Author: John Quiggin

Giving up on the Murray Darling Basin

John Quiggin15 Comments

The Risk and Sustainable Management Group, which I lead at the University of Queensland, launched our Annual Report for 2010 last night (link to large PDF coming soon). I’ll quote from the Foreword

As 2009 drew to a close, it seemed reasonable to expect that 2010 would see a resolution of the Australian political debate over the two environmental issues central to the work of the Risk and Sustainable Management Group: climate change and the management of the Murray–Darling Basin.

In the event, neither of these issues was resolved. The bipartisan agreement in support of an emissions trading scheme collapsed, and the policy was abandoned by the government. Following the August 2010 election, the government restated its support for a carbon price, but the main short-term focus was on the idea of a carbon tax.

Developments in water policy were equally confused. Under the Water Act 2007, passed by the Commonwealth Parliament with bipartisan support, the Murray Darling Basin Authority (MDBA) was required to produce a plan for the sustainable management of the Basin. The release of the Basin Plan was delayed by the election. The MDBA produced a Guide to the Proposed Basin Plan in October 2010 which met with a very hostile response, with copies of the Guide being burned at public meetings of irrigators. The Draft Plan is still under development.

I’m feeling a bit more hopeful about carbon prices than when I wrote that. Labor, Greens and the Independents seem to be holding together, and the public debate shows some increasing recognition that Abbott is an opportunistic hack and that while preferring prejudice to science may make for good talkback radio, it is not a good basis for public policy.

By contrast, the situation regarding the Murray Darling Basin has gone from bad to worse to pretty much hopeless. We had everything needed for a plan that made just about everyone better off: more water for the environment, a good deal for farmers who wanted to switch out of irrigation, no compulsory acquisition, and enough spare money sloshing into country towns to more than offset any reduction in agricultural output. Instead, the process was spectacularly mishandled, most notably by the Murray Darling Basin Authority, who managed to scare everyone into thinking the government was about to confiscate their water. That handed power back to the most reactionary irrigator lobby groups who just want to stay on the old, unsustainable, path as long as possible, while extracting as much money as they can from the public purse. The release yesterday of the Windsor Report suggests that they will get their wish. The central point of the report is that the government should abandon all “non-strategic” purchases of water, while pouring even more money into so-called “water-saving” schemes, which will cost 5-10 billion while delivering little if any additional water.

Perhaps there is a way back from this but I can’t see it at present. For the next couple of years, at least, I plan to give up (or at least scale down) my work on the Basin and focus on more tractable problems like stabilising the global climate, saving the Great Barrier Reef and fixing financial markets.

Why the global carbon price should probably be around $50/tonne (nerdy/wonkish, but not too difficult, I hope)

John Quiggin48 Comments

One of the big frustrations with trying to follow the debate on climate change is that most of the key questions are best answered with large, complicated models. Learning enough to assess these models in one subject area, even in general terms, is a huge task, and learning the details of any particular model is a full-time occupation. But, if we are going to make any real progress, we need numbers we can understand. It seems hopeless, but it isn’t entirely so. One thing I learned very early on about modelling is that, for almost any large complicated model, there’s a small simple model that gives much the same answers to the key questions of interest, if you use it correctly, and choose input parameters consistent with those in the big model. The big model (if it’s a good one) imposes consistency conditions you might miss in a simple model, and also gives detailed answers to lots of more specific questions, but a lot of the time, you can do without that. I’m writing a paper at the moment, trying to answer some of the important in a way anyone can check without spending years mastering a big model.

The biggest question of the moment is: what is the right price for carbon? I’m going to look at this question for the world as a whole, disregarding national differences and so on. If you’ve read the title of the post, you’ll know what answer I reach.

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Unfair exchange

John Quiggin21 Comments

Ten years or so ago, the Australian dollar was worth about 50 US cents on foreign exchange markets. I bet a small amount with a colleague that within five years, $A would have achieved parity. My reasoning was simple, elegant and wrong. By most estimates, the Purchasing Power Parity exchange rate[1] is around $A1.00 = $US0.70, so the Australian dollar was undervalued by around 40 per cent. It seemed to me that, within five years or so, the deviation should have not only been corrected but overshot in the other direction, giving a rate near parity.

I should have considered more carefully the saying, apocryphally attributed to Keynes, that the market can stay irrational longer than you can stay solvent. If deviations from PPP corrected within five years, speculators would bet on this happening, and the deviation would not be sustained at all. So, if PPP is false, it must stay false for long periods.

And that’s what’s happened. The Australian dollar has been above parity for some months now, and shows no sign of falling.

That raises some interesting questions. I’ll put up a few over the fold, and maybe update them as I go

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Bad and good news from the IEA

John Quiggin40 Comments

The International Energy Agency reported today that global CO2 emissions hit a new record in 2010, and are well above where they should be for a path to stabilise CO2(+equivalent) concentrations at 450 ppm. The Global Financial Crisis has had a significant impact in the US and Europe but (not surprisingly) hardly any in China, where the impact of the crisis was short-lived, and rapidly offset by a strong fiscal stimulus. With the failure of policy in the US, things are not looking good. On the other hand, after playing the wrecker’s role at Copenhagen, China now seems to have embraced the idea of becoming the world leader in renewable energy.

The real good news is a new study undertaken by the IEA that refutes negative views about the variability of supply from PV and wind power (expressed by quite a few commenters here over the years, and the subject of numerous amateur analyses at blogs like Brave New Climate) and concludes that “the challenges of integrating large shares of variable renewables in power systems are far from insurmountable“. The analysis suggests that starting with existing grid characteristics, and employing balancing technologies now available, it would be possible to supply between 20 per cent (Japan) and 60 per cent (Denmark) of electricity generation using variable renewables, with an average of around 30 per cent. No specific date is given, but the discussion implies a time horizon around 2030.

Unfortunately, the PDF containing the detailed analysis is on sale at a price of 80 euros, which I don’t intend to pay, but the executive summary is online and gives a general idea of the argument.

An important point is that the most natural partners for variable renewables are sources that can be turned on and off easily. Hydro-electricity is the best example, but scope for expansion is limited. The next best case is a mixture of gas and variable renewables, and that seems like the sensible path to take over the next decade or two.

In the absence of any equally authoritative critique of the IEA analysis, I intend to treat this question as settled from now on, as with the prospects for nuclear power. Anyone seeking to make unsupported counter-claims based on their own intuition, BNC-style amateur analysis and so on should take them to the nuclear sandpit.

Summing up the news so far, if the world’s governments are willing to act to stabilise the global climate, they can do so at very low cost. It remains to be seen whether or not they will.

UK leading the way

John Quiggin19 Comments

The announcement by the UK government (Conservative-LibDem coalition) that it would aim to reduce CO2 emissions by 50 per cent, relative to 1990 levels, by 2025 has had a significant impact on the Australian debate and is likely to have a greater impact as time goes on.

In part this reflects the fact that, understandably if not entirely justifiably, Australians pay a lot more attention to news and ideas from the UK and US than from, say, France or Germany. The British announcement cuts the ground from under many of the claims being made by the denial/delusion/delay lobby in Australia.

* The idea that “Australia risks getting out in front of the world” is obviously false. Even assuming we get a carbon tax, leading on to an emissions trading scheme later this decade, we will be a decade or so behind the UK and other EU countries, which introduced an ETS in 2005

* The view that it is impossible, in a modern economy to reduce emissions substantially without a radical reduction in economic activity is obviously not shared by the UK government which (unlike the critics) has actually done the analytical work required to show that large reductions can be achieved at very little economic cost, and is now implementing the required policy. I’ve demonstrated this point over and over on this blog, and the negative responses have amounted to little more than “La, la, I’m not listening”, but hopefully a practical demonstration will have more effect

* As part of the longstanding intellectual trade with the UK, we get a regular flow of delusionist speakers like Lord Monckton out here (fair’s fair, we did send them Clive and Germaine after all). Demolition jobs like this one, from a leading British Tory, might make their audiences a bit more sceptical

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Tell it early, tell it all, tell it yourself

John Quiggin28 Comments

That’s the advice on scandal management from former Clinton spinmaster Lanny Davis, who’s since applied his expertise to defending some of the least appealing clients imaginable. Whatever you think of Davis, his advice is pretty good, and lots of people have come to grief by doing the opposite. That certainly seems to be the case with George Mason University. In March 2010, they received an official complaint of plagiarism regarding the notorious Wegman report produced (at the request of Republican Congressman Joe Barton) to criticise the well-known ‘hockey stick’ graph of global temperatures. Amazingly, GMU Professor Edward Wegman had lifted substantial blocks of text, without acknowledgement, from one of his targets, Raymond Bradley. When this was pointed out by bloggers John Mashey and Deep Climate, Bradley complained and asked for the report to be retracted.

Ignoring (or ignorant of) Davis’ advice, GMU took its time, perhaps hoping the problem would go away. Unfortunately for them, the opposite happened. Further research produced at least two more instances of plagiarism, one in another section of the Wegman report dealing with social networks and another in an unrelated paper on color vision. As I a mentioned a little while ago, the social networks analysis produced an academic paper, accepted by a Wegman mate with no peer review, which has now been retracted.

And now, Nature, which published the original hockey stick paper in 1999, has weighed in with an editorial calling for GMU to hurry up, and making mention of the Office of Research Integrity as an alternative process. That could make it a criminal matter.

At this point, GMU has no appealing options.

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