Category: Environment

Gittins on the Water Plan

John Quiggin6 Comments

Ross Gittins says of the government’s $10 billion National Plan for Water Security “They don’t want to fix problems, just be seen trying“. As has become abundantly clear from Channel 7’s FOI exercise, the whole thing was cooked up in a week or so, with the aim of countering a co-operative initiative launched by Kevin Rudd. Once it was out, the problem was that the only policy that would have any real effect, buying back water rights, was vetoed by the Nationals. So, in the Budget, the whole Plan was kicked into touch until 2008-09, by which time the election would be safely out of the way.

I had an initial assessment here, when there still seemed to be some chance the Plan would work, and an evaluation more similar to Gittins not long ago.

I have been very disappointed in Turnbull’s performance on this issue. He obviously knows what needs to be done, and if anyone had the capacity to ride roughshod over the Nats, I would have thought he did. I can only conclude that, having been put into the job by Howard, he has had no backing and has been, in effect, set up to fail.

(Thanks to Tim Coelli for pointing me to this piece).

Climate change roundup

John Quiggin11 Comments

There’s so much happening on climate change that it’s hard to keep up, but I’ll try and note some points down, as much for the record as anything else. I’ll update this roundup with more as I get time.

* There was talk in the Oz last week of a Sydney declaration of a regional emissions trading agreement, to emerge (very conveniently timed) from the APEC meeting in September. Now the idea is dead, reflecting the same Bush Administration intransigence on display in the leadup to the G8 meetings. Howard is discovering, like Tony Blair, that loyalty to Bush is its own reward.

* Also in the Oz, Alan Oxley doesn’t know the difference between levels and growth rates.

* And, yet again in the Oz, a classic example of the fallacy of composition (unless its a particularly egregious case of special pleading). To be fair, the author finally gets around to the point that we have to do something even if our role is a relatively small one. Although it’s not strictly relevant, Australia’s share of international emissions is about the same as that of the UK or France (even though they have larger populations).

Reply to Davidson and Robson

John Quiggin90 Comments

Phillip Adams and Peter Dixon have prepared a reply (over the fold) to the opinion piece by Robson and Davidson in the Australian which offered a range of incoherent criticisms of proposals to reduce emissions of greenhouse gases. Disgracefully, but not at all surprisingly, the Oz has declined to print it, marking yet another step in its decline.

Admittedly, the debate is so one-sided that printing the reply would have made it obvious how ill-advised it was to publish the Davidson-Robson piece in the first place. Dixon is Australia’s pre-eminent economic modeller, and Adams is his successor as Director of the Centre of Policy Studies at Monash. They have published extensively in leading economic journals on modelling and climate change, and their expertise shows. Robson and Davidson have essentially zero professional expertise on these issues, and that shows too. Of course, they have exactly zero professional expertise in climate science, and that hasn’t stopped them claiming the entire profession is wrong, so we shouldn’t be surprised.

Tim Lambert cleans up what’s left
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Groundwater

John Quiggin6 Comments

The bleak outlook for the Murray-Darling Basin has just got substantially worse with reports that inflows may have been overestimated by as much as 40 per cent, as a result of double counting of groundwater. Of course, as Malcolm Turnbull says in the article, the general problem is well-known to those working in the area. The Risk and Sustainable Management Group*, which I lead at UQ, has been working on it for some time, and so have lots of others. But, as we know all too well from our modelling efforts, there’s a huge gap between a qualitative understanding of the issues, and an adequate quantitative representation of flows of water and salt, not to mention the nutrients that contribute to things like blue-green algae blooms. Everyone is doing the best they can, but it will take a long time to get coherent data sets together, and time is something we don’t have.

In the meantime, policy is at a standstill because the National Party refuses to countenance voluntarily repurchase of water rights, let alone a scaling back of allocations that are, in retrospect, obviously unsustainable. Unless Turnbull can really start banging some heads together on this one, his first ministerial stint is going to end up a disastrous failure.

* I’m reposting this at the RSMG blog, which has lots of useful discussion of water and other environmental issues.

Update 18/5 It turns out this estimate is from Bill Heffernan (I had somehow inferred that the National Water Commission had produced it) and it’s an upper bound, based on the total contribution of groundwater. Turnbull has a letter in today’s Fin suggesting that the real value is 3 per cent, though I don’t think this includes capture of surface flows through farm dams, laser levelling and so on. Even 3 per cent of flows is a big deal – much more than the amount that has so far been repurchased or regained through efficiency savings.

Insider

John Quiggin32 Comments

Andrew Bolt picks up the Davidson-Robson piece I mentioned here. I know Bolt mainly from his writing about global warming and (to a lesser extent the Iraq war) where he is about as wrong as it is possible to be, in every possible way. He gets basic facts wrong, recycles long-exploded propaganda exercises like the Oregon Petition and commits just about every kind of logical fallacy known, all in an attempt to push a position that has literally no credible scientific defenders left*. He compounds all this by explaining the virtually unanimous verdict of the scientific community, including such bodies as the US National Academy of Sciences, Royal Society of the UK, Australian Academy of Sciences and so on as the product either of a crude conspiracy to scare up grant money or a quasi-religious cult.

Fortunately, in the case of global warming, anyone with access to the Internet can easily check the facts, so the only people deluded by Bolt on this topic are those complicit in their own delusion, believing an implausible story because it suits their ideological or cultural/tribal prejudices. But Bolt’s opinions on general politics are routinely featured on such programs as the ABCs Insiders. As the name of the show indicates, we are supposed to accept on faith that Bolt has access to facts and insights not available to the rest of us, except through the intermediation of Bolt or his fellow-insiders.

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Miserable failure …

John Quiggin23 Comments

… is a term that will forever be associated with George W. Bush. So, it’s interesting in more than one way that two of our local supporters of the Bush policy line on most issues , Sinclair Davidson and Alex Robson, use the phrase to describe a petition signed by a large proportion of the Australian economics profession in 2002, calling on the government to ratify Kyoto. (I was one of the organisers, and am currently particpating in a similar exercise). Writing in the Oz (where else), Robson and Davidson write “A similar petition was circulated in 2002 but ended in miserable failure when the Government simply ignored it.”

It’s an impressive piece of chutzpah on the part of Robson and Davidson to ignore the fact that, in the intervening five years, the government’s rejectionist position has collapsed, having already been abandoned by the business community and the vast majority of the Australian people. I don’t suppose a petition signed by academic economists had much responsibility for this, but it may have helped to undercut the spurious claim that signing Kyoto would be ruinous to the economy.

But for real chutzpah you can’t go past the fact that when the 2002 petition was released, with nearly 300 signatures, a counter-petition was immediately announced, and a text circulated. But the petition was never released apparently because the number of signatories was embarrassingly small and the number with any real stature in the profession close to zero. The leading organiser of this effort – none other than Alex Robson.
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CEDA lunch on emissions trading

John Quiggin26 Comments

Yesterday, I spoke at a CEDA (Committee for the Economic Development of Australia) lunch on the topic “What would life be like with an emissions trading system for Australia”. Shorter Quiggin: Much as it is now. Slightly longer version: For the average household, it will be a bit like the GST, with some initial disruption and relative price changes, becoming effectively invisible as carbon costs are factored into prices throughout the economy. Other speakers were Paul Simshauser from Babcock and Brown (owners of electricity generators and other infrastructure) and Stuart Dix from e3 International, a firm with a lot of experience in emissions trading markets.

The audience was similarly made up of likely buyers of emissions credits (Stanwell and other electricity generators), sellers (geothermal and other carbon-free sources) and intermediaries (accounting companies, consulting engineers and so on). They are looking at decisions on the billion-dollar scale over the next few years

A couple of points of interest:

* In addition to the usual free lunch and bottle of wine, speakers were rewarded with 17 trees worth of carbon credits, roughly a year’s worth of CO2 from driving for the average motorist.

* The delusionist idea that the whole thing is a hoax dreamed up by scientists looking for research grants/the UN seeking world domination/the Illuminati didn’t get a mention, even in refutation. Unlike the rightwing commentariat and some senior political figures, serious businesses have concluded that the main game now is how emissions trading should work, not whether we should have it.

Economists lining up on climate change

John Quiggin37 Comments

Today’s Fin includes a full-page ad from five prominent financial market economists, calling for the introduction of a carbon trading scheme to reduce greenhouse gas emissions (paywalled, but it gets a brief mention here in the Oz). Meanwhile, Crikey yesterday ran a piece by another financial market economist, Michael Knox. Knox multiplies the estimated social cost of CO2 emissions from the Stern review ($85/ton of carbon) by total carbon consumption to get an estimated 5.3 per cent of GDP, and concludes (contra Stern) “This means that the cost is not 1 per cent of GDP but 5.3 per cent of GDP.

But Knox has the problem back to front here. He has calculated the cost to the world of Australia’s carbon emissions. Equivalently, this is the revenue that would be raised by a carbon tax of $85/ton, assuming a zero price elasticity of demand.

But the 1 per cent estimate of Stern, with which he is comparing his numbers is the cost of reducing emissions by 50 per cent relative to business as usual. Assuming the policy adopted was a carbon tax, with zero exemptions, the appropriate measure is the welfare triangle of deadweight loss. Knox has instead calculated the rectangle of revenue, a standard mistake for beginners in welfare economics, but a bit surprising to see from a senior financial economist.
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