Markets and Conservation

Chilean water markets and hydroelectric projects. 

Ecuador's Conservation Innovation

At Sense & Sustainability

REDD as a Tool for Development

I was recently given a blogging spot at the new site Sense & Sustainability so I will now be publishing a weekly blog there.  I'll put links on this site as well and I plan to keep posting here occasionally; mostly things that aren't appropriate for Sense & Sustainability. 


Here is my first post about the new UN REDD social and environmental standards. 

Climate Change & Uncertainty

I'm going to be lazy now that I'm back from my trip and start off by simply re-posting a paper I had to write before I left.  New stuff sometime next week once I get caught up on all the stuff I should have been doing while I was traveling.

Climate Change & Uncertainty

Climate change is likely the most important issue of our time.  The overwhelming majority of the scientific community agrees that climate change is a reality and that its primary causes are anthropogenic (Oreskes 2007, Christoff 2010, Glieck et al 2010). 

Consensus does not imply finality, however.  Rather, although the debate about the existence of climate change has effectively ended, the question of how the changes will proceed and what the likely outcomes will be remains open. In this area the science is indeed unsettled and there remains a great deal of uncertainty.  This is especially true with respect to the concept of climate sensitivity and the threshold effects likely to be triggered by climate change (Alley 2004). 

This uncertainty has important implications for managing the effects of climate change.  In particular the “fat tail” phenomenon (Weitzman 2010) suggests the “unlimited downside liability” of climate change implies that there should be greater action taken today to limit the impacts of climate change. 

Section II: Climate Change Consensus

To begin, it should be acknowledged that science does not work by process of consensus – theories are proposed, tested and, if their predictions are verifiable and replicable, they are broadly accepted.  However, science has very few absolutes; theories are continually scrutinized. That does not mean that the science is unsettled or that sound policy cannot be based on its predictions.[1]  Furthermore, “consensus” does not mean absolute agreement on all points.  Rather, in the context of scientific theory, consensus is generally taken to be a “measure of a central tendency and as such, it necessarily has a distribution of perspectives around that central measure” (Pielke 2005).  When the distribution of perspectives around a central tendency has reached a sufficient concentration around one point it can safely be said that point is the consensus opinion.  

Perspectives on the reality of climate change have reached sufficient density around the affirmative to say that this is now the scientific consensus (Oreskes 2007, Alley 2004, Anderegg et al 2010, Glieck et al 2010, Doran and Zimmerman 2007).  Numerous studies of the opinions of scientists have consistently reported between ninety and ninety-seven percent of scientists believe that climate change is occurring (Doran and Zimmerman 2007, Anderegg et al 2010, Oreskes 2004).[2]

Beyond merely agreeing that climate is indeed changing, more and more scientists agree that humans are causing this change.  In a letter signed by 255 members of the National Academy of Sciences Glieck et al (2010) states, “there is compelling, comprehensive, and consistent objective evidence that humans are changing the climate…”  The National Academy of Science was more direct when it said, “Climate change is occurring, is caused largely by human activities…” (NRC 2010).  These are strong statements that indicate scientists are quite confident of the reality of climate change and the large role that humans are playing in creating climate change. 

It is here that the consensus, and certainty about climate change, begins to break down.  While scientists are certain about the reality of climate change and its anthropogenic nature, they are less certain about its effects, as the next section will discuss. 

Section III: Climate Change Uncertainty

There are several critical areas in which the science of climate change remains unsettled.  The first, and most important of these, is climate sensitivity.  This is a “measure of the climate system’s response to sustained radiative forcing … defined as the global average warming following a doubling of CO₂ concentrations” (Weitzman 2010).  While the 2007 IPCC report states that there is sixty-six percent chance that a doubling of CO₂ will result in warming of 2-4.5°C (Dietz 2010) various other climate models predict changes ranging from 1°C up to 12°C (Oreskes 2007).

A second serious uncertainty in the science is the understanding of the role that thresholds will play in climate change (Alley 2004).  The planet has hundreds of geophysical systems that are currently in equilibrium. Each of these systems has developed and operates within the climatic conditions that have been prevalent for the last several thousand years.  However, as climate change pushes the planet out of the boundaries of these conditions it is unclear how these systems will react (Alley 2004, Christoff 2010).  It is believed that many of these systems have a threshold value that, once crossed, will cause the system to go into a new equilibrium (Alley 2004, Lenton et al 2008).  The uncertainty surrounds exactly what that threshold value is, what the new equilibrium might look like, and even how many of these systems exist.[3]  Whether or not these thresholds are reached and what happens if they are has major implications for the long-term impacts of climate change

A third area of uncertainty is de-glaciation and sea-level rise (Bray 2010, Christoff 2010).  Although scientists know that both Greenland and Antarctica are losing ice mass it is unclear what the long-term impacts on sea level will be, both in how much the sea will rise and how quickly.  The IPCC presents a range of possible values for sea-level rise by 2100 but there is little consensus on these numbers (Bray 2010).  Additionally, some scientists believe that the collapse of the West Antarctic Ice Sheet could occur within the next hundred years, leading to several meter sea level rise while others predict it will occur over the next several centuries (Lenton et al 2008).

Section IV: Fat-tails and Risk Management

The high level of uncertainty over what the results of climate change will be have important implications for how the risk of these results is managed.  These implications are most clearly elucidated by Weitzman (2010) in his discussion of the fat-tail phenomenon.  In short, risk assessment regarding climate change is different than most risk assessment because of three things: (1) the potential damage from climate change could be catastrophic, (2) the probability of these catastrophic damages actually occurring is not insignificant and, crucially, (3) scientists don’t know how catastrophic the damage may be nor how insignificant the probability actually is (Richardson et al 2009, Plummer 2011, Weitzman 2010). [4]

Risk management typically assumes that while a catastrophe is possible, the likelihood of one occurring is remarkably small, too small to justify allowing the potential consequences to dictate risk management responses.  Weitzman’s point is that the nature of scientists’ uncertainty about the scope of climate change makes typical risk assessment assumptions inappropriate.  First, too much is unknown about what exact temperature difference is required to bring about a catastrophe.  Second, the welfare effects of catastrophic climate change could be extremely high and the proper way of determining these effects (called a damage function in economics) is unknown (Weitzman 2010, Dietz 2010, Plummer 2011).  What is known is that the effects could be large enough to dictate policy responses even though there is a low probability of them occurring.  Finally, even a low probability is not low enough. As Weitzman (2010) puts it, “the critical question…is how fast does the probability of a catastrophe decline relative to the welfare impact of that catastrophe?”  In the case of climate change, Weitzman’s answer is not fast enough. 

If Weitzman is correct – and empirical work suggests that fat tails are three times as likely as thin tails in the probability distribution of temperature changes (Mason and Wilmot 2011) – then the costs of climate change policy should be weighed against the costs of catastrophic climate change  (Crost and Traeger 2010, Weitzman 2010, Pindyck 2007).  Because the cost of inaction, or too little action, is so high, the optimal price to pay to avoid these costs is much higher than if the distribution had a thin tail (Pindyck 2007).[5]  Although this price remains sensitive to discount rates (Deitz 2010, Sterner and Persson 2007) – contrary to Weitzman’s claims – even with low discount rates the implied price is much higher than what policy makers are currently considering (Weitzman 2010). 

Section V: Conclusion

The existence of climate change is no longer in doubt among the scientific community.  It is widely acknowledge to be occurring and to be caused primarily by humans.  Anthropogenic climate change is therefore something that must be acknowledged and prepared for to maintain a livable planet.  The challenge for policy makers is to craft policies to ensure a livable planet in the face of the remaining scientific uncertainty about the effects of climate change.   

This uncertainty is centered on how climate change will change the planetary systems on which humans depend.  It is likely that climate change will cause some of the largest geophysical systems to cross thresholds that push them towards new equilibrium but it remains uncertain what these thresholds are and what the new equilibrium will be.  Furthermore, climate change will certainly lead to higher seas but how much higher is unclear.  Even the relationship at the heart of climate change, how much warming will occur with a doubling of CO₂ in the atmosphere, is uncertain. 

These small uncertainties combine to create massive uncertainty around the probabilities of a catastrophe.  As a result, policy should be structured to pay to avoid the worst potential effects of climate change, a threshold current policy is far below. This requires both more investment in research to clarify scientific uncertainties and in policies that will help avoid the worst impacts of climate change.

References

Alley, R.B. 2004. Abrupt Climate Change. Scientific American. November. 62-69.

Anderegg, W.R.L., Prall, J.W., Harold, J., and Schneider, S.H. 2010. Expert Credibility in Climate Change.             Proceedings of the National Academy of Sciences. 

 Bray, D. 2010. The scientific consensus of climate change revisited. Environmental Science and Policy 13. 340-            350.

Christoff, P. 2010. Touching the void: The Garnaut Review in the chasm between climate science, economics             and politics. Global Environmental Change, 20. 214-117.

Crost, B., and Traeger, C.P. 2010. Risk and aversion in the integrated assessment of climate change. Department             of Agricultural and Resource Economics: UC Berkley.

Dietz, S. 2010. High impact, low probability? An empirical analysis of risk in the economics of climate change.             Climatic Change. 1-23.

Doran, P.T., and Zimmerman M.K. 2009. Examining the Scientific Consensus on Climate Change. EOS, 90(3).

Ereaut, G., and Segnit, N. 2006.  Warm Words How are we telling the climate story and can we tell it better?             Institute for Public Policy Research: United Kingdom.

Gleick, P. H., Adams, R. M., Amasino, R. M., Anders, E., Anderson, D. J., Anderson, W. W.et al. 2010. Climate             Change and the Integrity of Science. Science, Vol. 328. 689-690.

Grundmann, R. 2007. Climate change and knowledge politics.  Environmental Politics,  16(3). 414-432.

Lenton, T.M., Held, H., Kriegler, E., Hall, J.W., Lucht, W., Rahmstorf, S., and Schellnhuber, H.J. 2008. Tipping             Elements in the Earth’s Climate System.  Proceedings of the National Academy of Sciences, 105(6). 1786-1793.

Kopp, R.E., Golub, A., Keohane, N.O., and Onda, C. 2011.  The Influence of the Specification of Climate             Change Damages on the Social Cost of Carbon. Discussion Paper 2011-22, Economics E-journal. 

Mason, C.F., and Wilmot, N. 2011. On Climate Jumps and Fat Tails.  European Association of Environmental             and Resource Economists, 18^th Annual Conference: Rome, Italy.  

National Research Council. 2010. America’s Climate Choices: Panel on Advancing the Science of Climate Change.             The National Academies Press. Washington, DC.

Oreskes, N. 2004. The Scientific Consensus on Climate Change. Science 306. 1686.

Oreskes, Naomi. 2007. The scientific consensus on climate change: How do we know we’re not wrong? In             Joseph F. DiMento, Pamela Doughman. Climate Change. MIT Press.

Peiser, B.J. 2005. The dangers of consensus science. Canadian National Post. 17 May 2005.

Pielke, R.A. 2005. Consensus about climate change? Science, 308. 952-953.

Pindyck, R.S. 2007. Uncertainty in Environmental Economics.  Review of Environmental Economics and Policy,             1(1). 45-65.

Plummer, J. 2011. Overselling Carbon Dioxide Reduction Strategies for Global Warming.  IAEE International             Conference: Stockholm, Sweden. 

Richardson, K., Steffen, W., Schellnhuber, H.J., Alcamo, J., Barker, T., Kammen, D.M., Leemans, R., Liverman, D., 

Munasinghe, M., Osman-Elasha, B., Stern, N., and Weaver, O.  2009. Synthesis Report: Climate Change Global Risks, Challenges & Decisions. Copenhagen, 10-12 March.

Sterner, T., and Persson, U.M. 2007. An Even Sterner Review Introducing Relative Prices into the Discounting             Debate. RFF Discussion Paper 07-37: Washington, DC.

Weitzman, M. 2011. Fat-Tailed Uncertainty in the Economics of Catastrophic Climate Change.  REEP             Symposium on Fat Tails.

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[1] A facetious, and slightly misleading, example of this in the context of climate change can be seen on a bumper sticker that reads, “Climate change is a theory, like gravity.” 

[2] While some of these studies have been controversial (Doran and Zimmerman 2007), later studies confirm their results (Anderegg et al 2010, Oreskes 2007).

[3] Some major ones include the north Atlantic drift, methane stored in permafrost, and carbon stored in the deep ocean. 

[4] Take the amount the temperature will increase.  While temperature increases between 2-4.5°C are the most likely outcome of climate change, the probability that the temperature increase is closer to a catastrophic 10° is still remarkably high (Weitzman 2010, Dietz 2010).

[5] Under certain assumptions (rational, intertemporal utility maximizing agents with a utility function positively related to consumption) the optimal price to pay today is infinity.  This arises because in a climate catastrophe consumption is assumed to go to zero.  As a result, the marginal utility of consumption at that point is infinity.  The optimal amount for a rational agent to pay today to increase consumption in the future is equal to the marginal utility of consumption at that point in the future.  It should be clear then that the rational agent would be wiling to pay infinity today to ensure that some consumption remains in the future, in other words, to avoid catastrophic climate change.  Obviously this is an extreme case, but it serves to illustrate the point that the socially optimal point is far below the current amount spent on avoiding climate change quite well. 

Adaptation and Climate Change

The recent snow in Wellington – along with a class discussion on adaptation to climate change – got me thinking about an element of adapting climate change that I think is often overlooked.  That is the fact that, when assessing the ability of an area to adapt to climate change you must look at both the variability in the amount of temperature change that the region is likely to have,  so plus/minus however many degrees, relative to the normal annual variability in the region. 

For example, New Zealand is expected to have temperature change somewhere around +/- 2 degrees.  This is much different in terms of adaptation than a change of +/- 2 degrees in Boston.  The reason is pretty simple.  In Wellington annual temperatures typically range between roughly 35 and 75 degrees.  Even that might be a bit generous, generally if it’s below 40 degrees it’s exceptionally cold and it doesn’t often get much about 70.  A change of +/- 2 degrees represents 12% of the annual temperature change.  Compare this to Boston where temperatures range from well below zero to the high 90s or 100.  In that context +/- 2 degrees represents less than 2% of the annual change. 

The implications are that areas like Boston, with wide normal ranges are much more able to adapt to climate change than somewhere like Wellington.  In Boston people are accustomed to heating their homes in the winter and cooling them in the summer.  Conversely, in Wellington, homes are not designed to be heated in extremely cold (read: below 35 degree) weather.  So if weeks like this past one are going to become more common here it will require a significant investment in insulation and retrofitting a lot of long-term infrastructure.  Whereas if the average winter temperature in Boston drops from (I’m estimating here) 20 degrees to 18 degrees people will be a bit less comfortable and they’re going to spend a bit more on heating costs but they’re not going to have to put in new insulation, new windows and new heat pumps. 

I haven’t read much about this so I can’t point to other people’s thinking on it and it isn’t an earth-shattering revelation.  But it is one more minor aspect of climate change that will have to be dealt with going forward. 

The Buck Stops Here

By the end of the year we will have a clearer picture on exactly how committed Obama is to a clean energy future, a green economy, and environmental protection.  For some time now his failure to produce meaningful progress on these issues has been mediated in part by the existence of the Republicans and, more recently, the Tea Party.  To a limited degree, even his own party has presented obstacles to making progress on these issues.  Waxman-Markey died as much due to opposition from West Virginian Democrats as it did from Republican opposition. 

That is set to change by the end of the year.  The administration is now faced with a decision on the Keystone XL oil pipeline that is entirely up to the executive branch.  Because the pipeline would cross the U.S. border with Canada, approval of the project must come from the State Department.  Congress and the Republicans have no ground from which to effect the outcome (despite their attempts).  Granted, Obama is not in charge of the State Department.  However, it seems absurd to believe that if the Whitehouse opposed the project, the State Department would allow it to continue or vice versa. 

Certainly there are jobs to be created by approving the pipeline, and the U.S. economy desperately needs jobs.  It will also reduce our dependence on oil from the Middle East (although, perhaps it’s only semantics, it will not reduce our dependence on foreign oil).  It will also help out the battered economy of the Gulf Coast.  But let it be clear.  Approving this project cannot be justified by the jobs it will create or by the reduction in oil imports from the Middle East. 

Not when these benefits are stacked against the costs of allowing the project to go forward.  These costs start with the environmental impacts.  The oil in the tar sands is exceptionally polluting.  Some estimates suggest that burning the oil in the Canadian tar sands would set the global irrevocably on the path to over 500 ppm CO₂.  Further, as the spill in Michigan last year demonstrated, when these pipelines go wrong, there are severe consequences.  And they tend to go wrong more often than anticipated.  Perhaps more important than the environmental concerns however,  for all the jobs that this pipeline would create, there are far more to be had if the U.S. gets serious about clean, renewable energy.  While stopping this project won’t move that agenda forward on it’s own, allowing it to go forward sends a clear message that the U.S. is not serious about clean energy - we are, in fact, committed to oil for the next half-century or more. 

So, Obama is called upon to answer for comments that the U.S. build a new country and new economy based on clean energy and green jobs.  The project will either be approved, and continue the country along a path of oil dependence and under-investment in renewable energy.  Or Obama will show that he does stand for what he says and the project will be stopped.  Either way, he can no longer hide behind the excuse that it was someone else’s fault. 

Something to think on

What if...

Cast your mind back to the summer of 2009 for a moment.  As you might recall, there were two major policy proposals being discussed in Washington that summer.  One was the Waxman-Markey Climate Bill and the other was Obama’s Healthcare Bill.  One of these got the weight of the President fully behind it and one of them didn’t.  Consequently, the healthcare bill made it out of Congress and into law and Waxman-Markey died when the Senate couldn’t come up with their own version of a climate bill.  While passing this healthcare bill has been hailed as one of the highlights (or lowlights, depending on who is asked) of Obama’s Presidency thus far, what if, rather than being a highlight, choosing to prioritize the healthcare bill was this biggest political mistake that Obama has made as President? 

This premise rests on a few ideas:  (1) that Obama had enough political capital at the time to pass one of the two bills but not both and that he chose healthcare instead of climate, (2) that the healthcare bill is the, or one of the, primary motivator(s) for the Tea Party, (3) if Obama loses in November 2012 it will be because of the economy and (4) a climate bill would have been a boost to the economy.  So let’s explore these four ideas.  First, however, note that this is not an examination of which of these policies was the right one to choose from the perspective of what they will accomplish – health care reform was desperately needed and climate change is a massive problem that must be addressed – or an examination of how Obama has performed as President.  It is simply looking at whether, by choosing healthcare over climate, Obama made his political life more difficult. 

Starting with the idea that Obama had enough political capital to get one of these two policies passed.  He came into office with a massive groundswell of support after the Bush years.  Although this was undercut slightly by the unpopularity of the bailouts and TARP funding he was still in quite good shape by the summer of 2009.  His personal approval rating in June 2009 was 67%.  This obviously isn’t conclusive evidence that he had the political capital to do whichever he wanted – clearly he couldn’t do both though – but there is no really good measure of political capital.  So for the sake of argument say that 67% approval rating, combined with the fact that 71% of “likely voters” supported the Waxman-Markey bill, meant that if Obama had chosen to back it, we would now have climate legislation.

Now, to be fair, there are several people who think that Obama didn’t so much choose to endorse healthcare over climate change as he was forced to do so by the makeup of Congress and his own party.  I don’t buy this argument.  In part because of what has happened since then.  I think that Obama was forced to endorse healthcare only insomuch as his leadership style, or lack thereof, is very hands off.  He doesn’t dictate the debate; he allows the debate to be dictated and then tries to stake out a position in the middle.  This is not leadership, and it isn’t what I’d expect from a President.  “Leading from behind” as it was recently termed, is not really leading. 

So on to the next idea, that the healthcare bill is the leading motivator of the Tea Party.  Although the Tea Party was started in the spring of 2009, mostly in response to the bailouts on Wall Street, it really got going in the summer and fall of 2009 (the notable rally was held in DC in September) during the debate over healthcare.  It was at the town hall meetings discussing the bill that the Tea Party gained most of its notoriety.  While I think that the Tea Party would have developed in the absence of the Healthcare Bill, I think that it would have been less widespread and less politically important in its absence.  The Healthcare Bill gave the Tea Party two things: (1) it threatened people on a very personal level (they’re going to “Kill Granny” with their “death panels”) that riled people up and (2) it appeared, rightly or wrongly, unconstitutional, thus appealing to the notion that by opposing it the Tea Party was returning America to it’s constitutional roots.  The climate change bill would have offered neither of these things – and I think – taken away quite a bit of the draw of the Tea Party. 

So here is the first reason I think choosing healthcare was a political mistake:  it drove the creation of the strongest and most vitriolic opposition that Obama faces.  I’d suggest that the climate bill, while it probably would have hurt some people economically (more on that in a minute) would not have had the same effect on the Tea Party.  There was nothing in the bill that could have been construed as unconstitutional.  Furthermore, there is nothing comparable to the death panel claims, except perhaps, claims of killing jobs.  That doesn’t cause quite the same visceral reaction that saying a bill will kill you does.  Finally, the climate bill is based on cap and trade, a fundamentally Republican idea, introduced by the paragon of Republican virtue himself, Ronald Reagan. 

Now, the idea that if Obama loses in November 2012 it will be because of the economy.  I think this a pretty uncontroversial statement.  It’s pretty well documented that the fortunes of President’s rise and fall on the economy.  This leads into the last point then, that the climate bill would have helped the economy. 

This is probably the most controversial part of the theory.  Indeed, most of the opposition to the bill stemmed from the fact that it was seen as a job killer.  In some areas it certainly would have been.  West Virginia, Wyoming, the other coal states, would have been hit pretty hard.  But overall, a climate bill would likely have led to job creation.  See here, here, here, here, and here for reasons why.  But, the basic idea is that there is a ton of money looking to be invested in renewable technologies and energy and areas that have made policies to encourage this investment are seeing job creation and lower rates of unemployment.  Passing climate change legislation would have gone a long way towards creating those policies on a national scale and, as a result, produced national scale job creation. 

Furthermore, and perhaps most importantly, these effects would have begun to appear by the time the election takes place in 2012.  This means that the economy would have begun to improve, improving Obama’s chances, and that there would be direct evidence to counter allegations made by is opposition. Instead, he is burdened with a healthcare bill that inspires very strong opposition, does little if anything to create jobs, and the effects of which – good or bad – will not be seen for years, providing him with no ammunition to counter critics of the bill. 

Obviously, it’s impossible to say whether all of this would have happened the way it’s laid out here.  Maybe the Tea Party would have found something in the climate bill just as offensive as in the healthcare bill.  I don’t think that this is a particularly outrageous scenario though and I do think that passing the climate bill would have had benefits in a lot of areas unrelated to the climate (reduced political opposition, improved economy and therefore less problems with the deficit) that have bedeviled Obama for the last 16 months. 

Still think the U.S. doesn't need a climate policy?

These are both slides from a presentation we had in class the other day.  As I've said before, if you don't think that the lack of a clear policy on carbon emissions is hurting the U.S. economy then you're a fool.

I have quite a bit more to talk about in the next few days so check back soon. 

Papers

I have 8000 words of economics and energy policy due in the next 4 days so all of my literary output will have to be devoted to that for the time being.  However, I have quite a lot to write about apart from those papers so expect some new thoughts after Thursday.

Fukushima Fallout

I said a few months ago that the Fukushima disaster might be the best thing to happen to renewable energy in quite some time.  Not only will it, hopefully, raise some serious questions about the economics of nuclear and thus redirect some of the money that has been subsidizing nuclear power into renewable investment, but if Japan gets serious about kicking nuclear power and using renewables instead they're going to have to address the major problem facing a 100% renewable future: intermittentcy.  

Well, it looks like the first of those two things is happening.  Various segments within the Japanese business and government spheres have announced in the last few days that Japan is quite serious about becoming renewable, with the PM going so far as to say they will be generating twenty percent of their power from renewables by the 2020s.  Perhaps more importantly, they want to reduce the cost of solar power (what type is left unclear) to one sixth of what it is today by 2030.  Doing so would make PV very cost competitive with fossil fuels. 

Most importantly though, Japan getting serious about renewables means that one of the most technologically innovative countries in the world will now, almost assuredly, have to put a lot of thought towards solving the intermittentcy problem of renewable generation and, this likely means, putting a lot of thought towards new, large-scale battery storage.  Advances in this area would do wonders for the wide-spread implementation of renewable power.  That Japan is now getting into this game in a big way has dramatically accelerated the time-table for potential business feasibility of these technologies. 

Fun with Graphs pt II

So here is another entry based mostly on some graphs I put together - or borrowed from the St. Louis Fed - based on BLS data and OECD statistics data.  Inspired by a comment my macroecon professor made in class the other day I decided to compare four things: (1) the decline in output in the U.S. during the recession in 2008, (2) the decline in output in Germany at the same time, (3) the increase in unemployment in the U.S. during and after the recession, and (4) the increase in unemployment in Germany at the same time.  The graphs of each of these four things are below (I used GDP as a proxy for output since it was easier to find that data) and the grey boxes in each graph correspond roughly to the period that the U.S. economy was technically in recession. 

 

A couple of things should be obvious from these graphs.  First, and most surprising to me, there is almost no increase in German unemployment associated with the recession.  I hadn't expected there to be a U.S. sized increase in unemployment (that expectation was what prompted the whole exercise) but I had thought it would be larger than the roughly half a percent increase that that the graph shows.   

That half a percent increase corresponds to roughly a ten percent increase in the overall level of unemployment.  Contrast that to the five percent increase in the U.S. unemployment.  As you can see from the graph, that's a drastic increase in the level of unemployment in the U.S.  Roughly, 100% in fact.  

Now look at the declines in output in each country around the same time, and would have, to some degree, caused the increases in unemployment.  In the U.S. GDP dropped roughly 550 billion from it's peak in late 2007 to the low point in mid 2009.  That's a decline of a little less than five percent.  In Germany, by contrast, GDP peaked in mid to late 2008 and bottomed out around the same time in 2009 after a fall of about 2.2 billion or a little more than six percent.  

What's remarkable to me about this is that a slightly smaller decline in GDP in the U.S. led to a massive increase in unemployment relative to the increase in Germany.  Not only that, but in the U.S. the unemployment rate has remained high since the recession whereas in Germany it jumped up and then has resumed the steady decline seen since 2006.  

Here is where the comment by my professor comes in.  He suggested that the reason that the Germany unemployment rate didn't respond to the recession is that as the recession hit Germany paid out subsidies to companies to retain employees.  So although German productivity dropped sharply in the recession (as compared to a smaller drop in the U.S., neither is shown here) that productivity drop meant that unemployment stayed low.  In turn, this meant that once companies came out of the recession employees already had jobs and were not waiting for companies to return to hiring as they are in the U.S.  How accurate this is I'm not sure but it seems reasonable.  To my mind it also argues for a slightly more interventionist state when it comes to responding to recessions.  Sure the government can stimulate demand by direct spending but it seems that if people where still employed they be more willing to go spend money and thus stimulate demand themselves and so a subsidy that encouraged companies to retain employees during a downturn might have been a more effective recovery package.  

A final note about the U.S. GDP data.  For all the talk of a gradual "U" shaped recovery the GDP data seems to suggest a fairly straightforward "V" recovery in output.  So it isn't the economy that still needs to recover but the jobs market.  However,  this doesn't seem too likely in the near future.  Someone is capturing that increase in output and it isn't workers.  That leaves companies and executives and they aren't known to willingly give up profits. 

Engineering vs. Adaptation

Those few of you out there who are loyal readers know that I oscillate between being a cheerleader for economics and economic/market solutions to problems, and criticizing the tendency of economics to reduce everything to models and dollars. I find myself squarely in the middle of these to poles after reading Nick Kristoff’s most recent editorial on aid. Kristof is clearly infatuated with economics in a way only a non-economist could be. To quote at length, we apparently possess:

“…a rigor that other fields in the social sciences don’t – and often greater relevance as well. That’s why [we’re] shaping national debates about everything from health care to poverty, while political scientists often seem increasingly theoretical and irrelevant. Economics are successful imperialists of other disciplines because they have better tools.”

While I’m flattered that I possess such great tools and, apparently, unique intellectual rigor, I think that Kristof is a bit off the mark (perhaps that’s his political science background coming though?).

Too often, both within the field of economics and, perhaps even more, outside of the field, the clean mathematical answers that economic models provide are confused with intellectual rigor. As some notable economists (Summers & Krugman among others) have recently pointed out, math does not have a monopoly on intellectual rigor. Legal opinions are extremely rigorous and most of my attorney friends haven’t taken a math class since high school algebra. This is not to say that economics is not a rigorous field, it most definitely is and its models can provide elegant solutions to certain problems, but it is a field that has limits like any other and it certainly is not the only rigorous field in the social sciences. I’d also suggest that it does not have the best tools and could learn a great deal from fields such as geography, ecology, and the natural sciences.

Turning to science for inspiration as an economist is not a new idea. Much of the strength of economic thinking, as well as most of its weaknesses, stem from its obsession with physics. Economists, by and large, love mathematical models. If they could reduce everything to Latin symbols and equal signs they’d be all the happier. They, like physicists, like to come up with elegant models that explain why things happen and then go out and test them. And here is where economists run into a problem. The universe, and in turn physics, is governed by certain laws. We may not know what they are but they certainly exist and they typically don’t change from day to day. Gravity worked yesterday, it worked today, and it will continue to work for the foreseeable future. So when a physicist comes up with a new model he or she can go out and test it and see if it works and know that if it does or doesn’t work today they conditions that led to that result will not change too much tomorrow.

Obviously this only goes so far. As our knowledge of the universe expands our understanding of the “laws” of physics will continue to change. But the point remains, basic laws, once we get them right, don’t change. The same cannot be said of economics and there’s the rub. An economist can come up with a model and go out and test it today and it works and when they test it tomorrow it suddenly doesn’t. This is because economists don’t model the behavior of the laws of the universe. They model human behavior. And humans are nothing if not irrational and inconsistent. So attempts by economists to neatly express how humans will behave fall back on assumptions that are not broadly applicable. Thus, economic models give us ideas as to how people may behave in certain circumstances but these models are not absolutes and should not be treated as such. Human behavior is not gravity. It changes often and for reasons that are not in the models. Economists broadly understand this and don’t claim that their models are absolutely predictive. But the field as a whole remains too heavily reliant on mathematical models of behavior. More work examining individual motivations behind behavior and less attempting to model a ‘representative agent’ would be helpful. At the same time, recognition outside the field that economic models are not the word of God would be nice as well.

Expecting the general public to have a greater understanding of the limits of economic models brings me to a second problem however. The public and policy makers are too concerned with “knowing” the absolute correct answer. This is the real reason for the rise of economics in national debates that Kristof points out. The only feature inherent to economics that allows it to dominate current policy debates is its ability to provide one “right” answer. Look at the end of Kristof’s article: “What kind of aid works best? For those who want to be sure that to get the most bang for your buck, there is also a ‘proven impact fund’…” These are questions asked by a generation raised on Cost Benefit Analysis and who expect immediate measurable returns for every dollar spent. Characterized by some as the “engineering” management style this view sees the world as a series of cause and effect relationships. Do A and B will happen and if C happens then you did something wrong. The real world doesn’t work that way but is the dominance of this view that leads to the dominance of economics.

There is real danger in the dominance of both economics and the engineering mode of management. Yes, we should expect that our aid programs work to solve the problems set out before them and to that end data collection and measurement is important. My brother just spent six months demonstrating this with respect to aid organizations in Afghanistan. So in this regard I agree with Kristof. Randomized field tests can be helpful and the information that de-worming kids is more cost effective than building schools in some areas is important. But maximizing the distance that each dollar goes in accomplishing an aid goal is not the only important thing and taking the view that it is can dangerously obscure other, equally important, goals.

With respect to aid, first among these is increased understanding of issues. In contrast to the engineering style of management, which calls for specific models of a situation and strict control of the process and results, adaptive management calls for a much more expansive and integrative approach. Critically, adaptive management acknowledges that any approach to a complex problem must cope with substantial amounts of uncertainty (differentiated from risk by the fact that risk implies we know it exists and whether it might happen. Uncertainty implies we don’t even know it exists) and builds in mechanisms to evolve and respond to new information. Adaptive management is much more suited to dealing with problems in the real world. Problems arise, however, when funders take an engineering approach and demand specific models with a strict process and clear success metrics when they give aid money. These strict processes and success metrics remove the opportunity for adaptation to new information and research into the roots of problems. It may not be glamorous but solving these problems requires long-term funding commitments to projects that will not have clear results for many years, if ever.

So while Kristof is right, despite his subpar political science background, about the fact that economics possesses some neat tools for solving these problems, and statistical examination of aid programs can improve their effectiveness, he suffers from the same mindset that has given rise to the dominance of economics. An expansion of what is defined as rigorous, what qualifies as good management, and an acceptance that there are not always clear metrics for success in solving these problems would well serve both economics and the field of humanitarian aid. 

Chilean Water Markets: Part I

Note:  This is an edited version of the paper I just handed in for a course.  For the paper itself (along with the references, deleted here) email me.  The first part will go through the background of the Chilean water market and the second will discuss my biggest issue with the water market.  

In 1981 the authoritarian government of Augusto Pinochet overhauled Chile’s water market. The new Water Code (el Codigo de Aguas) shifted the previously state-run water sector to a new, free market model based heavily on the neoliberal ideas of Milton Friedman. The new water code instantly became the leading example of regulation by free markets, and neoliberal ideas in practice, in the world. The Chilean model was heavily promoted alongside the Washington Consensus in the developing world. By the late 1990s, however, there was increasing recognition that there were significant flaws with the Water Code and the World Bank, among others, began to examine the Chilean water sector more critically.

Criticism of the water allocation system focused on three weaknesses: (1) poor dispute resolution mechanisms; (2) a lack of water basin management frameworks; and (3) insufficient environmental protection. Within Chile, there was also concern over monopolistic and speculative behavior in the market for non-consumptive water rights. In 2005, these criticisms and the concern over speculation and monopolies led to a reform bill (Modifica el Codigo de Aguas) that adjusted the Water Code to address some of the flaws in the previous decree.

Thus, the current Chilean water market still serves as a leading example of the neoliberalization of natural resource management. But, where previously this system was praised, it is now recognized as having several critical flaws. A great deal of the scholarship on solving these flaws has focused on reforming the Water Code to weaken some of its strongest neoliberal tendencies and increase the involvement of the state. In the extreme case there have been calls for the re-nationalization of water. I argue that, in fact, correcting these flaws involves broadening the scope of the neoliberal tendencies of the Water Code, not weakening them. That is, articulating private rights in the Water Code for instream flows – defined as a right to a certain minimum rate of flow in the water body.

The Water Code defines water as a national good for public use (son beines nacionales de uso público) but water rights are unquestionably private property. These rights, once issued, are permanent, absolute, and are not tied to land titles. They can be traded, inherited, sold and are treated as any other type of real estate. Expropriation can only occur with explicit legislation and the state must pay market value for the rights. Furthermore, although the state – after the 2005 reforms – has the right to tax unused water rights, non-use of rights is not sufficient grounds to expropriate rights.

Water rights are issued by the Dirección General de Aguas (DGA), which must issue rights upon request if water is available and unclaimed. If there are multiple requests for the same water, the DGA is required to hold an auction. Requests for water need not specify to what use the water will be put. This has led several commentators to claim that the state does not prioritize one use above another and allows water to be put towards the most effective use as determined by the market. Others have criticized this stance, claiming that the code is not as fair as it appears. Indeed, the structure of Water Code implicitly values certain uses above others.

A final, critical part of the Water Code is the distinction between consumptive and non-consumptive rights. Non-consumptive rights were introduced into the Water Code as a means of encouraging hydroelectric development on rivers that had already had their consumptive rights allocated. These rights allow users to remove water from a body of water, use the water (ostensibly for hydroelectric generation), and return the water, unaltered, to the watercourse. Consumptive rights, on the other hand, allow the user to remove water from a body of water and use it however they like, with no requirement for return flows. There is also no beneficial use doctrine, as is common in other water regimes. Notably, consumptive and non-consumptive rights are the only two types of water rights outlined by the Water Code.

Chilean Water Markets: Part II

The foundation of Chile’s water management regime is that, by stepping out of the water market, the state allows the market to freely allocate water rights to the sectors of the economy that can make the most efficient use of them. In this way, water rights are allocated in an economically and, by extension, socially optimal manner. Thus, the only role of the state is to create the governance structure – the Water Code – that allows the market to function.

In this system it is critical that the governance structure be constructed properly because, in order for the system to function, there can be little state involvement beyond the initial rule setting. In other words, and as Chile is discovering if the initial structure is designed incorrectly, the government cannot intervene to fix it later because this intervention would undermine confidence in the market.

Market participants must have faith in the strength of the property rights established in the system. An overly activist state would undermine faith in the strength of property rights and thus the market for these rights. Therefore, because the Chile cannot intervene to correct flaws in the market, the Water Code must send the proper price signals. If the Code is written to structurally bias the market toward one economic use of water it is, by definition, sending an incorrect price signal that will lead to inefficient allocation of water rights.

Since the Water code only recognizes consumptive (municipal, industrial and irrigation) and non-consumptive (hydroelectric) rights, the Chilean water market does not consider additional economic uses and values for water. If water has an economic value not represented by these two rights the market is incomplete and thus inefficient.

And in fact, instream flows do have an economic value. In some locations, the economic value of instream flows may exceed the value of out-of-stream uses.

Increased instream flow due to dam removal in Idaho was found to have annual economic use values ranging from $193 million to $311 million with additional non-use values associated with the increased flows. In Colorado each additional Mm3 of instream flow was found to have an economic benefit of $17 in low flow periods. Now, this benefit declined to zero in high flow periods which points out an obvious economic lesson: there are flow rates above which water can be removed from the river without harming the value of the instream flows. However, once the flow rate is reduced past a certain point, there is an economic loss associated with further reductions. In order for water allocation to be optimal, this loss from reductions must be balanced against the gain from the activity causing the reduction. The market is only capable of determining this optimal level if the users of instream flows have a protected right to those flows and there is a price associated with these rights.

These examples are specific to the United States, but it can be assumed that there are similar values associated with instream flows in Chilean rivers. The intuition for this assumption is thus: most of the use value associated with the instream flows in other studies is due to the economic benefits associated with tourism. Looking at Chile, multiple studies of Chilean Patagonia have found that the annual value of tourism in Patagonia is greater than USD80 million. It is clear that not all, or even most, of that money can be attributed to instream flow. But, with one of world’s best whitewater rivers in the Futaleyfú and numerous other locations to raft and fish, it is certain that instream flow does have economic value in Chile.

Although the Water Code enshrines a system that depends on the market to operate, it is worth taking a moment to discuss the role of institutions in the Chilean water market. Markets never develop in a vacuum and the history and power of institutions have a lasting impact on both the development of markets and their execution. Although the state has little to no role in the Chilean water market, the courts play an important role in dispute resolution. In fact, it is the inability of the courts, the DGA, and local canal associations to effectively and fairly mediate disputes that leads to some of the most vexing problems with the water market.

The lack of an instream water right can be explained in part by the Chilean approach to water. In this view, water must be extracted, as with any other natural resource, in order to have economic value. This view is very strongly ingrained in the Chilean system and its institutions and is as much a reason for the current structure of the Water Code as a result of that structure; it is also incompatible with the idea of there being economic value to instream flows.

The interplay between the Water Code and Chilean institutions should make it clear that problem is too complicated for a simple solution; adding a new category of rights to the Water Code alone will not solve the problem of misallocation. The new rights will require equal protection in the courts in order to have any force or market value.

Thus, although structural reform of the Water Code is necessary – in the form of the addition of instream flow rights – it is important to note that adding rights to the Water Code is not sufficient. The Water Code is part of a larger system which is still very much dependent upon institutions. Reforming those institutions must also be a priority.

Break

No new posts for a while - I'm currently traveling around the south island and can't be bothered writing.

An 800 lb (million dollar) Gorilla

The Boston Globe published and opinion piece over the weekend that broadly summarizes the concept of ecosystem services (unrelated: the Globe needs to get their internet act together.  This isn't the 90s anymore, come join the NYT and the WSJ in the 21st century).  I’ve been meaning to write something about this for a while so I suppose now is as good of time as any to do that.  I’ll start by saying that I thought that the piece was both fair and well informed.  It didn’t do the details of the issue justice, but as an introduction it was fine.  I’d dispute the tagline though – ‘ecosystem services’ is neither a new idea nor a particularly bold one.

As the article notes, it has been around since the mid-1970s, and in many ways the foundations of the idea have been around far longer than that.  At its heart, the principle of ecosystem services is nothing more than a recognition that humans are dependent upon services that are offered by the natural environment.  When we do not manage our activities to be in harmony with the surrounding environment we have a tendency to destroy these services.  As a result, a successful society is one that lives in harmony with the earth and recognizes that it is a system, of which we are only a part.  Sound familiar?  Granted, the introduction of money into the system is a new twist, but I can’t be the only one who sees more than a little irony in the fact that the West, and America in particular, is just now coming to this view.

Ironic or not, our gradual awakening to the fact that primitive societies might not have been as primitive as they seemed is very important and not without controversy.  As Tuhus-Dubrow and numerous others have noted, there is significant pushback against the idea of ecosystem services from some environmentalists.  Arguing that nature is much more than any dollar value we could assign it, they argue that our time should not go towards assigning dollar values but advocating for the protection of nature because of it’s priceless value to humanity.  While I tend to agree that there are many more reasons to protect the environment than the services it provides for humans, I reject the argument that we should not be assigning dollar values.  If we argue that nature should be protected because it is priceless there is a very real danger that it will not be protected precisely because it is price less. 

Not everyone sees nature as a priceless asset.  Unless a dollar value is assigned to at least some of it, then it will be given a zero value.  I see the problem as more severe than the justification, given in the article, that nature is given a value of zero by default.  That presumes people haven’t thought about the value of nature but, if they did, would give it more than a zero value.  I don’t believe that.  A large part of society will, and does, actively assign a value of zero to the environment – and in some cases assigns it a negative value in that they view the taming of the wild as progress.  This view cannot be countered by the argument that nature is valuable because we can’t value it.  It must be countered with specific and quantifiable data. 

However, the usefulness of ‘ecosystem service’ valuation is not limitless, nor are those who oppose its use entirely wrong.  They correctly point out the danger, in assigning dollar values, that the objects to which the dollar values are assigned become nothing more than those values.  When it becomes economical to replace them, based on the estimates of their value, they are replaced with no consideration for intrinsic value. 

While correct, this is not a reason to avoid ‘ecosystem services.’  Rather, it is the reason why ‘ecosystem services’ must be stressed as the minimum possible value that these things have, and that decisions to eliminate them must encompass many more variables.  The U.S. Department of Transportation has reduced human life to a numeric value – in the low millions – and uses this to assess whether certain policies should be enacted.  No one would argue that human life has hence been reduced to a numeric value.  Nor, I would suggest, that this statistical value of a human life is the only consideration in policies that may cost human life.  Nature can, and must, be dealt with in the same way.  Assigning values is only one part of the process but it is a vital one.  Without quantifiable data environmentalists are fighting an uphill battle against those who speak in dollars and cents. 

Finally, because I think that there is an important caveat to the discussion that is often glossed over – and certainly was in the article – I’ll leave you with the idea that there are two categories of environmental goods.  There are those that have a clear value in our current economic system but are not accurately priced, and those that currently have no clear value (and, obviously, are not accurately priced).  The first category includes things like mountain views (of which I am particularly fond) and carbon emissions.  These are goods that can, with some ingenuity, be accurately priced and included in our markets.  That they are not represents a significant market failure that should be addressed (especially with regard to carbon emissions).  The second category includes things like wildlife, wilderness, and a pristine environment.  These things can be valued – an African mountain gorilla was recently valued at USD 4 million based on tourism revenue – but the fact that they are not does not necessarily represent market failures.  I believe that having a value in these cases is still useful but one must be much more careful about the terms of the discussion.  A gorilla should be protected for its own sake, not just because it brings in 4 million from tourists. 

Trade for Development

So the conference that I was involved in earlier in my trip had a follow-up session this weekend.  The end result of that conference was a short statement we gave this afternoon.  I don't want to write the whole statement in case other people at the conference have issues with that but I'll post the section that I had a hand writing.  Enjoy.

______

 

The reasons why climate change is a slow crisis are obvious - it's invisible, it doesn't directly affect individuals, and it is very technical.  Poverty is none of these things.  2 billion people live in poverty and we all know it.  Why are we still struggling to address it?  By 2020, 3 billion people will live in poverty.  Poverty is as much a crisis for our generation as climate change.  

So what do we do?

We must tackle poverty with the same collaborative urgency needed to stop climate change.  This will mean redefining success to be more than simply GDP growth but also about finally taking responsibility for all of the effects of trade agreements. 

Now, while trade is not the only way to solve poverty, it is through trade agreements that governments deal internationally with economic issues.  It is the driving force behind the NZ-US partnership that brings us here today.  As a result, trade agreements in the future must deal effectively with poverty. 

Trade agreements must be reoriented to emphasize international development as well as profits. 

Applying our definition of success in this context we want to see a global trade agreement in which trade barriers - both tariff and non-tariff - are eliminated in the developed world with respect to the developing world.  In practice this would mean that countries with the highest GDPs and highest per capita GDPs eliminate barriers on goods from countries with both a lower GDP and per capita GDP.  It directly promotes development by allowing the developing world access to the markets of the developed world while at the same time giving them control over their domestic industry.  

The reasons why this benefits the developing world are obvious.  It is less clear why the developed world would, or should, get behind this.  The answer comes when you see the long-term elements of the program.  

The leaders of today are benefiting from the leadership of the last generation; who took specific actions to help China open to the West.  Today Starbucks makes more money from their stores in Shanghai than in New York City.  By 2015 they will triple the number of stores they have in China.  

If the current leading generation reorients trade towards development it will lead to the same benefits for our generation.  It is an investment by the developed world in the global future that will pay dividends for our generation.  

For too long the West has made decisions on very short time horizons.  It is now time for leaders to recognize that there are long-term benefits to development for everyone and if trade is the chosen medium to reduce poverty and promote development it must be fair and equitable trade. 

The first step in this process is crafting a bi-lateral agreement between the US and NZ in which the US truly opens its markets and removes all trade barriers.  It means providing labor protection for those who will lose in trade, financed in part by those who win from trade.  It means that NZ, in turn, opens its markets to those in the rest of the Pacific basin who are still struggling in crippling poverty.  

Such a relationship will serve as the first step in crafting global trade policy that equitably addresses poverty and leads to global growth, an inclusive society, a sustainable environment and is truly successful.

Bill Gates Could Save Biodiversity

Well, not quite. More accurately he could put up the first two and a half years of capital to preserve at least 10% of the land in every major climactic region on the planet (although with climate change his selections may not stay in their climactic region for very long). In a paper published in Nature in 1999 it was estimated that 15% of the world’s land area – the roughly 5% currently protected plus 10% strictly preserved to protect biodiversity – could be purchased and managed for roughly 23 billion annually. Bill Gates is worth somewhere between 50 and 55 billion dollars (and that is personal wealth, it doesn’t consider what he could mobilize through his foundation). The math is quite easy: 23 billion + 23 billion = the first two years of protection and some pocket change.

The numbers are even more impressive if you consider Warren Buffet’s wealth as well. Gates and Buffet have recently been involved in some high profile lobbying of the extremely wealthy, trying to get them to give away their money. So assume Buffet joins Gates in a quest to save the natural world. Between the two of them they have around 100 billion. That would get the project started and almost five years of funding and by that time I’m sure they could pull in some other donors.

Yes, it will never happen. But it’s a nice thought. No one is quite sure what Gates and Buffet plan to do with all of their money but they could have a massive impact on global conservation if they were to direct even half of their money that way. Today the global budget for wildlife conservation is less than 10 billion dollars. Imagine what could be done if that were doubled or tripled.

The nearly microscopic size of the current budget is the real take away from all of this. The U.S. alone has spent more than 15 billion a year in direct farm subsidies since the mid 1980s. We spent a little less than 10 billion a year on oil and natural gas subsidies from 2002-2008 and that hasn’t changed much since 2008. Neither of these is a necessary subsidy. In fact, have significant distortionary effects on global markets and, arguably, the competitiveness of the U.S. economy. If either or both were eliminated and the money shifted to conservation the impact on conservation efforts would be colossal. Again, it will never happen but it doesn’t hurt to think about where our priorities are and where they should be.

The Ants Go Marching Hurrah, Hurrah

So I was watching BBC Earth last night and saw an interesting piece on insects around the world.  One of the species they talked about in particular was the grass cutter ant.  These ants live in colonies of up to 8 million individuals across South America and Africa.  What caught my attention, however, is the system the ants have developed to produce their own food.  They are, in effect, (ant) farmers.

Within any given colony there are several different types of ant, from scout to cutter, that each of defined roles within the community.  Of primary importance here are the cutters.  They venture out from the colony and harvest up to 34 lbs of grass a day to bring back to the colony.  However, they are incapable of digesting the cellulose in the grass.  So, instead, they coat the grass with their saliva and feed it to the fungus that they cultivate underground.  They then eat the fungus.

All of this is quite cool but then things got really interesting.  See, when the fungus grows it produces CO2.  Because the ants respirate and because the fungus is grown in closed spaces underground this is a problem for the ants.  Left alone the CO2 would fill the colony and the ants would suffocate.  So the ants have created a rather unique system to ventilate their colonies by taking advantage of pressure differences between the areas where they grow fungus and dirt towers they construct on top of their hives.  This causes air movement across the fungus and clears out the CO2 and keeps the ants from killing themselves through their own farming.

The parallels should be obvious.  Now, I’m not suggesting that we ventilate the earth by poking holes in the atmosphere and letting all the CO2 out.  But it is nevertheless interesting to note that we are not the only species with this problem of CO2 production. 

Catholics in the lead

So I just found out that the Catholic Church has, for maybe the first time, taken the initiative on an environmental issue.  With the planting of a forest in Hungary and the installation of solar panels on the roof of Paul VI auditorium, next to St. Peter's Basilica, Vatican City is the first nation in the world to become 100% carbon neutral.  I'm sure that their contribution to carbon emissions beforehand was effectively zero but the symbolism is important.

On top of going carbon neutral, the Vatican has updated and modernized the seven deadly sins for a more ecologically conscious world.  Led by Monsignor Girotti - the head of the Vatican body in charge of matters of conscience - they have added seven more deadly sins: 

- Environmental Pollution

- Genetic Manipulation

- Accumulating excessive wealth

- Inflicting poverty

- Drug trafficking and consumption

- Morally debatable experiments

- Violation of fundamental rights of human nature 

None of these are quite as appealing as lust and envy and while some of these might be a bit short sited - genetic manipulation for example - and I'm not sure I'd agree with their definition of what a morally debatable experiment is, I think that this list is very refreshing.  It's an acknowledgment, at a high level, that the Catholic Church isn't totally out of touch with the rest of the world.  It'd be nice to see this conveyed throughout every level of the church but it's certainly a start. 

I also think that this merits a re-post of an article I wrote last year on a similar topic.  See below: 

God and Global Warming

Today is the eighth day of the Copenhagen climate negotiations. Representatives from 190 countries have come together to try and craft a political solution to the problem of climate change. It is, in many respects, the high-water mark of the environmental movement. Copenhagen is not the first time that countries have come together to attempt to solve environmental issues—this has happened with varying degrees of success many times—but it has received the most attention. With this attention come the highest expectations of an environmental summit to date.

Yet this summit is primarily political. In fact, to date, the environmental movement as a whole has been primarily political. It has embraced command and control protections, opting to direct actions rather than to change outlooks. Many of the solutions being discussed at Copenhagen fit this model. However, some representatives at Copenhagen do not represent countries. Instead, they are there to represent the world’s major religions.

This is the second time in as many months that many of these figures have come together. The first was at a conference specifically for religious leaders in the beginning of November in preparation for Copenhagen. However, this conference had a twist. Participants were only invited if they had already begun to take concrete steps to improve the environment. These include the Jewish representative’s commitment to cut meat consumption among the Jewish community by 50 percent by 2015 and the Baptist plan to increase environmental education among youth in Baltimore. Each of these commitments is in some way related to the fundamental tenants of the respective religions. But what is important about these commitment—and what separates them from the commitments that may come out of Copenhagen—is that these are primarily commitments to change lifestyles. Not just to cap emissions from churches or to print Bibles on recycled paper (although they did commit to that), these commitments are more fundamental and involve every member of these respective religious communities—they are changes that people can participate in and that will make a real difference.

Command and control solutions to environmental problems may be necessary, but they will not be sufficient. As a result, the lifestyle changes that the religious leaders of the world are beginning to promote are just as important as anything that comes out of Copenhagen. Many of these religious leaders have recognized that their respective creeds place a religious obligation on their followers to take action to protect the environment. It is time that environmental leaders put aside their own religions—or, as may be the case, lack thereof—and embrace the potential of the religious world to protect the environment.

To some degree, as the conference in November demonstrates, this has already happened. But it will take more than just a single conference or participation at Copenhagen. For a very long time, the environmental movement has marginalized the religious world. But as environmental problems become increasingly complex and call for more and more solutions based in lifestyle changes, the need for help from world religions will continue to grow. Religion offers an avenue into people’s lives that the government simply cannot hope to match. For many, it may often be the case that, while the government controls what you can do, religion personally inspires and motivates you to act on behalf of certain causes. To solve the environmental problem facing the world, people must want to solve it, not be forced to solve it. Thus, the engagement of religious leaders is vital for the success of environmental protection.

The problems the environmental movement faces are not new. Martin Palmer, secretary general of the Alliance for Religion and Conservation, notes that, at its heart, climate change is an issue of “sin, greed, selfishness and foolishness.” In other words, an issue involving the same elements of humanity that religion has been dealing with for centuries. It is time for the environmental movement to put aside its lack of religion and embrace the support of religious leaders worldwide. It would be foolish not to. Yes, the hopes of the world’s environmental leaders are staked on Copenhagen, but, in the end, it will likely be the religious leaders there who make the greatest difference.