The personal experience of the floods and watching the effects of Cyclone Yasi haven’t altered my views on climate change, which are based on a large accumulation of scientific evidence, so that one or two additional data points should have only a marginal confirming effect. But they have changed my personal attitude to those who persist in obstructing action to mitigate climate change. My piece in Thursday’s Fin (over the fold) was a final appeal to any of them still accessible to reason, but I haven’t seen any evidence that it had any effect.
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Category: Environment
Factor of five
The Oz reports Opposition spokesman Greg Hunt, saying that “FAMILIES face electricity price rises of up to $1100 a year” under a carbon price of $30/tonne. Oz reporter James Massola doesn’t check the arithmetic behind this scary claim, so I guess it’s a job for the blogosphere.
Using black coal as the fuel source, a tonne of CO2 is emitted for each MWh generated, so the tax comes out at 3c/kWh. Our hypothetical family would have to use nearly 40 000 kWh each year. The average NSW household uses 7300 Kwh/year, putting Hunt’s claim out by a factor of five. That “up to” is doing an awful lot of work, the kind that would get a commercial advertiser into a lot of trouble with Consumer Affairs.
Assuming Hunt isn’t deliberately lying (and to be fair, he’s one of the best on the Opposition side) how did he get such an absurd number? My guess is that he divided an estimate of total revenue ($16 billion, which looks about right for emissions of 500 million tonnes a year), then divided by the number of households. His mistake of course is to assume that 100 per cent of emissions arise from household use of electricity – the correct figure is about 20 per cent.
Coming back to the average household, the implied cost is around $200/year, which would, in a properly designed scheme, be returned one way or another, either in direct compensation or in offsetting tax cuts.
Water policy after the flood
There’s already some finger-pointing about the management of Brisbane’s dams in the weeks leading up to the flood. I don’t want to deal with that while the emergency continues, but I will make a couple of suggestions regarding future policy in Brisbane and elsewhere
* The historical statistics on the frequency of severe rainfall events (both droughts and floods) have proved to be of little value. Everywhere in Australia, we need to work on the assumption that extreme events will be more common in the future than they were in the (pre-2000) past.[1]
* As regards Wivenhoe Dam, we need a much more cautious approach to flood mitigation, going into wet seasons with a substantially larger reserve capacity. This in turn will reduce Wivenhoe’s usefulness as a water supply source, and buffer against drought.
* One response that is immediately available to us is to turn on the water recycling plant, built at great expense during the drought and never used. Current policy is to turn it on when average dam levels are at 40 per cent. This trigger should be raised significantly. As a very rough guide, it appears that when our dams are at 100 per cent of normal we currently have enough storage for four years supply. If instead we cut the maximum to three years supply (75 per cent0, we could (roughly) cancel the impact on supply by turning on the recycling plant at 65 per cent (40+25)
Billions down the drain
That’s the headline on my opinion piece in yesterday’s Fin, over the Fold
A tender model for carbon pricing
My UQ colleagues Lynette Molyneaux, John Foster and Liam Wagner have produced a paper arguing for a Tender-Price Allocation Mechanism for reductions in carbon emissions. I haven’t had time to consider the proposal in detail, and I don’t entirely agree with the paper’s characterization of the ETS and carbon tax alternatives (I currently lean to the carbon tax, mainly because the CPRS ended up such a dog’s breakfast that it would be better to restart from scratch). But, I think it’s useful to look at all the alternatives.
Yet more zombies — Crooked Timber
After finishing Zombie Economics, and confident that it would soar to the top of the best-seller lists, I had the idea of a franchise-style list of sequels – Vampire Econ (on the financial sector), Cyborg Econ (the market and the mixed economy) and so on. Now, though, I’m thinking I could spend a lifetime on the zombie ideas that dominate the political right.
One of the most tenacious has been the DDT myth, that the writings of Rachel Carson led to a global ban on the use of DDT[1], bringing to an end a program that was on the verge of eradicating malaria[2], and causing the death of millions[3]. I thought that Tim Lambert and I had finally administered the coup de grace with this piece in Prospect a while back, after which some of the leading promoters of the myth (such as [[Roger Bate]] and his [[Africa Fighting Malaria]] group) appeared to have given up and moved on to other projects.
But zombies are hard to kill, especially for such reliable sources of misinformation as Britain’s Channel Four. C4 has just run a documentary by Stewart Brand, entitled What the Green Movement Got Wrong in which the DDT myth was repeated in its full glory. Amusingly, Brand made the plea ‘I want to see an environment movement that can admit when it’s wrong’. When challenged by George Monbiot on his glaring errors of fact, Brand exhibited the familiar pattern of weasel words and blame-shifting, followed by silence.
Meanwhile, two of the AFM crew, Richard Tren and Donald Roberts have published a pro-DDT book. The Reuters report on the book says that it comes Six years after the insect killer DDT was globally outlawed on grounds of environmental damage. This is confusing to say the least, given that claims about the dire effects of the supposed ban were around long before this and that the same groups were celebrating the supposed reversal of the ban by WHO in 2006. Actually, both the Stockholm Convention which came into effect in 2004 and the “new” WHO position were little more than different spins on the long-standing consensus that DDT should be banned in agricultural use but retained in anti-malarial use until it can be replaced by cost-effective alternatives. The Reuters report notes that “Tren is a “free market lobbyist who has previously criticised tobacco control”.
Update The original version of this post referred to Richard Tren as a “tobacco lobbyist”. This claim was false. I withdraw it and apologise to Mr Tren.fn1. DDT has never been banned in anti-malarial use
fn2. The attempt to eradicate malaria through DDT failed because of the development of resistance, long before environmentalist concerns about DDT
fn3. The DDT ban myth was largely popularised by the tobacco industry, seeking to pressure WHO out of anti-smoking campaigns in poor industry. Those pushing the myths are the active agents or unwitting dupes of an industry that has indeed killed millions
An even more durable zombie than the efficient markets hypothesis
Framing and farming
My column in last week’s Fin was about the communication and policy failures surrounding the release of the draft plan for the Murray Darling Basin. I still hope that a solution can be salvaged, but the release was a fiasco.
No one will be forced out
Accidents of timing sometimes work out in interesting ways. Early this year, the Risk and Sustainable Management Group at the University of Queensland, which I lead, planned a workshop to review the draft plan for the management of the Murray-Darling Basin, then due for release in July. The rather optimistic title was ‘Water policy in the Murray-Darling Basin: Have we finally got it right?’ and the idea was to allow leading economists and scientists, with the hindsight of a few months, to review the plan and its reception.
Instead, because of delays to the election, the workshop was held only a couple of weeks after the release of the ‘Guide to the Draft Plan’, copies of which were still smouldering on the steps of community halls around the Basin. In this context, the sub-title ‘Have we finally got it right’ took on a tone of sardonic irony.
Surprisingly, though, the consensus of the workshop was that, in substantive terms, the draft plan did mostly get it right. Many of the problems we have seen are the result of poor communication and an excessive bureaucratic reliance on the provisions of the 2007 Water Act, under which the report was required. Others could be addressed with sensible government policy responses to the problems inevitable in dealing with the consequences of decades of largely failed policies.
The big communication problem was the media framing of the plan in terms of ‘cuts’ to water entitlements and allocations, resulting in a string of news stories of farmers saying their businesses would be ruined by cuts of the magnitude envisaged in the plan. The presentation of the draft plan by the Murray Darling Basin Authority did little to challenge this framing. As a result, the Gillard government was left to play catch-up, protesting that it had already committed itself to ensure that water would be acquired only through voluntary participation in purchases or water-saving investments.
The discussion of economic impacts was similarly misleading and similarly poorly handled. Model estimates of changes in employment levels were translated as ‘jobs lost’, when in reality they mean nothing of the kind. The most direct impacts will be on the number of irrigation farm operators. Given reliance on voluntary buybacks, the number of operators who will lose their jobs, or be forced off the land, can be precisely estimated at zero. The reduction in employment will primarily take the form of operators choosing to sell their water entitlements to fund either retirement or a shift into other industries.
For most towns and cities in the region, the ‘job loss’ estimates will be similarly notional. Total population in the Basin is growing, and so is employment. A small change up or down in projected employment growth over a decade or so is little more than a modelling artifact.
These purely notional estimates serve to distract attention from the more important results, focusing on the minority of communities in the Basin where a contraction in irrigated agriculture is likely to produce a reduction in total employment or to exacerbate existing adverse trends.
Communication failures are never the whole story. The government should have had, at the ready, a regional development package that would address both unmet needs in regional Australia as a whole and the specific needs of communities in decline, regardless of the cause of this decline.
Instead, policy responses have been narrowly focused on irrigators and irrigation infrastructure. Billions of dollars have been allocated to projects to improve the efficiency of irrigation, despite evidence that very little water is ultimately lost to the system through processes such as leakage and seepage, which mostly return water to rivers and groundwater systems. If even a fraction of this sum were allocated to improvements in social infrastructure, it could generate enough new jobs and social returns to more than offset the adverse impacts of a contraction in irrigated agriculture.
A solution to the environmental, economic and social problems of the Murray Darling Basin is within our reach. A combination of voluntary repurchase of excess water entitlements and investment in social infrastructure could be funded from the $10 billion already on the table for the Water for the Future initiative. Success or failure will tell us a lot about the capacity of the Gillard government to deliver meaningful reform.
Learning from mistakes, not repeating them
The policy skills of the NSW Labor government were graphically illustrated by Kristina Keneally’s recent announcement that the scheme offering a 60c/kWh feed-in tariff to anyone who installed solar panels on their roof had attracted far more demand than the government had budgeted for, and that the price would therefore be cut back to 20c/kWh (roughly the delivered price of coal-fired electricity). This pattern has been repeated with a string of schemes in Australia and overseas in recent years. The reason is simple, as can be seen from the graph below.
The implicit price of carbon
I was too busy to post when it came out, but the Climate Institute has recently issued an important report on the implicit carbon price associated with such measures as renewable energy quotas. The take home message is that major economies, either directly or indirectly, are putting in place carbon prices. China’s current implicit price, for example (in PPP terms), is roughly either times higher than Australia’s and three to four times higher than the USA and Japan.
You can read more here.
An important implication is that concerns about Australia “acting alone” or “getting out in front” are misplaced. We are, as we have been for most of the past decade, at the back of the international pack. One day, this will come home to hurt us.
The end of paper
A few year ago, I observed that the paperless office, long derided as a myth was on the edge of becoming a reality for those on the leading edge of technology (immodestly, I took myself as an example). Jumping to the present, global demand for paper has dropped sharply. Granted, there’s a recession on, but that’s only a spur to changes that were going to happen anyway. When and if the economy recovers, i don’t think paper demand will bounce back, except in a few specialty areas.
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John Quiggin 