Running out of water

A couple of months ago, there seemed to be some hope that the record-breaking drought in south-eastern Australia was breaking. There was good rain, and the switch from El Nino to La Nina seemed to be established. Now, it seems, those hopes are gone. The really good rain was confined to coastal areas, most notably Sydney. Temporary water entitlements are now going for $1000 a megalitre, and irrigators are likely to receive something like 5 per cent of their normal allocations.

The water market should do some good in ensuring that water flows where it is most needed, most obviously in keeping tree crops alive. But water is also needed for cities and towns in the Murray-Darling Basin and for Adelaide, so the market will have to be combined with administrative allocation, and there may be a need for emergency measures.

In these circumstances, the last thing we need is the continuing squabbling between Federal and State governments, and within the Federal government between Nationals and Liberals, which has led to only marginal progress under the National Water Initiative. It’s likely that nothing much will happen until after the Federal election and, to be fair, there’s not much that can be done until we see how bad the summer is going to be. But it seems clear that the incoming government will have an emergency on its hands.

Nanni at RSMG has more on the limitations of demand management. This is not going to be an easy problem to solve.

Meanwhile, and relatedly, several species of coral and many seaweeds have been listed as vulnerable or critically endangered as a result of climate change, specifically the increasing frequency and severity of El Niño events.

New PM this AM?

As the Liberal party meeting begins it looks unlikely that Howard will go, but not beyond the realms of possibility. If Costello stands up and demands the job, he will probably get it. And Howard might just decide to pack in the whole sorry crew. However, neither of these scenarios looks likely.

I have a trivial and selfish reason for hoping Howard stays at least until tomorrow. My Fin column, due out tomorrow, gives Howard some unsolicited advice and will have to be rewritten if there is a new PM.

The first and final draft of history?

A while back, I observed in a footnote

Bush isn’t stupid. He’s shown himself to be quite sharp in the pursuit of his own short term interests and those of his backers. But he’s ignorant, narrow-minded, intellectually lazy and unwilling to learn from experience, a combination that produces reliably stupid policy decisions.

Google finds quite a few similar judgements, suggesting that the BlogGeist is in tune. Now Salon’s write-off for an interview with Bush’s biographer says “Bush has a surprising intellect but is incapable of curiosity and owning up to mistakes.”

I’m guessing this initial judgement will be confirmed by a historical verdict that will rank Bush among the worst of US Presidents, if not the absolute worst (Among other candidates for this dubious honour, Nixon had many positive achievements, Harding did no real harm, Andrew Johnson was at least trying for reconciliation and Buchanan’s big failure came after his successor had been elected). Harding’s case in particular shows that amiable stupidity is less dangerous than other intellectual flaws.

Costello – the numbers but not the bottle ?

Looking at today’s news, it’s pretty clear that the Prime Ministership is Peter Costello’s for the asking. We have two senior ministers, Downer and Turnbull giving non-denial denials to claims that they want Howard out. That means there have to be enough numbers for a serious challenge. That in turn means that Howard’s position is untenable, if such a challenge is made. Howard might win a party-room vote, but he would be doomed at the election even if he did. By contrast, Costello would have a chance. The remorseless logic of game theory now implies that anyone who cares about keeping their seat should support the challenger, and try to force Howard to bow out gracefully.

But Howard has made it clear he won’t do this in the absence of an overt challenge from Costello. He judges, on the basis of past experience that Costello won’t have the bottle*, and that facing the challenge down gives him a chance to present himself as a strong leader in the contest with Rudd.

* I had various thoughts about the origin of this term for nerve/guts. A quick search of the Internet found support for all my ideas and quite a few I hadn’t thought of. It looks as if it will remain a mystery.

$50 on the footpath?

Quite a few people have pointed out that, while the betting markets have now caught up with the opinion polls in making Labor hot favorites to win the election, seat by seat markets while shortening suggest a very tight outcome. The question that doesn’t seem to have been asked (not aloud at any rate) is whether there is (or was) an arbitrage opportunity here. That is, if you backed the Liberals to win the election, while backing Labor in all the marginal seats needed to win, could you make a “Dutch book” against the bookies and guarantee a net gain no matter what happened (within reason – you would still lose if Labor got in by winning lots of supposedly ultra-safe seats while losing in the marginals).

Looking at the movements in seat prices, I suspect this was a real possibility not long ago, and that alert punters have exploited it, closing the gap. But this is definitely a case for Andrew Leigh.

Update As you might expect, I’m not the first to have asked this question. Here’s John Barrdear asking and Simon Jackman answering (a bit obscurely – I think he’s assuming a uniform swing, but I’m not sure). I’m still keen to discover Andrew’s thoughts on all this.

Immediate further update No need to worry. They’ve stopped taking bets

Thoughts on Beattie’s resignation

A few thoughts, not well organised, which I may update

* Labor has now changed leaders in five states, twice as a result of illness and three times because of a voluntary decision to retire, with no sign of any damage as a result. Such a string of smooth transitions is almost unprecedented in Australian political history where the rule is that all careers end in failure (defeat by the electorate or by a party rival, or resignation in disgrace)

* Following from the previous point, if the Federal Libs get the drubbing predicted by the opinion polls and Rudd doesn’t run rapidly into disaster, Labor will be established as the natural party of government. It’s hard to see how the Liberals, for whom success is the main raison d’etre could survive this for long

* I imagine Beattie’s departure will take the sting out of the council amalgamations issue in Queensland, which will be a gift to Kevin Rudd in a couple of marginal seats such as Herbert.

* Obviously, this has contributed to the pressure on Howard to follow Beattie’s example. I can’t see him caving in to this, nor can I see a last-minute switch to Costello doing the government any good. On the other hand, the way things are going, this is Costello’s last chance to be PM, if only for six weeks or so.

The Sydney Declaration – mostly harmless

Unsurprisingly, the APEC leaders meeting in Sydney have signed a statement on climate change, grandly described as the
Sydney Declaration and described by Dennis Shanahan and Cameron Stewart in the Oz as a ‘sweeping triumph’.

It’s unsurprising because once the host nation has proposed a topic, it’s pretty much unthinkable for a meeting like APEC to break up without some sort of agreement, because such agreements commonly have grandiose titles and because the Oz … well, you get the idea.

Most of the attention so far has been focused on the set of initiatives referred to as the “APEC Action Agenda”, which includes various voluntary steps on energy efficiency, reafforestation and so forth. As my co-author Frank Jotzo notes, “In practical terms, that will mean almost nothing”. A fair indication of the significance of this agenda is its treatment by the New York Times, which gives a one-line link to the AP wire service report in which Jotzo is cited. The Washington Post has a story on the Bush-Howard statement a couple of days ago, but nothing so far on the great Declaration.

The really important point, though, is the section on Future International Action which begins “We reaffirm our commitment to the United Nations Framework Convention on Climate Change (UNFCCC).” (Kyoto is a protocol to this convention). There’s more, spelling out the post-Kyoto bargaining process embodied in UNFCCC In other words, the idea that APEC would produce an alternative to Kyoto, or a post-Kyoto agreeement outside the UNFCCC is dead.
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