What Environmentalists Should Know about Economics

Dispelling misconceptions and myths about economics to environmentalists became such a large part of my work that I started thinking to write a book about it. Luckily, someone has done it already. 

Jason Scorse from Monterey Institute of International Studies published an on-line book on the topic. 

Further good news is that no economic background is required. The book is also fully downloadable.

Download the Book

What Environmentalists Need to Know about Economics - Entire Book

Download by Chapter

Table of Contents and Introduction

Part I: How Economists Approach Environmental Issues

Chapter 1 - The Root Causes of Environmental Problems

Chapter 2 - Determining the "Optimum" Amount of Pollution

Chapter 3 - Valuing Ecosystems

Chapter 4 - Putting Monetary Values on the Environment and Living Things

Chapter 5 - Valuing Future Generations

Chapter 6 - Tools to Address Environmental Problems: Taxes, Property Rights, Information, and Psychological Insights

Part II: Putting Economic Analysis to Work

Chapter 7 - Climate Change

Chapter 8 - Conservation and Biodiversity Preservation

Chapter 9 - Agriculture

Chapter 10 - Chemical Pollution

Chapter 11 - Fisheries

Chapter 12 - Deforestation

Chapter 13 - Population Growth & Technological Change

Chapter 14 - Demand-Side Interventions

Final Thoughts & Additional Resources

Comments and constructive criticism are welcome at: jason.scorse@miis.edu.

Image: Flickr

H/T: Globalisation and the Environment

SAs response to the international crises

See this draft, from Business Day.

CDM: Part of the problem?

A new working paper from the Statistics Norway, Research Department "Does the Clean Development Mechanism have a viable future" argues that CDM is an obstacle rather then a solution to dealing with climate change:

The developed countries can meet part of their Kyoto commitments by investing in emission-reducing projects in developing countries (the Clean Development Mechanism, CDM). Since the developing countries have so far not been willing to accept binding emission commitments, the CDM has been the only mechanism available for ensuring emission-abatement measures in developing countries. We argue that the CDM is not an efficient tool for achieving deep cuts in global emissions and conclude that maintaining the CDM as an option for developing countries may in itself be a serious obstacle to more binding participation by these countries.

Well-being: Income and Social Context

From a new study published by the NBER :

We find strong evidence for the importance of both income and social context variables 

in explaining differences in well-being. For most specifications tested, the combined 

effects of a few measures of the social and institutional context exceed that of income in 

equations explaining international differences in life satisfaction. Calculation of 

compensating differentials also reveals large income-equivalent values for improvements 

in the social context, with much of this value flowing via positive national spillover 

effects for key social variables.

Improvements in factors such as corruption, freedom, friends to count on, care and helping others, importance of religion can go a long way in improving human well-being.

Roaring China-Africa trade in 2008

China-Africa trade increased by 45% from 2007 to 2008 - reaching a record $107bn in 2008. The biggest trading partners are Angola and South Africa. This places even more emphasis on the question whether these deals are sustainable (see earlier post: China: Doing Deals that last?)

From ChinaView:

BEIJING, Feb. 11 (Xinhua) -- Trade between China and Africa reached a record 106.84 billion U.S. dollars in 2008, up 45.1 percent from a year earlier, customs figures showed Wednesday.

    Exports to Africa reached 50.84 billion U.S. dollars, up 36.3 percent. Imports from Africa hit 56 billion U.S. dollars, up 54 percent.

    China had a trade deficit of 5.16 billion U.S. dollars with Africa in 2008, compared with a surplus of 940 million U.S. dollars in 2007.

    The number of African countries with which China had more than 1 billion U.S. dollars in trade increased to 20 in 2008 from 14 in2007.

    Angola remained China's largest trading partner in Africa and South Africa came the second.

H/T: Centre for Chinese Studies

On carbon taxes and a sense of proportion

Three pieces of information showing the importance to keep a sense of proportion in the carbon tax debate:

A total of 735,000 automobiles were sold in China last month, compared to 656,976 vehicles were sold in the US. BBC News

and this:

FINANCE Minister Trevor Manuel’s plan to tax vehicles emitting more than 300g of carbon dioxide per kilometre from next year should be welcomed. The sentiment brings SA closer to international best practice in sharing in the responsibility to mitigate climate change.

While it is fair to argue that private vehicles do not add nearly as much carbon to the atmosphere as heavy industry does, changing the way we think about the environment may begin to make the big difference that the world needs.

Even if the effect of the tax is negligible in the greater scheme of global warming and climate change, its symbolic value and the awareness it creates is likely to have an important effect. (Business Day)

and this:

According to the National Association of Automobile Manufacturers of SA (Naamsa) 22,473 passenger cars were sold in January. But light commercial vehicle sales declined 9.4% over December last year to 8,978 units. The net effect was a total January new vehicle sales figure of 32,999 units - a mere half a percent increase over the previous month. (Bizcommunity)

Conclusion: Symbolic values and facts are not always good partners.

Rising temperature, decreasing income?

Hotter means lower income, even within countries, but there is a theory of longer-term adaption. 

From a new NBER paper, "TEMPERATURE AND INCOME: 

RECONCILING NEW CROSS-SECTIONAL AND PANEL ESTIMATES":

This paper provides new evidence on the relationship between temperature and income. 

Using sub-national data from 12 countries in the Americas, we show that the negative cross- 

sectional relationship between temperature and income exists within countries, as well as across 

countries. We then provide a theoretical framework for reconciling the substantial, negative 

association between temperature and income in cross-section with the even stronger short-run 

effects of temperature shown in panel models. The theoretical framework suggests that half of 

the negative short-term effects of temperature are offset in the long run through adaptation. 

Manuel's Greenery

Min Manuel's Budget Speech, delivered 11 Feb, highlights a continued focus on improving South Africa's environmental performance. Here are a the few extracts dealing with incentives for energy efficiency, environmental fiscal reform and favourable tax treatment on carbon credits:

A further R1 billion is added for electricity demand management, together with tax incentives for investment in energy- 

efficient technologies. 

Tax tips continue to make up the majority of the tips submitted. Mr. Saul Margolis of 

Johannesburg called for a tax to be imposed on incandescent light bulbs to encourage 

people to use compact fluorescent lightbulbs and save energy. Mr. Margolis, I have 

asked that this be included in the revenue proposals this year.  

We propose taking further steps to encourage energy efficiency and reduce harmful 

emissions, some of which have tax implications. 

• An incentive for investments by companies in energy-efficient equipment will be 

introduced, in the form of a supplementary depreciation allowance.  

• The levy on plastic shopping bags will be increased from 3 cents to 4 cents. 

• An increase is proposed in the international air passenger departure tax, which was 

last raised in 2005/06.  

• The existing excise duties on motor vehicles will be adjusted to take into account 

carbon emissions. 

It is important, furthermore that we should encourage South African companies to take 

advantage of the clean development mechanism established in the Kyoto Protocol. A 

favourable tax treatment will therefore be introduced for the recognition of income 

derived from the sale of emission reductions, as certified through this mechanism.  

RWE: No new coal fired power stations

RWE AG said it won’t build new coal- fired power stations in western Europe after the European Union forced utilities there to buy all carbon dioxide allowances starting 2013, newswire Dow Jones reported, citing Johannes Lambertz, chief executive of RWE Power.

Full story: Bloomberg.

Image: Flickr

H/T: Environmental Valuation & Cost-Benefit News

Discover Africa

A website called Discover Africa pulls together a wonderful set of images from Flickr on the continent. 

Well worth a visit! I tried one search. Good images, but just not clear how one will make sense, filter narrow or rank the 162784 images found matching “Cape Town”.

H/T: White African

Image: Bo-Kaap, Cape Town from Flickr

On free choice and planning in natural resource management

Aren’t economists often seen as the defenders of free choice and are they not sceptical about any intervention or planning that could hamper that choice? When one picks up a textbook on the subject this might easily be your first conclusion. However, further developments in the discipline have pointed out that focusing only on either planning or markets is untenable. This post will attempt to point out some of the bridges between free choice and planning within the context of natural and environmental resource management.

The first important concept is that of external effects or externalities. These negative or positive effects of certain economic activities are not accounted for in market prices. An example of a negative effect could be air or water pollution, while an example of a positive effect is that private research could lead to new general knowledge. Policy adjustments are often necessary, especially to internalise negative impacts, which, ceteris paribus, would ultimately lead to better-informed choices. 

Another important development in economic theory is the contributions of neo-institutional economics. The focus here is on the rules and contracts that guide exchange. In this view the market, or any other institution for that matter, is just one way of exchange and could be efficient, but should be measured according to the costs of performing such transactions. The focus is not on a choice between planning or market frameworks, but on the relative costs of keeping such institutions intact. 

The third, and least developed concept in economic theory, is one related to the burgeoning sciences of systems theory, complexity theory and chaos theory. With the holistic focus on the interrelationships between objects, rather than on objects themselves, the contribution of this subject field for our purpose lies in the emphasis on continuous feedback from the system under study. The ex post planning of complex systems is almost a contradiction in terms, one which will only make sense if applied in a process of experiential learning. 

These three concepts are important when evaluating the importance of  theories on economy-environment interactions for planning purposes. The fact is that the tension between the amount and type of planning, and the amount and type of free choice differ on deep philosophical grounds. Even the views of scholars within the subject field of economics and the environment (including environmental economics, ecological economics, neo-institutional economics and other more peripheral approaches) differ vastly on the relative roles they would like to assign to free choice and to planning. 

Without going into the details of such a debate, it would possibly be valuable to point out some environmental issues where such a debate will continue to flourish:

• The economic value of open spaces in urban environments
  
• The prioritisation of alternative environmental planning options
  
• The economic assessment of environmental policies and plans
  
• The economic valuation of alternative land uses in applications such as city planning, rural development or spatial development initiatives (SDIs)
  
• The planning of an international or national trading system for carbon credits

In all these examples, some will argue that more planning means more economic costs, while others will continue to argue that more individual choice means more potential for anarchy, and thus failure to reach environmental objectives. It can be foreseen that this debate will reach an academic stalemate if not guided by a learning process that facilitates such interactions. The context of natural and environmental resource management will be an important factor in determining the best mix between planning and markets.

Urban natural capital

Urban centres do not only pose a threat to the sustainable delivery ecosystems goods and services, but also provide the infrastructure and the people to realise the economic value of such goods and services.  

A study done in Canada argued that a supply of urban natural capital provides residents (and visitors!) with a connection to nature as well as benefits such as improved health, recreational and educational opportunities, increased property values, encouraging tourism and attracting and retaining skilled labour and businesses.

Investing in urban natural capital has some tangible socio-economic benefits that can be quantified.  The challenge remains to make a compelling business case to municipalities and local authorities to invest in natural capital, which by nature is often a public good.

Picture: Flickr

Environmental damage and the rising price of flying

A British surveys reveals that people are more readily accepting the idea that the price of air travel will have to rise to better reflect environmental damage. Usually when prices rise, demand will fall. Will this affect long-haul destinations like South Africa, and particularly the Western Cape with its increased reliance on tourism for economic growth and development? 

Their is no direct answer, but it will make sense to start measuring and monitoring tourist behaviour and not only aggregate tourism number on arrivals and expenditure. For example, how sensitive are tourists to a rise in ticket prices? Does this affect both business and leisure travel? What options do tourists have to adapt to rising prices and which are they most likely to follow? 

From the annual British attitude survey as reported in the Guardian:

Voters are ready to accept a steep rise in air fares to reduce the environmental damage caused by flying, the annual British social attitudes survey reveals today.

Each year, they have asked a representative sample of more than 4,000 people whether they agree or disagree that "the price of a plane ticket should reflect the environmental damage that flying causes, even if it makes air travel much more expensive".

The proportion of those agreeing rose steadily from 36% in 2004 to 49% in the most recent survey, in 2007, while those disagreeing fell from 34% to 28%, with the rest undecided.

Analysts from the National Centre for Social Research (NCSR), which conducted the surveys, said: "We found remarkably low levels of opposition to the idea that ticket prices may have to rise in order to offset environmental damage. This remains the case among current flyers as well as non-flyers and holds across the political spectrum."

Picture: courtesy SA Tourism

Obama: a welcome sensitivity to green and poor?

From the UNEP website an overview of Obama's promises on greenery (and poverty):

Here is a selection of the environment-related points from US President Barack Obama's Inauguration Speech on 20 January 2009

"Homes have been lost, jobs shed, businesses shuttered. Our health care is too costly, our schools fail too many, and each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet."

"We will harness the sun and the winds and the soil to fuel our cars and run our factories. And we will transform our schools and colleges and universities to meet the demands of a new age."

"With old friends and former foes, we'll work tirelessly to lessen the nuclear threat and roll back the specter of a warming planet."

"To the people of poor nations, we pledge to work alongside you to make your farms flourish and let clean waters flow; to nourish starved bodies and feed hungry minds."

"And to those nations like ours that enjoy relative plenty, we say we can no longer afford indifference to the suffering outside our borders, nor can we consume the world's resources without regard to effect. For the world has changed, and we must change with it."

Read the full speech at http://www.nytimes.com/2009/01/20/us/politics/20text-obama.html

Green Jobs

A recent study by the Institute for Energy Research in the US agues that subsidising "green jobs" may not be such a good idea after all:

Unfortunately, it is highly questionable whether a government campaign to spur “green jobs” 

would have net economic benefits.  Indeed, the distortionary impacts of government intrusion 

into energy markets could prematurely force business to abandon current production 

technologies for more expensive ones. Furthermore, there would likely be negative economic 

consequences from forcing higher-cost alternative energy sources upon the economy.  These 

factors would likely increase consumer energy costs and the costs of a wide array of energy- 

intensive goods, slow GDP growth and ironically may yield no net job gains. More likely, they 

would result in net job losses. 

For full report see here.

Happy Planet?

From the new economic foundation a new Happy Plant Index. If you look at the HPI map Africa does not really succeed in translating the consumption of natural resources into human well-being.

From the nef website:

The Happy Planet Index (HPI) is an innovative new measure that shows the ecological efficiency with which human well-being is delivered around the world. It is the first ever index to combine environmental impact with well-being to measure the environmental efficiency with which country by country, people live long and happy lives.

The Index doesn’t reveal the ‘happiest’ country in the world. It shows the relative efficiency with which nations convert the planet’s natural resources into long and happy lives for their citizens. The nations that top the Index aren’t the happiest places in the world, but the nations that score well show that achieving, long, happy lives without over-stretching the planet’s resources is possible. The HPI shows that around the world, high levels of resource consumption do not reliably produce high levels of well-being (life-satisfaction), and that it is possible to produce high levels of well-being without excessive consumption of the Earth’s resources. It also reveals that there are different routes to achieving comparable levels of well-being. The model followed by the West can provide widespread longevity and variable life satisfaction, but it does so only at a vast and ultimately counter-productive cost in terms of resource consumption.

The Happy Planet Index (HPI) strips the view of the economy back to its absolute basics: what we put in (resources), and what comes out (human lives of different length and happiness). The resulting Index of the 178 nations for which data is available, reveals that the world as a whole has a long way to go. In terms of delivering long and meaningful lives within the Earth’s environmental limits - all nations could do better. No country achieves an overall ‘high’ score on the Index, and no country does well on all three indicators.

H/T: RFF library blog

The benefit of being gloomy

It is that time of the year again when we tend to take stock and speculate on what the future will bring. With persistently bad news on many fronts one can expect a lot of us to be quite gloomy. In a world obsessed with happiness (see related blogpost on the philosophy of happiness), the first reaction is often to banish those dark moods out of our lives.

Sadness is not all bad argues the New Scientist in a recent editorial. Sadness may help us to learn from our mistakes, may help facilitate a need for deeper reflection and may even stimulate creativity.  As Terence Ketter, psychiatrist at Stanford University remarked in the article: 'The cost of happiness is complacency. Discontent can drive change'.

Feeling gloomy? Time for reflection and change.

The smell of Africa

It is not a romantic smell. It is not the smell of free people, living as they would choose. Rather, it is the smell of people who labour, strain, and toil for every drop of sustenance their body receives from the earth. It is the smell of of people who have been marginalised and disempowered and forgotten. It is the smell of of people without a voice in a world where only the loud are fed. It is the smell of people who are alive only because they are cunning, ingenious, and endlessly resourceful. In theory they are "peasants".  In practice they are brilliantly versed in the skill of surviving.

A passage from Scribbling the Cat. Travels with an African Soldier by Alexandra Fuller. 

Absolutely brilliant. 

From Science to Impact

Most scientists, well at least senior scientists, need to report on progress to funders and policy makers reliant or interested on the outcome of their research.  Yesterday I was invited to attend such a meeting, not to report, but to listen and observe. Apart from really interesting presentations and ground-breaking research, the eternal struggle on how to clearly speak to policy and decision makers on matters of science was clearly evident.

I made a few notes:

• Present in a nutshell the implications of research for policy
  
• Explain what and why some modelling, calculations have been done. Guide policy makers through the logic. Do not baffle them with complicated statistics
  
• Do not present all of the work you have done. Many times it will help much more to just say that your peers have endorsed you.
  
• Focus on the impact of your work on people and society, not on scientific details
  
• Always ask ‘So what?’
  
• Do not speak about what you think is interesting, but speak about things that are important to decision making
  
• Do not duplicate other work when you do not have to! Use existing data, analysis etc. and invest in connecting the dots.
  
• Design and optimise modes of communication. Beware of death by ppt... (Despite the fact that everyone knows the term, my perception is that it is getting worse)
  
• Be clear on the investment cost of projects/programme in relation to societal benefits. Do not emphasise costs only.
  
• Generalise from specific studies in a responsible way. Neither jump to conclusions, nor be willing to take some risk. An educated expert opinion is still much better then an uneducated guess.
  

This is just a rough, personal account. There are many more excellent resources on how to improve the science-policy interface.   I recommend Prof Pielke's book The Honest Broker as a good place to start.

Social networking and happiness

From the BMJ a study on happiness within social networks:

Happy people tend to be located in the centre of their local social networks and in large clusters of happy people.  

Happiness... is also a property of groups of people.

...people are embedded in social networks and the health and wellbeing of one person affects the health and wellbeing of others.

Social networking as a public health focus area?

Read the full study.

The Rising Cost of Deteriorating Water Quality

Everything is not well in South Africa's Waterland.  Sewerage, industrial effluents and acids are contaminating South Africa's scarce water resources. Some speak of a water crises. 

Water in South Africa belongs to the state (National Water Act). The question that does arise is whether the state are able to manage and protect this water effectively. There is mounting evidence that this is not the case. Many water resources are effectively treated as common property and without clear and binding institutional arrangements are overexploited as repositories of waste. Unregulated markets will generally produce more then the desired amount of pollution, externalising these costs onto the environment and ultimately on human beings and the environment dependent on clean water.

A honest review of government failure is long overdue. It is also time to bring the polluters to book and time for developing open-minded approaches to the pricing of water pollution. Gradual and well-designed prices on the scarcity of natural resources send more correct signals to market players on the cost of pollution, and may help to avoid sudden crises.  When water quality approaches critical levels, longer delays will only mean rising costs of inaction.

Should business be involved in poverty alleviation?

In a world of persistent poverty and growing inequality the pressure to respond will continue to increase. This is not only the case for governments, but increasingly one for larger businesses who start realising that it makes little sense to operate in failed societies. 

An article from Sustainability Investment News on the basis of a new WBCSD report, highlights the perceived role of business in poverty alleviation: 

Almost half of the world’s population survives on the equivalent of less than $2 a day. And the gap between rich and poor countries continues to widen; the richest 20% of the world’s population control three-quarters of the world’s wealth, while the poorest 20% control just 2%. 

The World Business Council for Sustainable Development (WBCSD), a global association of 200 companies dealing exclusively with business and sustainable development, has produced a report that sees in such dire statistics an opportunity to do business in new ways. The report, developed by the WBCSD Development Focus Area and entitled "Doing Business with the World--The New Role of Corporate Leadership in Global Development", finds that "companies can contribute to global sustainable development through their core businesses in a way that is profitable for the companies and good for development." 

The key to alleviation of poverty is the creation of wealth, the report concludes, and business is a necessary part of the equation. By engaging with low-income segments of developing countries through direct employment and sourcing from low-income suppliers, companies can tap into a market that despite its poverty represents an estimated collective purchasing power of $5 trillion. 

It is a good thing that big business is coming on board in addressing the world's biggest problems.  Social responsibility is not something only for governments, NGOs and philanthropists.

Expect some interesting developments in shaping this suggested partnership between governments, NGOs and business.

Hope that the really poor are not left out in the action.

Poverty and violence

From VoxEU.org - a new study on poverty and violence in Africa:

This column suggests that in Africa an income drop of 5%—a large but altogether common deterioration in economic conditions—increases the risk of civil conflict in the following year to nearly 30%. This suggests that aid agencies could help prevent war by targeting short-term emergency aid towards countries hard-hit by adverse commodity price movements or weather shocks.

...

If we believe that a direct link connects poverty and violence, then when failing rains create economic hardship, war should follow. In this case, we can actually figure out whether poverty caused violence by isolating rainfall’s effects. Drought and the resulting economic hardship turn out to matter a lot for understanding conflict in Africa. In work with co-authors Shanker Satyanath and Ernest Sergenti of NYU, we find that a 1% decline in national GDP increases the likelihood of civil conflict by about 2 percentage points. So an income drop of 5%—a large but altogether common deterioration in economic conditions, especially when the rains fail—increases the risk of civil conflict in the following year to nearly 30%, up from an already-high average probability of conflict in Africa of around 20% in normal rainfall years. So we find that short-term shocks to income – exactly the type that Djankov and Reynal-Querol purport to study – do trigger violent conflict on the world’s war-prone continent.

This is an interesting observation. It also begs the next question how aid organisations, governments and society as a whole can effectively react to such shocks. Apart from preventing those few that can be controlled, it is more a matter of keeping "the fingers on the pulse" and to have sensitive systems in place that can "hear the baby cry". That means a lot of flexibility and adaptability.

Rural poverty does not exclude sensitivity to relative standing

A recent EfD study in rural China pointed out that Chinese rural farmers do care about relative income. This concern for relative standing, according to the authors,  is similar to comparable studies in developed countries.  In China, however, these results need to be interpreted within the context of a country rapidly becoming more unequal. It may also help explain peasant discontent and incidents of rural protest and unrest.

See also earlier related posts Globalisation and Inequality and Does Inequality lead to Violence?, 

Turton: Petition against assault on academic freedom

Following the highly controversial suspension of Dr Tony Turton from the CSIR, please stand up for academic freedom and sign this petition.

For background on the Turton case read Environment News, The Times, Business Day and Engineering News.

What if AIDS was treated with ARVs?

Bottom-line: 330 000 lives could have been saved.

Read the full Harvard publication: 'Estimating the Lost Benefits of Antiretroviral Drug Use in South Africa'

H/T: The Times

Real world impact of ecosystem valuation

Many environmental economists and ecologists seem to find common ground in the language of valuing "ecosystem goods and services". Since the Millenium Ecosystem Assessment, numerous reports have been produced on the topic.  An increasingly important question that is being asked is whether this is all worth the effort.  Does it really make such a difference to provide an economic argument for the conservation and restoration of ecosystems? Would it not be better to just frame an ecological or biodiversity argument?  These questions are very relevant as a typical EGS valuation study does take a lot of effort, discipline and can be quite costly.

A new report 'Valuation of Ecosystem Services and Strategic Environmental Assessment. Lessons from Influential Case Studies' released by the Netherlands Commission on Environmental Assessment provides evidence that results are indeed emerging on a policy level.  

The main messages are as follows:

1. Recognising ecosystems services enhances transparent and engaged decision making

2. Insights in the distribution of ecosystem service benefits highlights poverty and equity issues

3. Valuation of ecosystem services directly facilitates sustainability

4. SEA and planning processes are enhanced by the identification and quantification of ecosystem services

5.  Valuation of ecosystem services is more influential with decision makers 

6.  Methodological complexities do not necessarily hinder influential decision making 

7.  SEA provides a platform to put valuation results in a societal context 

In a nutshell, the value of such a economic valuation of EGS approach is that all beneficiaries are identified and included as stakeholders, all values are taken into account and the distribution of such value can be explicitly included, ecosystems are immediately embedded in socio-economic realities and development needs of the area/city/region/country and the economic value of nature's services communicates far easier to policy makers concerned with poverty and development then biodiversity concepts on its own. 

Ecosystems have a value. Proper investment in such ecosystems improves human well-being and can save households, firms, farmers and authorities a lot of money. 

Steady increase in greenhouse gases

Despite Kyoto and much talk about climate change, greenhouse gases of 40 industrialised nations are on the increase (again). 

From the UN News Centre:

Greenhouse gas emissions of 40 industrialized countries rose by 2.3 per cent between 2000 and 2006, while still about 5 per cent below the 1990 level, according to United Nations figures released today, two weeks before a major review conference on the issue.

For the smaller group of industrialized countries that ratified the 1997 Kyoto Protocol setting reduction targets, emissions in 2006 were about 17 per cent below the Protocol’s 1990 base line, but they still grew after 2000. The pre-2000 decrease stemmed from the economic decline of transition countries in Eastern and Central Europe in the 1990s.

Africa is expected to be particularly vulnerable to climatic variability. For Africans this is not good news.

Open access Journal on Economics

From the Economics e-Journal website:

Economics is a pathbreaking journal that captures the advantages of some highly successful natural science journals. It adopts an open source approach to publication, viewing research as a cooperative enterprise between authors, editors, referees, and readers.

Economics aims to cover all the main areas of economics. This is not a journal for a select field of economics.  For example, one environmental economic article caught my eye:

The Social Cost of Carbon by Prof Richard Tol

Click here to become a registered reader.

H/T: econacademics

Poverty in sub-Saharan Africa: Hydrocarbons to the rescue?

Sub-saharan Africa is going through a hydrocarbon boom. Will this help alleviate poverty? The potential is there, but do not expect miracles without open and transparent governments.

From Fact sheets for World Energy Outlook 2008:

H/T: Common Tragedies

WORLD ENERGY OUTLOOK 2008 FACT SHEET: SUB-SAHARAN AFRICA 

Could revenues in oil- and gas-rich sub-Saharan African countries 

alleviate energy poverty? 

n Oil and gas exports in the top-ten producing sub-Saharan African countries are set 

to grow steadily to 2030, providing the means for alleviating poverty and expanding 

energy access. In the Reference Scenario, in which no change in government policies is 

assumed, their oil exports rise from 5.1 mb/d in aggregate in 2007 to 6.4 mb/d in 2030. Gas 

exports, largely as liquefied natural gas (LNG), increase from 21.6 bcm in 2006 to 130 bcm 

in 2030. These projections hinge on a reduction in gas flaring, adequate investment and 

avoidance of disruption to supplies through civil unrest. The ten countries flared 40 bcm 

in 2005 — almost three times the entire region’s gas consumption. These countries could 

make direct use of their gas resources by using currently flared gas for power generation 

or distributing it in cities. The liquefied petroleum gas (LPG) extracted from natural gas or 

produced in refineries can provide a low-cost source of supply for distribution networks. 

n Less than a third of households in the majority of oil- and gas-rich countries have access 

to electricity or to clean fuels for cooking, like LPG, kerosene, biogas and ethanol 

gelfuel. About 150 000 people, mainly women and children, die prematurely each year in 

these countries because of indoor air pollution from burning traditional fuels – essentially 

fuelwood and charcoal – for cooking in inefficient stoves or open fires. In the absence of new 

policy initiatives, the number of people living without electricity and relying on fuelwood 

and charcoal for cooking rises over the Outlook period, as the population grows. 

n Government revenues from oil and gas are set to rise strongly, giving these countries 

the means to speed up economic and social development and alleviate poverty. The 

government take in the top ten oil- and gas-producing countries is projected to rise from 

some $80 billion in 2006 to about $250 billion in 2030. Nigeria and Angola account for 86% 

of the $4.1 trillion cumulative revenues of all ten countries over 2006-2030. All these 

countries desperately need sustained and sustainable economic development. Modern 

energy services are a crucial prerequisite, bringing major benefits to public health, social 

welfare and economic productivity. In most of the countries, improving energy access 

will entail fundamental political, institutional and legislative reform, as well as efforts 

to strengthen the capability of regional and local authorities to implement programmes 

and to expand access to credit. 

n The upfront cost of expanding access to modern energy is small relative to the wealth 

that these countries’ hydrocarbon resources will generate. An estimated $18 billion is 

needed to achieve universal access to electricity and to LPG cooking stoves and cylinders 

– a mere 0.4% of the projected cumulative government revenues from oil and gas export 

revenues in 2007-2030. The cost relative to the government take in Equatorial Guinea, 

Angola and Gabon is only 0.1%. 

n Sub-Saharan Africa’s hydrocarbon-resource wealth will lead to economic development 

only if governments manage wisely and honestly the development of the sector 

and the revenues that accrue. An improvement in the efficiency and transparency of 

revenue allocation and the accountability of governments in the use of public funds 

would improve the likelihood that oil and gas revenues are actually used to alleviate 

poverty generally and energy poverty specifically.

Night Time Light as proxy poverty indicator

Tired of breaking your head on how to construct comparable measures of poverty? Remotely sensed data on artificial night time light may be a good proxy.  From a study published by Noor et al in in Population Health Metrics: 

Population health is linked closely to poverty. To assess the effectiveness of health interventions it is critical to monitor the spatial and temporal changes in the health indicators of populations and outcomes across varying levels of poverty. Existing measures of poverty based on income, consumption or assets are difficult to compare across geographic settings and are expensive to construct. Remotely sensed data on artificial night time lights (NTL) have been shown to correlate with gross domestic product in developed countries.

Notice any differences?

Obama's Green Revolution?

From WSJ, Environmental Capital:

In a video message prepared for a global-warming summit in California, Mr. Obama seems to say that battling climate change will be in the leadoff slot, with the clean-energy program batting cleanup (hat tip):

My presidency will mark a new chapter in America’s leadership on climate change that will strengthen our security and create millions of new jobs in the process. That will start with a federal cap-and-trade system. We’ll establish strong annual targets that set us on a course to reduce emissions to their 1990 levels by 2020, and reduce them an additional 80% by 2050. Further, we’ll invest $15 billion each year to catalyze private-sector efforts to build a clean-energy future.

If this is indeed the case it will send a strong signal to take carbon constraints seriously.

Africa vs Money

Based on Google search data there is a declining interest in 'Africa' and an increasing interest in 'money'.

Here is the proof (based on Google Trends, 'africa' in blue and 'money' in orange):