The Productivity Commission has just released a paper called The Stern Review: an assessment of its methodology (the full paper is a 1.3Mb PDF). It’s very good, I think, giving a balanced presentation to the Review, its supporters and critics and those who fit into neither category. Here’s the summary:
The Productivity Commission today released a staff working paper titled The Stern Review: an assessment of its methodology. This technical paper contains a detailed examination of key elements of the Review’s analytical approach. Originally prepared as an internal research memorandum following release of the Stern Review’s report, the paper is being made more widely available given its ongoing relevance in light of Australia’s Garnaut Review.
The staff paper finds that the Stern Review made some important analytical advances. The Review sought to move beyond analysis based on the mean expected outcome to one that incorporates low probability, but potentially catastrophic, events at the tail of probability distributions. The Review also attempted a more comprehensive coverage of damage costs than most previous studies.
The paper also finds that value judgements and ethical perspectives in key parts of the Stern Review’s analysis led to estimates of future economic damages being substantially higher, and abatement costs lower, than most previous studies. The paper notes that the report could usefully have included more sensitivity analysis to highlight to decisionmakers the consequences of alternative assumptions or judgements.
Looking at the way debate has evolved both within and outside the economics profession, a few points have emerged
* No-one credible now disputes the view that a well-designed set of policies could greatly reduce CO2 emissions at very low cost. The Stern Review is marginally lower than average at 1 per cent of GDP, but it would be hard to find any serious analyst claiming costs much higher than 3 per cent. These are once off changes in levels corresponding to a once-off loss of between a few months and one year of improvements in material living standards. It’s intuitively hard to see how risking the worst case outcomes of climate change to avoid such a small economic cost could possibly be justified.
* While there is still plenty of dispute about the economic costs of doing nothing, relative to stabilisation, the median estimate has been revised sharply upwards following the Stern Review. On the issue of discount rates, the (still controversial) choice of a low rate by the Stern Review pointed up the dependence of earlier estimates on rates that now look implausibly high. And on the treatment of risk and damage to the natural environment, Stern’s look at these issues points up how badly neglected they were in the past. If anything, subsequent discussion has suggested that Stern was too conservative.
The speed with which the economic debate has evolved has left the political advocates of doing little or nothing stranded. Most of them had no qualifications in climate science, and embraced delusionist arguments against the science because they were opposed on political, economic or culture-war grounds to the kinds of policies needed to stabilise climate. Many of them clearly envisaged a campaign in which they would fight as long as possible on the science before turning to the economics. But the speed of change has left them flatfooted. Rather than being able to make a graceful retreat to a prepared position, they are trying to argue against what is now the mainstream economics position, while still being lumbered with their now-discredited attacks on mainstream science.
John Quiggin 
I’ll make a statement before I download the pdf; the high cost camp (ie pessimistic) inhabited by discussion groups such as The Oil Drum have very impressive credentials not only in economics but physics, engineering and agriculture. They tend to stress the doubling up effects of finding cheap alternatives to fossil fuels eg running not only your home but also your car from renewable energy.
Now I’ll read the paper.
The case for clean energy is pretty obvious now. When are we going to start doing something serious about it? I suspect the answer to that is not until we have our first crisis.
The “perfect storm” complex of crises is very close now. Climate change, mass extinctions, peak oil, peak food, peak (enter resource of choice), general economic collapse, an outbreak of major war(s).
Erudite papers are not be enough. Once the populace becomes as sh**-scared as they ought to be then there might be a chance of getting some changes in train.
Ikonoclast, are you saying that ‘peak aluminium’ is around the corner? ‘Peak iron ore’?
Any evidence of that? If there is, I might just get into aluminium futures in a big way.
Observations on the Productivity Commission paper. Firstly it focuses too much on the niceties of discounting whereas an examination of the undiscounted prospects for the next 20 years would suffice. Secondly the report defers to IPCC and techno-optimists such as Nordhaus without incorporating some of the heavy criticism eg
http://gristmill.grist.org/story/2007/10/2/151156/638 . Apart from questionable assumptions such as slow depletion of fossil fuels these sources resort to wishful thinking such as political willingness to impose higher prices. Moreover there is little evidence that mitigation practices such as geosequestration can work on any useful scale.
Other critics point to chain reacting threshold or Malthusian effects which call into question smooth graphs of mitigation costs per tonne of CO2. These include unaffordable transport, reduced farm inputs, population growth and collapse of some service industries. Others question the timing and availability of cheap capital for huge but low yielding projects. This suggests there may be too many free variables to enable a cost–benefit analysis of smooth transitioning to a low carbon economy.
Having said that the report is part of the national response called for by IPCC. Hopefully if Rudd makes a start on carbon reductions we can learn as we go.
Prof. Ken. Arrow quite recently suggested that:
“A straightforward calculation shows that mitigation is better than business as usual — that is, the present value of the benefits exceeds the present value of the costs — for any social rate of time preference less than 8.5 percent. No estimate of the pure rate of time preference, even by those who believe in relatively strong discounting of the future, has ever approached 8.5 percent”.
The media is reporting the PC as being very critical of Stern. That doesn’t seem right to me. The PC paper is more supportive than it is critical. It certainly provides no support for Stern’s denialist critics.
Actually ‘The speed with which the economic debate has evolved’ has left the political advocates of being seen to ‘do something’, ignore the economics of what they’re doing and challenge the whole notion that ‘doing something’ is better than doing nothing and adapting. Nowhere is this better illustrated than in their lemming like rush to put the world’s fresh water and food “supplies in our petrol tanks, as pointed out at Davos-
‘Nestle SA Chief Executive Peter Brabeck touched on one of the most sensitive ecological subjects at Davos, the production of biodiesel as an alternative “green” fuel from crops such as maize.
Mr Brabeck said the drive for biofuels and industrial usage could severely deplete water resources. Action should be taken to create a market for water to drive conservation.
“It takes 9000 litres of water to produce one litre of biodiesel. This strategy, which is not the right one, is backed by all major governments,” he told a panel at Davos.
The demand for biofuels in Europe and the United States has also contributed to pressures pushing the cost of maize and soya upwards as world food prices have hit record levels.’
The scientists are also beginning to concur-
http://www.news.com.au/adelaidenow/story/0,22606,23068489-2682,00.html?from=public_rss
These dangerous new evangelists, now intent on making up for their past environmental impotence, due to an inability to understand and critique the shortcomings of our constitutional marketplace, have simply become kilogram wise and tonne foolish with respect to their new CO2 devil. That is abundantly clear everywhere you look at present, but let me point out the glaring obvious.
So it takes 9000 litres of water to produce a litre of biodiesel, the alternative devil selling for $1.50/L around here now. Last I heard it takes about 1800 litres of water to produce a dollars worth of rice in the driest continent in the world and many are even bitching about that profligacy. A profligacy that goes unaddressed even now with wall to wall kumbaya governments, so much so that Adelaide will now build a desal plant to make up for the shortfall at around $3/Kl as compared to SA Water’s current delivery at $1.10/Kl. Apparently this plant will run on Kyoto promises rather than more Leigh Creek burnable dirt, just like those heathen Victorians
http://www.theage.com.au/news/climate-watch/greenhouse-emissions-soar/2008/01/06/1199554485339.html
I demonstrated a while ago the inanity of using more resources, particularly imbedded CO2, than is necessary by these new evangelists. My own Holdfast Bay Council was installing rainwater tanks to its civic centre and plumbing it to their toilets. A quick analysis showed the cost of water harvested at around $11/Kl, ten times the delivery price from the Muaray Darling largely(we do have some local Adelaide Hills catchments) Now it’s reasonable to assume that the respective prices reflect proportionate imbedded CO2 in the cost of delivery. Those poly tanks produced and delivered, with all the plumbing and pumps right down to the fuel in the plumber’s van, etc.(actually my costings didn’t include running the pumps to feed the toilets for 30 odd years) So basically they spend 10 units of CO2 to save 1 unit and God only knows how many with the rebates and incentives for backyard rainwater tanks, that have lesser economies of scale and higher costs. And now because apparently it’s too hard to organise and rearrange the priorities of the MD, Adelaide, using about 1% of the basin’s flows, will spend around 3 units of imbedded CO2 to save 1 unit for rice and cotton presumably. That’s too hard even with wall to wall Labor govts, yet somehow we’re all to go off on a crusade to change the world’s habits CO2 useage. You follow these froth and bubble snake oil preachers and their path to devil worshipping all you like, but I’m sticking quietly with my old time religion.
Observa, nobody cares about what is going in Adelaide, except for the cricket, and even that, not very much.
You are obviously lacking in taste or smart money Spiros
http://www.news.com.au/adelaidenow/story/0,22606,23104282-2682,00.html?from=public_rss
Nevertheless, I caught Nick Xenophon on his radio spot yesterday with guest Chris Hanna, banging on about how we should be trying to emulate our superiors interstate with their higher kilogram wise tonne foolish rebates and subsidies for rainwater tanks, shower heads, green washing machines, etc, so I assumed the snake oil preachers were alive and well interstate too.
Actually I think Observa has hit on the obvious; if any place in Australia should go nuclear it is Adelaide. Apart from the water and energy needs of the Olympic Dam expansion (to become the world’s largest mine) both Leigh Ck coal and Cooper Basin gas are running out. SA lost its nuclear virginity with the A-bomb tests in the 50s. Build a large nuke and the extra power can be used for metropolitan desal. I suspect Mike Rann thinks this as well but is politically hog tied.
In reply to Hermit, it is a little-known fact that Mike Rann was a CND member in his school and university days. Were he to advocate nuclear, he would have to disown his own intellectual past.
Why? Nuclear weapons and nuclear power are different animals.
Observa: your point is well made, but somewhat orthogonal to the issue at hand.
In any case, the economic case for efficient shower heads and washing machines is pretty strong, though mainly for the energy savings from using less hot water rather than the water savings.
Re: Spiros’s comment #6, alas the media thrives on reporting conflict, even where there is none, or reporting only the conflict in situations where there is both conflict and concord.
Thus the various media outlets have focussed only on the criticisms of the Stern methodology and presentation from the PC staff paper; not the compliments. Even the ABC has taken this route, and to add insult to injury it has procured some inane comments from a chap from the Climate Institute about how the debate’s over now anyway and we should just get on with it.
I totally agree with #6 and #14. I guess most of the journo’s didn’t read beyond Page 2 of the summary.
Its not just journos and the MSM, of course: Christine Milne in Crikey has given a predictably simplistic and loopy characterisation of the PC’s work.
“Why? Nuclear weapons and nuclear power are different animals.”
I suspect you’d find that most people who are/were sufficiently concerned about nuclear weapons to join CND would also be opposed to nuclear power. But, yes, they are, in a strictly logical sense, different.
SA has 3 uranium mines Beverley, Olympic Dam, just approved Honeymoon, and a fourth in the pipeline, Marathon at Mt Gee. Ex Labor Senator Chris Schacht has just been appointed to the board of Marathon. I think Rann disowned his intellectual past a long time ago. Or maybe not, he is vehemently opposed to any nuclear power stations in SA. And he fought vigorously to prevent Keating’s drums of waste in a shed at Woomera being stored in a dedicated nuclear waste dump in SA.
A bit OT but you gotta listen to these idiots here
http://www.canada.com/montrealgazette/news/story.html?id=5a0e128d-c60a-4f31-a5b4-4dabd49c5bf2&k=68845
The laugh and Eco101 lesson compliments of Greg Mankiw.
Rann was elected to run the State and if he allows his own personal views to influence his decisions and to disregard the needs of the constituents…..well, thats as bad as little johnny!
Unfortunately the politicians are still doing little or nothing. Lets face it, global CO2 emissions in 2008 will be higher than they were in 2007, U.S. recession or not. They’ll be higher again in 2009, 2010, 2011…
I see zero evidence of serious policy to combat climate change anywhere in the world.
P.S. Hermit: Great to see TOD mentioned here.
STT ridiculed my assertion that peak “all resources” was coming to a planet near us. It’s to do with resource quality, accessability and the recovery costs in energy terms.
First I’ll quote Jay Hanson.
“We mine our minerals and fossil fuels from the Earth’s crust. The deeper we dig, the greater the minimum energy requirements. Of course, the most concentrated and most accessible fuels and minerals are mined first; thereafter, more and more energy is required to mine and refine poorer and poorer quality resources. New technologies can, on a short-term basis, decrease energy costs, but neither technology nor “pricesâ€? can repeal the laws of thermodynamics.”
Second I will quote Kenneth Boulding from “The Economics of Spaceship Earth” –
“… in the (future) economy, throughput is by no means a desideratum, and is indeed to be regarded as something to be minimized rather than maximized. The essential measure of the success of the economy is not production and consumption at all, but the nature, extent, quality, and complexity of the total capital stock, including in this the state of the human bodies and minds included in the system. In this economy, what we are primarily concerned with is stock maintenance, and any technological change which results in the maintenance of a given total stock with a lessened throughput (that is, less production and consumption) is clearly a gain.
This idea that both production and consumption are bad things rather than good things is very strange to economists, who have been obsessed with the income-flow concepts to the exclusion, almost, of capital-stock concepts.”
Boulding probably overstates his case by saying “production and consumption are bad things”. I think he should have said “excessive and wasteful production and consumption are bad things”.
The current capitalist system is entirely predicated upon the most wasteful and exponentially increasing consumption patterns which can possibly be induced. As such, this system is in conflict with the laws of physics and our situation in a finite system; planet earth, or if you wish the solar system.
Which is just another way of saying the EROEI inexorably decreases. Sure, we will use energy more efficiently in the future, but eventually the ever decreasing returns will catch up with us … only an economist would pretend otherwise.
If Rann truly opposed nuclear power he must do the decent and honorable thing and close down all the uranium mines. The Feds will pass complementary legislation.
I’m afraid I remain an optimist.
New technology such as the Australian-designed ultrabattery will see plug-in hybrids on the streets in 2-3 years time at costs comparable with current conventional technology.
http://www.evworld.com/news.cfm?newsid=17283&url=http://www.technologyreview.com/Energy/20105/?nlid=830
Wind power and solar remain the fastest growing power sources on the planet and solar costs are going to come down dramatically in the next couple of years.
Doomsday has, once again, been postponed.
I hope you’re right Mr Gould but NSW power generator, Macquarie Gen has just abandoned a planned windfarm near Scone in the coal rich Hunter Valley because of insufficient price incentives and government interest. Meanwhile BHP Billiton is seeking planning approval for a $300m underground coal mine nearby. The more things change…
the CSIRO are not alone by all reports
http://www.news.com.au/business/story/0,23636,23106238-31037,00.html
John, subsequent reviews by Marty Weitzman (who has finished ground-breaking new work on how the “fat tail� of climate risk affects cost-benefit analysis, here: Weitzman: “On Modeling and Interpreting the Economics of Catastrophic Climate Change�, December 5, 2007; http://www.economics.harvard.edu/faculty/weitzman/files/modeling.pdf) and Richard Tol (who just finished a new survey of the literature, that I summarize here:
http://mises.com/blogs/tokyotom/archive/2007/12/16/the-social-cost-of-ignoring-carbon.aspx) reinforce your argument that Stern’s conclusions were largely right, even if wrongly argued.
Ian Gould refers to “the Australian-designed ultrabattery” with “costs comparable with current conventional technology”. I assume Mr Gould you mean economic costs. If you meant energy costs I think you would have specified that.
The key point is that economic costs are not fundamental in the long run. It is energy cost that is fundamental. Economics properly viewed is a sub-discipline of physics. We need to make the move from political economy to physical economy.
There are only two disciplines, physics and philosophy. Properly speaking all other disciplines are subsets of those. Some disciplines are derived from both; mathematics derives from both physics and philosophy.
Regarding the potential of nuclear power:
It’s important to consider the earliest year Australia could begin operating its first nuclear power station. The most optimistic estimates for UK’s proposed new nuclear plant is 2018. Add to this the most optimistic scenario of 6 years for energy payback time.
So even with optimistic assumptions any new nuclear plant are likely to have a net increase on GHG emissions until at least 2024. This would put us on a trajectory for warming exceeding 2 degrees and the unacceptable risk of tipping points.
Let this somewhat orthogonal Observa to the issue at hand get a bit more orthogonal. I, like my fellow South Australians are not really residents of SA, but residents of the greater Adelaide metropolitan region. A map of the Federal electorates should make that crystal clear here
We’re divided up into 11 electorates and straight away you’ll notice 1 out of 11 of us live in 92% of SA in the seat of Grey and a fair chunk of them live in the Iron Triangle cities of Port Pirie, Port Augusta and Whyalla, watered by the Murray via the Morgan Whyalla pipeline. The rest is largely lizards and snakes with the odd homo sapiens burrowing underground to get away from them and the heat. Add to that another 1 in 11 in the rural seat of Barker(6.5% of the state), from Mt Gambier, Bordertown up to Renmark on the Murray and that leaves 9 out of 11 of us living in Adelaide or its near playground (the 1.5% that’s left), up north to the Clare Valley and down south to the Fleuriu Peninsula to Victor Harbor and Kangaroo Island. Over a million of us have about as much to do with old nuclear test sites as Sydneysiders do with Bourke or Wilcannia, but unlike Sydneysiders we only get about 20 inches of rain a year. That makes the water flowing out of the MD nearby, a fairly attractive and sensible proposition, ever since God put us downhill from where it fills up. Unfortunately a few very profligate devils have since taken up residence in between and that’s a bit of a problem for we parsimonious, God fearing folk. The devil has now given us a Faustian bargain with GW. We’re between the devil and the deep blue sea now. With Kyoto, it’s a Faustian bargain for you lot too now, although if the good citizens of Grey can wangle emission caps on a per square kilometre basis, then clearly we’re with our brothers and the devil take the rest of you lot, particularly those in Brumby’s brown coal, Sodom and Gomorrah. Thirty percent CO2 emissions increase since 1990? Good God, if we’d known that last September, then Geelong footballers and their idolaters should have been made to cycle to the G, to earn carbon offsets and do penance for all Victorian sins. God why hast thou forsaken us?
Well he’s forsaken us because we’re not allowed to buy all the water we want at market rates, assuming there is one statutory authority monitoring and controlling the long term average supply from the basin. We and the other urban and industrial users along its length, who make up 9-10% of the useage now. Adelaide(largely SA remember) uses about 1% of it now. So if SA can’t use the cheapest source available, then it’s forced to spend $1.4bill of resources (and its embedded CO2 emissions) on a 50GL pa desal plant, to provide 25% of its needs with provision for a doubling of that capacity. Reverse osmosis of that 50 million kilolitres that coal fired power figures say produces 1.8kg or 0.9cu metres of C02. Now that’s black coal figures so Leigh Creek brown coal CO2 equivalent may well be 1 cu m of CO2 per cu m of water. Just let that sink in for one moment while you’re off Kyoto dreaming about changing the world. Now ask yourself why Rudd and Wong haven’t put their(really your) hands up to Rann and said stop the EIS and the pilot plant planning and let’s all sit down and think seriously about this folks. I’m quite sure Penny Wong knows what’s going down, but it’s about time you all did too, assuming you believe we’re all in this together with that Kyoto commitment. It’s one thing knowing about what’s going down, but quite another to do something about it. My take is if you can’t get your act together in our jurisdiction with wall to wall Labor now, you’ve got a snowball’s chance in hell of making Kyoto work internationally. Or is it all too hard and SA should start on that nuke power plant right now?
I think observa has a point. Cheap water from the Murray-Darling system (provided it isn’t all used up by upstream users) may well be the economically cheapest, “power cheapest” and “greenhouse cheapest” water source for Adelaide.
I agree it’s an abomination when cotton growers (to name one group) “shark” all the water upstream. I’m a Queenslander and I still reckon Qld and NSW have a major obligation to let adequate water go all the way down the MD for environmental flows and end of the line users (Adelaide).
I’m just not confident in market solutions for basic resources. Do we want capitalists to own all fresh water? What’s next? Are we going to marketise the atmosphere? No way! Never! Basic resources must never pass into private ownership.
“What’s next? Are we going to marketise the atmosphere?”
err…well yes if we hand out emission caps to big carbon and allow them to be traded and the economic rent passed on. Why the hell do you think I’ve been banging on about those reducing caps remaining in govt(communal) hands for chrissakes?
Yes Virginia, there are grown ups in places like Quebec who still believe in Santa Claus and fairies at the bottom of the garden
Gee observa, I’d hate to see how mad you’d get if I was disagreeing with you. 🙂 In one of my past posts I noted my complete opposition to tradeable CO2 emission permits. I noted that a carbon tax was the only way to go.
Negative externalities like pollution have to be costed in to production costs. Yes, I know the consumer will pay for it in the end but that’s the way it goes. However, putting a cost (tax) on polluting a commons is not the same as selling it to private capital. In fact, there is a big, big difference, a world of difference if I may pun a little.
Nonsense. All evidence suggests we are accelerating towards the cliff.
Growth in global greenhouse gas emissions is actually accelerating. Oil demand is forecast to grow at 2 percent p.a. while production from mature oil fields is declining at more than 4 percent.
Yes but from a microscopic base. Wind and solar combined provide less than one percent of global energy demand.
Just baying at the moon as usual Ian, or more precisely our MSM. Sweet Jesus, can’t they stick a mike under Mr 60% reductions, Media Mike’s nose and ask some pertinent questions, not to mention Penny and Kevvy? They’re all too busy breast beating and hand wringing over the demise of their new James Dean antihero, for splashing mud in the eye of the archetypal John Wayne cowboy. Another of their sensitive actor types cut down in his prime by the oppressive ‘system’, when he was really just another lousy human being with no money worries, who couldn’t cut it like millions worried about where their next feed’s coming from do every day. Wankers!
Observa’s points in 7 and elsewhere are excellent. There are a lot of precious energy and other resources being wasted by going for the trendy green solutions and/or the politically popular ones rather than the more cost effective solutions. Power from solar cells is another example. While the price of silicon is so high, it is better to hold off on this, and put the resources into wind power etc until solar power becomes price competitive. We’re such a rich society we can afford the waste of misallocating our resources without any real trouble, but it is rather pointless. And this sort of misallocation can’t be afforded by poorer countries.
Carbonsink, essentially you are right. We are still (tragically) accelerating towards the cliff. Ocasionally I stray into a little bit of optimism. All I can offer is the “Leech-gatherer-on-the-moor” defence from W’s Resolution and Independence.
“Once I could meet with them on every side;
But they have dwindled long by slow decay;
Yet still I persevere, and find them where I may.”
Barring recession there is no way real emissions will decline in the first term of the Rudd govt. More so if you add coal and LNG exports since the new Infrastructure Australia agency is tasked with speeding things up. I expect the ready made excuses are that now is not the right time (when is?) to increase power prices and the old standby of being ‘on track’ with tree planting etc.
So much for the PC’s neat little graph of carbon abatement costs.
Observa and johng, further to your points, the very best co2 abatement strategies are actually cost negative.
The low hanging fruits of energy efficiency for commerce, industry, home and existing coal power need to be first in line for uptake. The table and graph on page 5 and 6 here http://www.greenhouse.nsw.gov.au/__data/assets/pdf_file/0017/4544/cost_curve.pdf
show the point very clearly.
It would have been better to upgrade my home insulation and install double glazing etc, with curently nonexistant Govt rebates, than the new, expensive to buy, install and subsidize, solar hot water system.
Re comments #6, 14, 15, 16. The headline on the ABC news website is “Stern Review ‘exaggerated’ costs of climate change”. The Productivity Commission’s review doesn’t even contain the words ‘exaggerate’ or ‘exaggerated’.
Peter Walsh (Hawke government Finance Minister) has written an ultra-denialist submission to the Garnaut inquiy. (The science is bullsh1t, emissions trading is a cargo cult etc.)
It matters not a jot what yesterday’s man Walsh thinks on the matter, but his son-in-law Gary Gray is a Rudd government parliamentary secretary and probably destined for a place in Cabinet in the government’s next term. There has never been any difference in discernible policy positions between Gray and his wife’s father in the past.
Gray is a man to watch.
Ikonoclast, the cost savings for the ultrabattery comapred with the current nickel hydride hybrid vehicle batteries arise from the fact it’s based on lead and carbon.
Embedded energy and resource demand are lower because it doesn’t use large quantities of nickel, nor does it require platinum which is used in most fuel cell designs.
The ultrabattery also has a projected operational life three times that of the current battery pack in the Toyota Prius. This is backed up by the operational tests to date in which a ultrabattery-equipped car was driven for 100,000 kilometres over the course of a year.
Using it in a plug-in hybrid rather than a pure electric vehicle means you can refuel the IC engine if you’re in a hurry and recharge the battery overnight from mains power using a standard outlet.
This means firstly that much of the required power will come from off-peak power that otherwise goes to waste and that the power and resource demand involved in widespread deployment of new recharging infrastructure.
Meanwhile Nanosolar has started shipping thin-film solar panels with a capital cost below US$1 per watt.
http://www.evworld.com/news.cfm?newsid=17303&url=http://www.thecherrycreeknews.com/content/view/2329/2/
You might have wondered how I came across that horrific tradeoff with desal water. Now I like my fellow Adelaideans(think South Australians)have long appreciated the precious need for water, huddling together as we do near the coast and any semblance of collectable rainfall, not to mention the precious end of the Murray Darling basin. Inhabitants of the driest city state, in the driest continent, who could only look out with envy at Easterners splashing their good fortune about over the years, until finally they too came to the same status demographically. Add a prolonged drought and they quickly came up to pace with our kind of thinking over the years. The same drought that ended Adelaide collecting about 45-50% of its water needs over the years and suddenly last year, according to SA Water, only 2.92% of our demand. With around 6% regularly from groundwater, that only left pumping the balance from the falling Murray, panic stations and a desal plant pronto.
So with the prospect of $1.4 billion dollars of industrial resources being trotted out, I know that’s one helluva lot of resources in one hit and what are we going to get for it? Fourteen hundred million dollars starts to get more of a mouthful, particularly when SA Water reckon their whole box and dice infrastructure now is valued at a total of $7500 million. Straight away this little capitalist’s mind is spinning over. At 5% interest that’s SEVENTY MILLION DOLLARS PER YEAR before it produces a drop of that lovely 50GL of water for the year. I’m getting my head around that and who’s gunna pay,(the govt reckon only 12.7% extra on the average bill, but that’s compounding and before a drop from the plant in 2014 and any cost overruns and, and…gasp!) as the blue rinse set start hitting the airwaves about whether the salts produced are going to turn St Vincent Gulf into the Dead Sea and then SAHT tenants who have just been conveniently billed for some portion of their water for a bit more user pays, start realising that many are on collective metering. Little old ladies with walking frames are looking at their fertile neighbours with kids and pools and starting to fret a bit like me. The cost of retroffitting meters to them all is freaking the SAHT and me out even more.
Well there’s always a stock market crash to take one’s mind off these minor distractions and don’t you ever let a chance go by old son. So topically I’m reading the OZ Business pages and commodity prices and spot the perfect opportunity for some upside with this-
“The rains are good news for newly listed soft commodities company Prime Ag. This week it purchased the 6952 hectare property Milchengowrie, near Gunnedah in NSW, for $33 mill. last week it purchased three properties near Goondiwindi in Qld. One of its hub properties, Braylands, is located at Emerald and the drenching rains have brightened its prospects.”
So with the crash and the share price nicely below the original offer price I pounce with some readies. If you can’t beat the profligate bastards, join them. However that got me thinking about that $1400 mill again and just how much well watered property, SA Water could buy with our dough and get cheaper water, providing some useless govts would get off their behinds and allow the water allocations saved to flow downhill to its new owners. Now at 1800 litres of water to produce a dollars worth of rice, I’m thinking God’s gift to those profligate bastards must be the cheapest ecological water Adelaideans can get for their buck, but those gaia, kumabaya bastards withg their shower head subsidies and tree palnting offsets are never going to get off their butts and allow it to happen. Hmmmm, I wonder if there’s another way to get at them. Of course, their pet hand wringing subject, CO2 emissions. So I Google-‘CO2 emissions reverse osmosis desalination’ to satisfy my curiosity. The first cab off the rank gobsmacked me here
http://freedomaustralia.org/co2.htm
A litre of CO2 for every litre of water eh? A kilolitre, or 1 cubic metre of the stuff is about five 44 gallon drums full. 50GL per year is 50 million lots of five 44gallon drums of their dreaded stuff and all it needs is their undivided attention and cooperation to see it doesn’t happen for the next 25 or 30 years life of that plant. More’s the point, that Adelaideans don’t build that plant and further take up the option to double the size of it in that period. What gets me is how all the kings horses and all the kings men can’t put two and two together, when a halfwit like me can do a quick google and work out the bleeding obvious.
Meanwhile Mr 60% and his cohorts are buying more feelgood carbon offsets with taxpayer dough naturally which even causes middle class mum Lainie some palpitations
http://www.news.com.au/adelaidenow/story/0,22606,23113825-5012955,00.html
“The most important lesson I’ve learnt from this process, though, is that we small-scale polluters have a double responsibility.
Yes, we should all be doing what we can to cut our household emissions.
But Robert Kennedy Jr is right. Our biggest job is to pressure political leaders to end large-scale industrial and environmental pollution.
Mike Rann has shown pretty amazing leadership on climate change – both by offsetting his personal flights and also through government initiatives to massively increase solar power and wind generation.
Now he’s got to use his influence federally and, most importantly, abroad, to affect change that will really clear the air.”
Hear hear, up to a point Lainie my dear. That point is that our current constitutional marketplace is stuffed and needs a complete rewrite in order to unleash the best mechanism we have for allowing the millions of daily individual decisions to add up to a tsunami of activity roaring in the right direction as I reiterated here
http://clubtroppo.com.au/2008/01/23/another-question-for-economists/
Without carefully crafted market forces pushing us all in the right direction, we haven’t got a snowball’s chance in hell, or more relevantly, an Antarctic ice sheet’s chance on earth, of achieving any respectable environmental outcomes.
Ikonoclast,
I can see your fundamental point that in the future getting a tonne of iron ore out of the ground will take more energy than it does now (if our mining technology doesn’t improve, which it will). On top of that, energy will be more expensive as we suck out the last of the easily accessible oil. The compounding effect will make a tonne of iron ore more expensive. But it’s not going to lead to ‘general economic collapse and major wars’.
Increasingly expensive oil is nothing we can’t deal with, through that amazing mechanism known as ‘price’. So what if oil gets more expensive? And so what if that flows through to food, minerals etc.? Relative prices chnage all the time, and people adjust their consumption in response.
As the price of oil rises, we’ll shift to public transport (has happened in Melbourne over the last couple of years as petrol has passes $1.35, now nudging $1.50). Locally produced food wil be more competitive with imports. We will change the materials we use for our buildings. And mining engineers (who are clever buggers) will figure out cheaper ways to dig up the iron/aluminium/oil. No need to get all survivalist quite yet.
You also quote some weird stuff. A quick Google of Jay Hanson revealed that he is prominent in peak oil circles, and he thinks that we should ban restaurants and food advertising to save oil. (http://peakoildebunked.blogspot.com/2005/10/145-jay-hanson-solution-military-junta.html).
Jay Hanson seems like a pretty unreliable source for anything. In my brief search, he didn’t seem to have supplied any evidence that we are approaching ‘peak iron ore’ or ‘peak tungsten’. Just an alarmist website. Ignore him and his ilk: you’ll be happier for getting the cranks out of your life.
The Quote from Boulding is pretty bizarre, if you break it down. Specifically:
‘The essential measure of the success of the economy is not production and consumption at all, but the nature, extent, quality, and complexity of the total capital stock, including in this the state of the human bodies and minds included in the system.’
So the success of a system is down to the ‘stock of the state of human bodies and minds’ of its inhabitants? That just makes no sense. Who judges the quality of the minds in a society? What do we do if your state of mind isn’t contributing to the general wellbeing? Or if your body isn’t in tip-top shape? Slippery slope to a pretty nasty world, if you ask me. “Make the world a better place: round up the fatties and the depressed.”
And contrary to Bouding’s first sentence, classical economics sees the measure of the success of a system as the wellbeing of its citizens, not production or consumption. Consumption is a proxy for wellbeing, but, as all economists recognise, beyond a certain level, extra consumption doesn’t make people much happier. Wellbeing can also be measured by things like infant mortality, life expectancy, literacy and educational attainment. All those things are getting better all the time (at least in the medium to long term).
So what I’m trying to say is, relax. We’re not on the brink of a massive war caused by climate change. A changing climate will produce a lot of difficulties, but humans are smart. We will adapt.
STT
Observa, ever stop to wonder what the economic value of that desal plant water will be if the Murray actually dries up entirely?
Yes it’s expensive – but it’s intended to insure against the worst case scenario.
Ian Gould Says:
Ian, this isn’t correct. No off-peak power gets wasted. It’s cheap, sure, but if there’s no demand for it, it doesn’t get generated.
If everyone charges their cars overnight, this will mean that there’s no increase in the peak demand, which occurs in the afternoon/early evening, and so no new power stations would need to be built to supply the cars.
However, the greenhouse intensity of off-peak power isn’t lower than peak power, it’s actually higher. In most parts of Australia (Qld, NSW, Vic, SA, WA), you can guarantee that off-peak power will be 100% coal. This means that the greenhouse intensity of an off-peak charged hybrid will be about the same as an ordinary petrol-fuelled vehicle.