices has brought the National Water Initiative to a standstill Water rules won’t wash AFR 20/4/06

There are, at least, some signs that the Howard government, and particularly the Parliamentary Secretary to the Prime Minister, Malcolm Turnbull, are ready to move in the right direction on water. But on the even more important issue of climate change, the government’s resistance to an appropriate role for prices seems to be hardening.

With the recent release by the US government of a draft of the Fourth Assessment Report of the International Panel on Climate Change, it is apparent that scientific debate over the issue has come to a firm conclusion that human activity is causing damaging climate change. Unfortunately, the economic debate is nowhere near as advanced.

Understanding of the issues has not helped by the recent contributions of the government’s leading research agency in this area, the Australian Bureau of Agricultural and Resource Economics. Writing in AFR recently, ABARE’s Brian Fisher and Anna Matysek argued against carbon taxes and similar policies on the grounds that studies have shown ‘early action would be more costly than adopting emission pathways with lower near-term mitigation’. Greenhouse quick fixes sure to backfire, AFR 1/5/06.

This argument gets the roles of prices and quantities precisely backwards. If short-term action is costly, this will be reflected in the pattern of adjustment to an increase in prices. The adjustment will be slow to begin with, and more rapid as old capital stock is scrapped and new, less emissions-intensive technology is developed in response to the price change.

But the fact that emissions adjust slowly to price changes is not a reason for delaying those changes; precisely the reverse. The fact that responses will be slow means that the longer we delay getting prices right, the greater the buildup of emissions in the atmosphere and the greater the eventual cost.

Much of the ABARE analysis, and of the rhetoric surrounding the Asia-Pacific Climate Pact, seems to be premised on the assumption that the development and adoption of new technology will resolve the problem of excessive emissions. But as Brett Janissen of Allen Consulting observes ‘what is going to stimulate the development and uptake of these technologies? Rhetoric, tax dollars and an army of bureaucrats – or opportunities to profit from emission reductions, backed up by a carbon price?’ (It’s time to adjust to the realities of climate change, AFR 19/5/06).

A more sensible observation based on the fact that quantities are going to adjust slowly to any price change is that there is little benefit in raising the price of emissions rapidly. Much the same adjustment can be achieved by a gradual increase in carbon prices, based on a preannounced commitment. But again, if prices are to be increased gradually rather than rapidly, it is necessary to start sooner rather than later.

The other central lesson of economics is that prices and quantities are two sides of the same coin. Under conditions of full information, it does not matter whether governments specify a gradually declining path for aggregate emissions and let a market for emissions permits determine the corresponding equilibrium price or impose a steadily increasing carbon tax sufficient to reduce emissions to a sustainable level.

The first approach is that represented by the Kyoto protocol, which combines modest initial quantitative targets with the establishment of markets for emissions rights. These markets are now in existence, and despite some teething problems, appear likely to be firmly established in the next few years.

The second approach is that advocated by Australian economist Warwick McKibbin and his American colleague Peter Wilcoxen. It has the advantage of being more transparent. In particular, it is easy to ensure that the selected price path incurs only modest social and economic costs. So far, however, this proposal has failed to win much political support. Signatories to the Kyoto Protocol have argued that, whatever its limitations, Kyoto is, in effect, the only game in town.

The members of the Asia-Pacific Climate Pact have the opportunity to disprove this claim by adopting a price-based plan to reduce emissions gradually. So far, unfortunately, they have preferred to rely on wishful thinking.

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  1. Hans Erren
    May 29th, 2006 at 17:35 | #1

    Looking at the SRES scenarios, the major output of projected co2 emissions is from emerging economies. Even if the developed wold stops emitting this only reduces the mid century emissions with 25%. Any idea how to reduce emission growth for the emerging economies?

  2. Tom Davies
    May 29th, 2006 at 17:35 | #2

    I think you meant to say ‘The first approach is that represented by the Kyoto protocol…’

  3. Frankis
    May 29th, 2006 at 19:26 | #3

    Let our coal producers sell as much coal to others as they can at least for the time being but (disgracefully) ABARE doesn’t ever express an opinion that’s not predicated on the primacy of coal interests and designed to further them at their competitors’ expense. Its entire outlook is coal-coloured. Corrupted by a government that made a flagrant shill for coal (Warwick Parer) its Minister for Resources and appointed a Chief Scientist who’s owned by Rio Tinto this is hardly surprising, but understanding the reasons for its gutlessness just doesn’t render ABARE’s nonperformance any less appalling. They don’t get much right, and they don’t make the simple data available the way their counterparts in the US do – I’d like the chance to shake some sense into them, actually. It’d take a few years.

  4. May 29th, 2006 at 19:45 | #4

    Hans

    Take a look at my “Sensible Climate Policy” paper at the Brookings website
    http://www.brookings.edu/views/papers/200502mckibbin.htm
    for an alternative to Kyoto (or extension post 2012) that deals directly with developing countries and the critical difference between short term prices and long term quantity targets.

    Warwick

  5. jquiggin
    May 29th, 2006 at 22:21 | #5

    “First” fixed now, thanks TD.

  6. May 29th, 2006 at 22:41 | #6

    The atmosphere used to be one giant big commons that belonged to everybody. Now they are going to carve it up and allocate tradable rights to store stuff there. In effect it becomes one more piece of real estate. Capitalism seems to be swallowing up even the sky. Today fresh air is all about money. Soon only the rich will be able to afford to breath. Oh wow is me.

    The other central lesson of economics is that prices and quantities are two sides of the same coin.

    The “price” of a good is measured using a “quantity” of currency. And the “price” of currency is measured using a “quantity” of goods. So your point about a “coin” having two sides is pretty spot on?

  7. May 30th, 2006 at 07:46 | #7

    It is a deliciious irony to see a social democrat economist lecuture a free-enterprise conservative government on the virtues of the price system as a means of allocating scarse resources.

    But then Howard has always been something of a closet socialist.

  8. Dogz
    May 30th, 2006 at 08:15 | #8

    “Under conditions of full information, it does not matter whether governments specify a gradually declining path for aggregate emissions and let a market for emissions permits determine the corresponding equilibrium price or impose a steadily increasing carbon tax sufficient to reduce emissions to a sustainable level.”

    Maybe so from a theoretical point of view. But isn’t there a world of difference in reality? The carbon taxes go directly into government coffers, and hence will be highly susceptible to short-termism in how they are set (eg, what’s to stop the government introducing a “carbon surcharge” when they’re short of cash, just as they introduce the superannuation surcharge?). I would only advocate that approach if the level was set by an independent authority, similar to how the Reserve Bank sets interest rates. But even then, normalizing across countries seems a lot harder with the taxation approach.

  9. May 30th, 2006 at 09:19 | #9

    I’ve had a quick read of the McKibbin proposal.

    Sorry if I missed something obvious, I don’t understand why emission permits are not permitted to be tradeable between countries. If US consumers want to pay me to continue to drive their Hummer H2s and Chevy Suburbans, that sounds good to me.

    Secondly, this seems to me to be getting things the wrong way round. We need to reduce GHG emissions by known (to some level of uncertainty) amounts to achieve the environmental outcomes desired. I would think that it is better to fix the reduction target and let the cost vary around that, rather than fix the cost, and let the amount reduced vary.

  10. Paul Norton
    May 30th, 2006 at 10:01 | #10

    “We need to reduce GHG emissions by known (to some level of uncertainty) amounts to achieve the environmental outcomes desired. I would think that it is better to fix the reduction target and let the cost vary around that, rather than fix the cost, and let the amount reduced vary.”

    Agree. We scientifically determine the parameters of sustainability (in this case the maximum aggregate emissions consistent with the waste assimilative capacity of the carbon cycle, or more realistically a sliding scale of targets for aggregate emissions which will eventually settle at this point) and let the market for emissions permits operate within these limits.

  11. Dogz
    May 30th, 2006 at 10:18 | #11

    Given the uncertainties in what the right target should be, and the long-term delay between any emission changes today and their ultimate effects, just getting a global market mechanism in place is a good first step, even if it only has a small cost and small impact, provided it has a knob with which we can dial up (or down) the targets.

  12. Hermit
    May 30th, 2006 at 13:21 | #12

    I’ve read the McKibbin-Wilcoxen paper and it doesn’t feel politically possible. Big emitters will likely stall on effective action as long as they can do it cheap.
    It reminds me of the pledges of chastity that US teenagers sign but then ignore. When the long term limits start to bite big emitters can then run to governments for a dispensation to save jobs etc. Having said that I’ve no idea of a better plan except perhaps to demonise the bad guys to make it stick.

  13. May 30th, 2006 at 13:24 | #13

    But, Dogz, it seems like it’s the wrong dial. It’s like an amplifier that you adjust by moving the speakers to an appropriate distance from the listener, rather than a volume control.

    I don’t think anybody seriously disputes that any initial step should have a small cost and impact; I’m just unconvinced on my present understanding that the proposal advanced is the right first, second, or final step.

  14. David Michie
    May 30th, 2006 at 18:35 | #14

    QUESTION: Why is selling uranium to China a headline issue, but selling coal to China is a non-issue?

    The single biggest contribution Australia could make to the prevention of global warming is to stop selling coal to China. Of course that will never happen while the Commonwealth is raking in billions in tax dollars from mining companies. The sad truth is, not only is Australia doing nothing about climate change at home, we are actually profiting from climate change by shipping our vast reserves of carbon overseas.

    Australia may or may not come to its senses one day and introduce a carbon tax, but will China? Will India? Can we stop ourselves from shipping our carbon overseas? Does a carbon tax apply to coal exports? It doesn’t matter whether the coal is burnt here or in China it ends up in the same atmosphere.

    Imagine its 2040. Climate change is real, sea-levels are rising, its 45C outside … then explain to your children that Australia supplied China with trillions of tonnes of cheap coal for 40 years, and profited enormously from it.

    I would love to think the future will be different but I can’t see it happening.

  15. Louis Hissink
    May 31st, 2006 at 00:46 | #15

    John

    Your opening sentence ” Prices and quantities are the bedrock of economics, yet confusion about the roles they play, and the way they are determined in markets, continues to bedevil government policy” remains as obtuse as ever.

    Take this statement “This argument gets the roles of prices and quantities precisely backwards. If short-term action is costly, this will be reflected in the pattern of adjustment to an increase in prices.”

    How?

    You seem not to have a clue what prices are.

  16. SJ
    May 31st, 2006 at 01:02 | #16

    You seem not to have a clue what prices are.

    John’s article seemed to make sense to the other people in this thread. But whatever. Are you now claiming superior knowledge of economics now, as well as on supernatural physics? Quite a feat.

  17. Frankis
    May 31st, 2006 at 10:46 | #17

    It’s a fine line between punching above your weight and reeling around like a punch drunk sailor laying gloves on nothing. You almost always fall on the noiser, more clueless side of that line Louis. This morning you’re as usual too obtuse to understand that the Professor is in fact saying something that you yourself would agree with – if only you spent as much time thinking and reflecting as you do chattering. If you don’t understand something and you’d like to have it explained to you, do you think you might be able to manage a less obnoxious manner of asking than you just did?

    A more than normally dense rock-chaser telling an economist “You seem not to have a clue what prices are” is funny for only a short moment, mate.

  18. Dogz
    May 31st, 2006 at 10:58 | #18

    Imagine its 2040. Climate change is real, sea-levels are rising, its 45C outside … then explain to your children that Australia supplied China with trillions of tonnes of cheap coal for 40 years, and profited enormously from it.

    Which is why by 2040 (and hopefully a lot sooner) we need to be suppllying China with thousands of tonnes of very expensive processed Uranium. If you think our children will be pissed off with us over the coal exports, how angry do you think they’ll be if the Greens get their way and all Uranium exports and refinement are banned?

  19. David Michie
    May 31st, 2006 at 17:26 | #19

    Dogz, the Greens are hardly the villians here. If people had listened to Greens 20 years ago about alternative energy and energy conservation, we would be in a much better position today.

    Choosing to go nuclear is going to be extremely difficult politically, but we are running out of options. I don’t think anyone feels 100% comfortable about nuclear energy. Do you? I don’t think anyone can guarantee that uranium mined in Australia won’t fall into the wrong hands. Can you? I think nuclear waste can be managed better these days, and lets face it, there is no country on earth better placed to take the world’s nuclear waste than Australia.

    Our first course of action must be energy conservation, and the only way that is going to happen is by sending a price signal to consumers with a carbon tax. Economic rationalists: Is it rational to price something cheaply that will destroy the planet as we know it?

  20. Dogz
    May 31st, 2006 at 18:25 | #20

    I dispute that we’d be in a better position on anything by listening to the Greens. Cheap and abundant energy has allowed human progress to continue at a rapid pace. Reading the policies of the Greens is like reading the communist manifesto, and we all know how well that worked out in practice.

    I feel 100% comfortable about nuclear energy in the sense that there are already hundreds of operational nuclear reactors worldwide, generating a significant fraction of the world’s electricity.

    Uranium has already been mined in Australia for decades, so again, what’s the fundamental difference in mining more?

    I don’t see that our first course of action must be energy conversation at all. If we can continue to meet demand while reducing C02 then surely we can carry on as we are?

  21. David Michie
    May 31st, 2006 at 21:28 | #21

    If you accept that climate change is imminent, what else can we do right *now* apart from energy conservation?

    You don’t seriously believe we could have nuclear power stations up and running in this country in less than 10 years do you?! The politicians still can’t decide on a site for a second airport in Sydney, do you think they’ll be any faster finding a site for Australia’s first nuclear power station? If you think the NIMBY syndrome is a problem with wind farms, wait till the local yokels hear about the nuke being built in their shire!

    Now I’m not some head-in-the-clouds greenie who thinks we can replace gigawatts of coal-fuelled generating capacity with a few wind farms and some solar panels in the desert. These things help at the margins, but the big reductions in CO2 emissions will come from energy conservation and (hopefully) some breakthrough on carbon sequestration (which like nukes is decades away at best)

    Its clear that we *can’t* continue to meet the energy demands of a growing economy while reducing CO2, and any realistic alternative to burning coal is a long way off. The only solution in the short-term is energy conservation, and the only way you’re going to get the average Aussie to switch off the A/C unit is if it will save them $$$ to do so.

  22. June 1st, 2006 at 00:47 | #22

    Now I’m not some head-in-the-clouds greenie who thinks we can replace gigawatts of coal-fuelled generating capacity with a few wind farms and some solar panels in the desert.

    I think it is reasonably likely that 10-20 years from now Photovoltaics will be economically competetive with fossil fuels. And I’d still like to see Enviromission build their solar tower so we can get some real world operational data.

  23. Dogz
    June 1st, 2006 at 06:59 | #23

    Even if every Aussie switches off their air-conditioners it is going to make almost no difference to global warming. Unless you’re going to get China and India to reduce their energy consumption as they pull themselves out of third-world status, there’s not much the rest of us can do to make a lot of difference.

    So I believe a focus on energy reduction is almost exactly the wrong thing to do: it gives everyone the warm fuzzies (actually, cold fuzzies if we start in the winter) that they’re helping the environment, without actually making a difference. It sends the wrong message.

    The right message is we need *big* CO2-free generation capacity, and we need it now (by “we” I mean the globe).

  24. Ernestine Gross
    June 1st, 2006 at 09:05 | #24

    On prices and quantities.

    Before 1974 US army personnel, stationed in Europe, were observed to heat their rented accommodations during winter much more than the local population. The local population wore indoor winter cloths indoors, the US army personnel wore T-shirts and left windows open. After 1974, the behaviour of US army personnel became much more like that of the local population.

  25. David Michie
    June 1st, 2006 at 11:57 | #25

    Dogz:
    Yes its true that if Australia slashed its CO2 emissions to zero it would have negligible effect on a global scale. I don’t think that’s an excuse to do nothing. A U.S. state could say the same thing, or a Chinese city. Political boundaries are meaningless when we (and by “weâ€? I mean the globe) will all suffer the consequences of climate change. I’ll throw it back at you and say if a rich western country can’t do anything during a period of unprecedented economic prosperity, who can?

    Besides, as I pointed out before, Australia *does* have an impact on a global scale through the carbon we export. Before we dig it out of the ground that carbon is safely sequestered in Aussie dirt as coal. We might not be the ones burning the coal but we are the ones digging it out of the ground and therefore share some of the responsibility for it putting it into the atmosphere.

    You say we (the globe) needs big CO2-free generating capacity right now but exactly how is that going to happen? It requires massive government intervention in the market in some way, whether its funding to build CO2-free power stations (nuclear, wind, solar…) or a carbon tax that prices coal out of the market, because ATM coal-fired electricity is just way too cheap.

    There are very few places in the world where new nuclear power stations are politically feasible. The Chinese don’t get a choice, the French are very relaxed about nuclear power, and perhaps the Scandinavians, but pretty much anywhere else in the world you are going to run into exactly the same NIMBY problems you have in Australia.

    So please, tell me how this *big* CO2-free generating capacity is going to happen?

    My favoured course of action is a phased introduction of a carbon tax that eventually makes renewable/nuclear energy competitive with fossil fuels. You can see how well a strong price signal has worked with transportation. High petrol prices have already changed driving habits and sales of motor vehicles; sales of large cars and 4WDs have slumped, while small car sales are growing, and I believe Australia used less petrol last year than the year before.

  26. Dogz
    June 1st, 2006 at 12:37 | #26

    Is NIMBY more powerful than hip-pocket? The only way you’re going to get me to shuffle around rugged up in a non-heated house in winter is to charge me $1 or more per kWh for electricity. At that price I suspect many people would find nuclear a lot more attractive.

    NIMBY is partly a function of people’s natural fears, and partly a function of the enormous disinformation that has been wilfuly disseminated by green groups in the past. That is now changing – some of the worst offenders are now actively promoting nuclear. If they’re half as good extolling the benefits of nuclear as they were when denigrating it, we could be in for quite a sea-change in public opinion.

    So it seems at least worth a try looking at a proactive nuclear policy in Australia. We need to do that in conjunction with any carbon tax system anyway, because simply introducing a carbon tax without setting people straight on the benefits of nuclear means we doom ourselves to very scarce, very expensive energy from renewables, which in turn means leaving my children far worse off than me.

    And where is the money from a carbon tax going to end up? To have a real impact on people’s behaviour it is going to have to be an enormous tax – potentially adding a significant amount to government revenues. If recent history is anything to go by, that money will simply end up in the same place as our current surpluses: down the gullets of federal public servants.

  27. Ernestine Gross
    June 1st, 2006 at 13:34 | #27

    “On prices and quantities”

    I’d like to add to my earlier post that the only price that changed (significantly) in the example given is the value of the US dollar in relation to some of the then many local currencies in Europe. The US dollar depreciated ‘significantly’ (ie enough for people to bother to review their consumption patterns).

    Apologies. I took it for granted that people who post on a thread headed ‘Environment – Economics General’ would all know about major events in international financial markets. It came as a total surprise to me that some people think ‘NIMBY’ has anything to do with it.

  28. David Michie
    June 1st, 2006 at 14:03 | #28

    Yes NIMBY is that powerful, especially while the general populous sees global warming as some far off threat that might happen next century. The nuclear power station scheduled to be built next *year* 10kms down the road would be far more alarming. Frankly, you’ve got Buckley’s of educating that fear out of people. Seriously, if a nuclear power station was to be built within 10kms of your house, would you be happy about it? Even if you felt comfortable about it, think what it would do to real estate values!

    Maybe we do need to be paying a dollar per kWh for coal-fired electricity, instead of the 10-15 cents we pay now. It might not make you turn off the heater, but it might make you insulate the house, invest in a more efficient heater, or get the gas connected. Four winters ago I used several electric heaters and froze. The following year I got the gas connected and bought a gas convection heater and was toasty warm. I did that mainly for greenie do-gooder reasons, and at considerable expense (a few grand). It didn’t make sense from an economic POV … I reckon most people faced with a similar situation would buy a few more electric heaters; they’re cheap to buy and electricity doesn’t cost much. Millions of these decisions are being made every day, and the only way to get people to make better choices is price.

    Where would the carbon tax go? Well, we could reform our idiotic income tax system for a start, pay for a few schools and hospitals, and invest in public transport … because we’re gonna need it.

  29. June 1st, 2006 at 14:28 | #29

    PrQ,
    Most of the equipment that produces carbon emissions is long lived, as you have pointed out. If the governmnet stated now something along the lines of “in 5 years we will have a carbon tax of $x per tonne of carbon emitted” the change would start happening now as the NPV of investments made now would change. Similarly with emissions trading – a statement that a system would be implemented (based on emissions at the current level) at a reasonably near date would also affect current decisions.
    If you believe we need to move in this way then this would be something that could be implemented now without major current costs.
    BTW, I cannot see any constitutional reason why the state governments cannot implement this. Blaming Howard for all of this (if you feel that appropriate) overlooks the possibility of the State Premiers actually doing something rather than whinging to the feds for more money.

  30. jquiggin
    June 1st, 2006 at 14:43 | #30

    AR, the states are doing things, within the limits of their powers. For example, Victoria is promoting emissions trading.

    I would have thought that a state carbon tax might be regarded constitutionally as an excise. More importantly, it would be certainly treated by the Feds as a violation of the GST agreement, which Costello regards as prohibiting any state tax he doesn’t like.

  31. Dogz
    June 1st, 2006 at 16:19 | #31

    Costello has a point: despite record revenues mainly due to the GST, it now costs something close to 2 years average weekly earnings (gross) to pay the taxes when buying a new house in South Australia (median price).

    I dare say New South Welshmen hock themselves for closer to half a decade to their government for the privelege of owning their own home.

    Oh yeah, except for the baby boomers. They already got their houses on the cheap. Now they want my generation to pay through the nose for a shoebox for “environmental reasons”.

  32. June 1st, 2006 at 16:43 | #32

    David Michie, I have a idea to help deal with the NIMBY factors with regards to nuclear – pay the neighbours money from a levy (say about 0.2 cents a kilowatt, about a 5% impost on the wholesale price) on nuclear-generated electricity. If you put one nuclear power station in the Latrobe Valley and gave each of the 90,000 residents (at a rough estimate) an equal share of the compensation, it works out to about $170 per year. If you replaced the entire coal-generation capacity of the Latrobe Valley with nukes in the same spot (which wouldn’t be a bad spot to put them, as there is already ample water and lots of electricity grid there), each resident would receive on the order of $1000 per year.

    How much money does it take to keep NIMBYs sweet? I don’t know, but it’d be an interesting experiment to find out…

  33. Dogz
    June 1st, 2006 at 17:13 | #33

    “Where would the carbon tax go? Well, we could reform our idiotic income tax system for a start, pay for a few schools and hospitals, and invest in public transport … because we’re gonna need it.”

    Apart from the public transport (Australian cities are fundamentally not designed for it), I was hoping for all of that in the last budget. What did we get instead? A miserly shaving of the top marginal rate and a huge great dollop in the “future fund” – ie public service pensions.

    It feels really good knowing my 46.5c in every extra dollar is paying for the comfortable retirement of a 55 year old public servant with a house bought long before governments taxed or restricted such things out of the reach of anyone under 35.

  34. David Michie
    June 1st, 2006 at 19:44 | #34

    Dogz, no arguments from me about our tax system … the CGT and negative gearing rorts, the chasm between the top marginal rate and the company rate, and the handout given to retirees while working people still pay tax on their super contributions … but while we may whinge and gripe about these things the world will keep turning, if we don’t act soon on climate change the planet’s climate will be stuffed for 100,000 years.

    BTW, since when were Australian cities “designed”? (Canberra excepted)

  35. David Michie
    June 1st, 2006 at 19:48 | #35

    Robert Merkel, I dunno about you but I would find $170 a year rather inadequate compensation for having a nuclear power station plonked in my district.

  36. June 1st, 2006 at 21:17 | #36

    So, David, what *would* you consider adequate compensation? The way I crunch the numbers there might well be latitude to pay you more…

  37. David Michie
    June 2nd, 2006 at 09:20 | #37

    Honestly, I reckon a one-off payment in the tens of thousands, and an on-going yearly payment in the thousands. I know that may sound absurd (not to mention completely unaffordable) but that’s what I reckon you’d have to pay residents to stay within 10kms of a nuke. Even that may be inadequate for homeowners who would likely have ~30% wiped off the value of their properties.

    The feds would have to spend millions (perhaps billions?) shifting people who wanted to move and paying off those who wanted to stay. This kind of thing….

    Sydney Airport Noise Amelioration Program

    Reducing air traffic noise
    A range of measures have been introduced by the Commonwealth government to reduce or mitigate some of the noise impact associated with Sydney airport, including:

    a noise amelioration program that includes insulation and acquisition of the most affected properties, including houses, schools, child care centres, nursing homes and hospitals. As of 31 January 1997, $64,326,000 had been spent on insulation (the average cost for a house is $38,000) and $31,900,000 on land acquisition (data supplied to EPA by Commonwealth Department of Transport & Regional Development 1997)

    There are very few political forces more powerful than NIMBY!

  38. Dogz
    June 2nd, 2006 at 11:20 | #38

    The solution to NIMBY is to put the reactors in as few BYs as possible.

    How about this: with carbon taxes many existing coal-fired power stations will be uncompetitive.The economies of some towns, like Port Augusta in SA, are completely dependent upon the local coal-burning power station. If the power station goes, the town will all but disappear. So I dare say the good citizens of Port Augusta would rather see a nuclear power station in their backyard than have no backyard at all.

    Closing the coal fired power stations near more densely populated areas would probably have a positive impact on property prices in those areas, because the economy clearly has other stuff going on (that’s why they are populated). So one can imagine replacing all the coal-fired generators in all areas with large amounts of nuclear generating power in the regional centers that need it for their economy, to the point where the expansion of the local economy would actually drive property prices higher, offseting any negative NIMBY effects.

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