I spent yesterday at the Gold Coast, at a pre-conference Workshop on Water leading up to the International Association of Agricultural Economics Conference which starts today.

My presentation gave some simulation results on the impact of climate change. It’s still preliminary, but for those interested here is the presentation.

There’s a big area set aside for WiFi users at the Conference, including at least one possible liveblogger, who has already chided me for my failure to report promptly. The competition in econoblogging is definitely getting keener, in all senses of the term.

There’s a lot of interesting stuff around just now on the question what we should and shouldn’t do with measures of aggregate economic performance and welfare. I talked about this in my BrisScience lecture. I make (again) the point the Gross Domestic Product is a bad measure of a nation’s economic welfare because it’s Gross (doesn’t net out depreciation of physical or natural capital), Domestic (doesn’t net out income paid overseas) and a Product (takes no account of labour input)).

But if GDP isn’t a good measure, what is? There are a bunch of alternatives in the air at present such as Gross National Happiness and the Genuine Progress Indicator (the latter has been advocated by Clive Hamilton and the Australia Insitute. These ideas have been getting a fair bit of criticism lately. Andrew Leigh has a go at Gross National Happiness while Nick Gruen writes on the Genuine Progress Indicator for New Matilda. This is subscription only, unfortunately, but when Nick completes his two-part paper, I’ll try to comment more. Andrew Norton at Catallaxy has also written a lot on this.

My general view is close to Nick Gruen’s. We should be trying to get at a Net measure of Full Income (including leisure and taking account of resource stocks) but none of the attempts so far have been really satisfactory. More on this when I get some leisure (As If!).

I’ve been sent a critique of Alan Wood’s piece in the Oz claiming that global warming is a hoax. It’s written by a climate scientist who knows what he is talking about on this issue. Wood obviously doesn’t know or doesn’t care.

I was very disappointed in Wood’s piece. While his economic views are very different from mine, his columns on economic issues are usually rigorous, and if he makes a factual claim, it’s generally reliable. But his standards seem to desert him when he writes on this topic.

The response is in the (now relatively uncommon) form of a point-by-point fisking. Wood’s text is in plain type and the comment’s in italics.

One fairly trivial point is quite revealing. Wood claims, incorrectly, that the Mann “hockey stick” graph was “for a time, incorporated … into the IPCC’s logo.” As the analysis makes clear, the repetition of this bogus factoid indicates that Wood is sourcing his material from the denialist echo chamber, and not doing his own research. This is standard practice for our legion of rightwing hacks (and quite a few lefties as well), but it’s not the kind of thing I’d expect from Alan Wood.

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The big news on the RSMG blog is the release of our annual report for 2005 available for download here (3.2 MB PDF).

Other recent posts include, a wrapup of the deabte on Dryland salinity and groundwater, Water trading between states – in the details. and To recycle or not to recycle?

The body of Jake Kovco has finally returned to Australia. It’s hard to imagine what his family must be going through, starting with the news that they had lost a husband, a father and a son, and then compounded with the series of dreadful bungles (or worse) that we’ve seen.

It would be good to think that somewhere in the chain of command, someone will step forward to say “This happened on my watch, and whether or not I personally did anything wrong, I’m responsible. I offer my resignation”. So far, there hasn’t been any sign that anything like this will happen, but there’s still time.

A year or so ago, I was surprised to find out that a fair bit of the news on US TV is actually advertising produced by corporations and fed into news broadcasts with spurious “reporters”. The NYT has an update, with a report by the Center for Media and Democracy on the extent of the practice.

My piece in yesterday’s Fin is over the fold. I go into full free-market mode attacking the government’s deal with the monopolists. Ken Davidson in the Age goes the other way, arguing for tight regulation in the public interest, but I can’t see this ever happening to Murdoch or even Packer jnr. On the other hand, I guess we’re not going to see their spectrum taken away and auctioned off either. On the whole, though, I think the only useful intervention here is support for a strong public broadcasting sector. As far as the commercial networks go, the best hope is to encourage the kind of outside competition made possible by digital technology.

The point on which Ken and I agree, I think, is that we now have the worst of both worlds: lots of intervention, but in the interests of monopolists, not the public.
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The US recorded a trade deficit of $725.8 billion or 5.8 per cent of GDP in 2006. That’s roughly equal to Australia’s entire GDP. With short-run interest rates having risen, the income component of the current account deficit is bound to start growing rapidly soon. If the trade deficit doesn’t turn around this will generate an unsustainable explosion in debt and deficits.

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People who’ve been following the debate about global warming closely will be aware that the economic modelling used in projections of future climate change by the IPCC has been severely criticised by former Australian Statistician Ian Castles and former OECD chief economist David Henderson. The critique emerged in a rather confused form, with a number of letters and opinion pieces before finally being published in contrarian social science journal Energy and Environment. Responses, including mine, have been similarly partial and sporadic.

I’ve finally prepared a full-scale response to the main claim made by Castles and Henderson, that the use of market exchange rates, rather than “Purchasing Power Parity” conversion factors for national currencies, biases estimates of future emissions upwards. My conclusion is that although PPP measures are preferable in comparisons of national welfare, the biases introduced by using market exchange rates are not important in modelling emissions and will, on average, cancel out. You can read it all here.

Update: Ian Castles has sent a response which I’ve posted here. It doesn’t seem to me that Ian responds to my argument except to deny that the MER/PPP issue was the main point of the critique.

I should also note that Holtsmark and Alfsen (2004), whose paper I’ve just found, present much the same argument as mine.

Further update In the comments discussion, a fair degree of common ground has been reached. Ian clarifies that he and Henderson object to MER conversion factors, but not because they bias projections of emissions, saying

I agree that these arguments (about the errors in GDP growth and emissions intensity reductions cancelling one another out) are sound as a first approximation.

Ian makes the valid point that use of MER conversion produces the incorrect conclusion that the energy-intensity of LDCs is about the same as prevailed in developed countries when their income was similar. This could lead to misleading policy inferences, for example with respect to mitigation policy and should be corrected.

I agree with Ian that it is better to use PPP measures consistently, and that the sooner the IPCC does this the better. On the other hand, I think it’s important to make the point that the widely-repeated claims that IPCC projections of emissions are fundamentally erroneous because of the choice of exchange rate are not supported by careful analysis.

In every sense of the term.

The NYT runs an Op-ed Piece by John Lott, reporting statistical work he claims to have undertaken.

(Only too believable section). Lott’s results support current Republican talking points.

(Via Tim Lambert and Kevin Drum)