Old McDonald hates climate legislation

The American farmer, long the backbone of our upstart and formerly agrarian society, is one of the proud archetypes we Yanks like to incorporate into our national identity (much like the cowboy and the Hasselhoff). The strong farmer, reserved in demeanor and stout in constitution, laboring dutifully for the good of the nation. It’s a powerful image. Know what else about farmers is powerful? Their lobbyists. How powerful you ask? Well, powerful enough that after agriculture and land use were excluded from regulation under Waxman-Markey, they got one of their favorite Congressmen (Collin Peterson, D-MN) to throw a tantrum and threaten to derail the whole bill unless he got what. In the name of the mighty farmer.

So now that farmers got what they want, that’s one less obstacle for climate legislation working through the Senate, right?

Sigh…
The American Farm Bureau Federation, the most powerful group in this most powerful lobby, has come out firmly against any climate bill. According to Reuters:

In a speech opening the four-day AFBF convention, Stallman said American farmers and ranchers “must aggressively respond to extremists” and “misguided, activist-driven regulation … The days of their elitist power grabs are over.”

…

Vast amounts of farmland could become carbon-capturing woodlands under cap-and-trade, “eliminating about 130,000 farms and ranches,” said Stallman. One federal analysis says 8 percent of crop and pasture land could be turned into trees by 2050 because trees would be more profitable than crops.

On top of that, Rep. Peterson is having second thoughts about all his hard work being difficult last Spring:

Blue Dog Democrat Collin Peterson, who played a major role securing rural lawmakers’ support for cap-and-trade climate legislation this summer, now says he would vote “no” if a similar bill returned to the House for final passage.

The Agriculture Committee chairman said he was “stuck voting” for the bill (which awaits Senate action) in June because House Speaker Nancy Pelosi granted his requests for broad agriculture concessions, but he won’t support it again if it remains unchanged.

Man, I totally hate it when I get ‘stuck’ soing something I agreed to do in exactly for just about every concession I asked for. Poor Collin Peterson, 2009 was a rough year.

As for the Farm Bureau Federation and their concern that a swarm of carbon-hungry forests are going to swoop in and conquer the Grain Belt, they might yet be saved from the onslaught of immobile carbon zombie hordes, with their sinister foliage and penetrable cellulosic skin. A new study out of the University of Gothenburg in Sweden finds that paying people to preserve forests may not be sufficient to keep them standing. According to researchers Martin Persson and Christian Azar, a price on carbon from a cap-and-trade regime will drive demand for carbon-neutral fuel sources, such as palm-oil. This will compete directly with REDD schemes designed to pay for the preservation of tropical forests. In almost all the scenarios modeled in the study, clearing forests and planting palm oil is more profitable, meaning additional incentives aside from REDD program are necessary to keep forests standing.

While the study focuses on tropical forests and palm oil, and thus is not directly applicable to the Grain Belt per se, it does suggests that the competition for land between biofuels and forest carbon offset is not  so cut and dry. Demand for biofuels from US sources has the potential to overwhelm demand for offsets, especially if cheaper international options are available. Farmers may yet be saved from being taken over by ravenous groves of fast growing trees. Thank God, because they need all the help they can get.

Offsets, offsets, offsets

Offsets.

Offsets.

(related to) Offsets.

It seems like all anyone can do anymore is talk about offsets (at least in my sheltered life). Partially that’s because they are emerging as the key issue that could make or break the Waxman-Markey bill, and possibly a future Senate bill (which may make a splash before the end of the summer).  The three links above provide a good snapshot of the world of offsets as it stands now.

The first link is a rundown of the lobbying brawls surrounding the amount of offsets in Waxman-Markey. It does a good job of highlighting the difference between industry lobbyists (they heart offsets) and environmental lobbyists (they don’t trust them). One thing the article gets wrong, however, is who decides what is an offset:

Near the top of the lobbyists’ wish list is persuading Congress to specify which projects would be eligible as offsets. The bill creates large categories, then allows third parties to decide what is eligible as an offset. Those third parties probably would be similar to groups in the voluntary offset market like the Chicago Climate Network or the Climate Action Reserve in California.

That is an incorrect statement. Third party standards will probably be followed closely or entirely, but it is the Offsets Integrity Advisory Board (OIAB) that will be housed in the EPA that will be the the final authority that determines what is an offset. Thankfully, the bill itself does not say what counts as an offset, but you can imagine the fury that will burn around the OIAB if they make a decision that enrages a powerful and well-endowed interest group.

Actually, you need not imagine that because it has already occurred, which brings us to the second link above. Way back when Waxman-Markey emerged from committee markup, Collin Peterson (D-MN), chariman of the House Agriculture Committee started throwing a hissy fit about the supposed lack of role for agriculture offsets. He basically threatened to torpedo the whole bill if it gave offset market oversight to the EPA. Peterson is still stewing about an EPA rule that may make biofuel producers responsible for their full carbon footprint, including the possible indirect landuse changes resulting from ethanol production, so his solution is to bring down Waxman-Markey unless he gets his way. Discussions between Peterson and Henry Waxman’s staff have been on-going, but as of today, it sounds like Waxman is done playing with Peterson and House leadership may look to take their chances with a floor debate.

At this point, it can feel like using economic arguments is sort of like sternly yelling at a freight train, but I’ve got a loud voice, so I’ll give it a shot. This bill in no way excludes agricultural offsets. It doesn’t exclude any kind of offsets, nor should it. The point is to establish a market system where offsets can be brought, and let the market decide what makes a good offset. The role of OIAB is essentially quality control and setting standards. If your offset is legit, then you don’t need to worry. If it’s just a play to get make more money for Monsanto without any real carbon benefits, then there’s a chance it won’t make the cut.

Even though the offset language in the bill doesn’t favor a certain kind of offset, it contains a number of additional standards for forest offsets. That’s probably because everyone recognizes landuse and forest emissions are a big slice of the climate pie (20% of global emissions), but it also because we have a ways to go before we figure out how to make international forest offsets and REDD (Reducing Emissions from Deforestation and forest Degradation) work effectively.

The third link connects to the latest and greatest studies related to REDD and offsets. Basically, if we want to keep temperature changes below 2 degrees C, we need forest carbon. In the short term, capacity building, establishing pilot projects, and setting baselines for forests are the priorities. In the long term, international offset markets are going to sustain efforts to reduce emissions, so long that enough revenues make their way to indigeneous communties to compete with other land uses.

How well can these international offset markets work? According the authors of the economics study, offset prices between $10-$30 may capture 1-4 billion tons of CO2 per year, or 12-20% of current global emissions. Additionally, international links between markets may significantly reduce global allowance prices (by about 40%). Not bad. It’s important, however, to view these studies in context of the others. If we don’t get local buy-in and solid capacity building, we don’t get our offset markets. Conversely, if the market benefits don’t make their way down to the people on the ground, then all those forests (and investments) could go up in smoke. An when indigeneous people feel like they are being exploited by foreign investment, it’s none too pretty.

How do Catastrophes Factor into our Calculations?

I’ve always been fascinated by the idea of including the probability of a catastrophic climate event when calculating the costs and benefits of climate change. Even if the probability is very small, the sheer devastation of such an event can factor into climate estimates. Other models can have tipping points, where once a certain temperature is reached, a chain reaction is triggered which can accelerate CO2 release. I am in no way an expert on models that deal with each of these phenomena, but I did recently see a piece of news which disturbed me greatly.

The article titled “Forests could flip from sink to source of CO2: study” link discussed findings by “35 of the world’s top forestry scientists”

If temperatures climb even further, the consequences could be devastating, according to the report by the Vienna-based International Union of Forest Research Organisations (IUFRO).

“The current carbon-regulating functions of forests are at risk of being lost entirely unless carbon emissions are reduced drastically,” said Alexander Buck, IUFRO’s deputy director and coordinator of the report.

“With a global warming of 2.5 C (4.5 F) compared to pre-industrial times, the forest ecosystems would begin to turn into a net source of carbon, adding significantly to emissions from fossil fuels and deforestation,”

While estimates of devastation due to large temperature increases are not new, these recent warnings are still very scary. A lot of the carbon loss will be in the tropics, an area which captures almost 20% of total carbon emissions according to the article.

This recent finding brings a few questions to mind. First, as another tipping point is identified, how do we account for it in our cost/benefit analysis of climate policy?  Hopefully results such as these will highlight the growing importance of Domestic and International climate agreements.

My second question is about forestry offsets.  Do they not lose some of their value if they might eventually release the CO2 they were supposed to be offsetting?

German agency meats out advice

The EPA’s approximate German counterpart, the Federal Environmental Agency, recommended that citizens reduce their meat consumption and move toward a more Mediterranean diet.  The agency cited health reasons, but also noted the impact it would have on the nation’s carbon footprint.  It’ll be interesting to see if a broader information campaign emerges and to what degree it influences behavior.  For reference, Germans eat about two-thirds as much meat as the average consumer in America, France, and Spain as of 2002.

The major issues are the energy intensity of livestock production (lots of energy is wasted in processing plant matter using an animal’s digestive system) as well as the potent GHG emissions by the animals themselves:

I think making this information more prominent would be useful — even a small lifestyle change could make a substantial difference.  Still, I can’t imagine an American agency going after livestock farmers — even Oprah couldn’t get away with it.

H/T: Mark Bittman (great NYTimes food blog if you haven’t seen it).

A bit too honest about Ethanol

One of the large problems with ethanol is that there is no “correct” way to measure its impacts. A recent editorial in the NY times (it is short and worth reading) addresses this point, and highlights the important role the E.P.A. plays in the process. However, before discussing it, I think it makes sense to describe the biofuels requirements referenced in the article.

The mandate, called the Renewable Fuel Standards, was first created under EPACT 2005. Ethanol production, however, exceeded the standard by wide margins. The Energy Independence and Security Act of 2007 updated the standard to MUCH higher levels, put more focus on cellulosic ethanol and extended the timeline out to 2022.

There are a few things of note in the new standard. First, corn ethanol, while playing a significant role, only represents 15 of the 36 billion gallon requirement in 2022. Cellulosic ethanol requirements start at small levels in 2010, but quickly increase to 16 billion gallons by 2022. Cellulosic ethanol is placed under a larger 21 billion gallon umbrella of generic “advanced biofuels” that include 1 billion gallons of biodiesel.

The second layer to these standards is the Greenhouse Gas (GHG) reduction requirements. Corn ethanol is required to have a 20% reduction of lifecycle GHGs “compared to baseline lifecycle GHG emissions.” This terminology is a bit vague, but the general idea is that the production and burning of corn ethanol must release 20% less GHGs than petroleum. Advanced biofuels have a 50% reduction target, with cellulosic having a specific target of 60%.

The trouble comes from how you evaluate these levels. The EPA is put in charge of the rulemaking, and ultimately how they choose to set the standards will dictate a large part of how the RFS functions. The EPA administrator also has the authority to lower mandate or GHG reduction levels if they feel it is appropriate. As mentioned in the NY Times article, previous studies showed corn ethanol as carbon neutral, while newer analyses show that corn ethanol might create more GHGs than gasoline. While these studies are important, my feeling is that they should not shape the debate.

This goes back to the fact that there is no one way to count GHG emissions . Opponents of biofuels will want all potential sources to be taken into account, while proponents will argue the opposite. It also begs the question of how far upstream are we looking in the petroleum process. Do we just include emissions from combustion? How about the emissions from finding and extracting the oil? What about pirate protection?

Considering all of these uncertainties, I try not to worry about where corn ethanol falls on the GHG balance sheet. We all know corn ethanol isn’t that great (well, most of us).  So is it worth that much time debating just how bad it is? Instead, the most important decision will be how the EPA  calculates their life cycle standards. It is a bit unclear as to when these will come out, but they should be done soon. Expect to see a lot of people angry, I know I’m excited.

It is fall and I want to go apple picking

Some eight hundred kinds of apples once enriched the kitchens, taverns and inns of New England, but most of these have already disappeared from the region’s cuisines. … [A]t least seventy of the heirloom apples unique to New England that remain are so infrequently featured in nurseries, farmers markets and roadside stands that they can be considered threatened or endangered.

That is Gary Paul Nabhan writing at the Island Press Eco-Compass blog (now on the blogroll).  Here is Gary discussing potato diversity in Peru.  Here is Paul Ehrlich expressing skepticism about the returns to specialization.

Assorted links

Sometimes I wish the internet would slow down. There is just too much interesting stuff out there.

1. I don’t think I would want Bryan Caplan as a neighbor, since he seems to think pissing on my front steps is A-OK. Mike Moffatt snaps back.

2. Quiz time! See if you can spot all of the errors in this horribly glib Megan McArdle post on emissions permit allocation. Bonus points for citing previous CT posts that provide rebuttals in the comments.

3. RealClimate puts concerns about the global warming impacts from flat screen TVs in perspective.

4. “Free” roads — available for only $2.22 in gases taxes per gallon! What a steal!

5. Free Exchange is hosting a discussion on global inflation this week. Many interesting comments on the rise in energy and food prices.

6. Speaking of the food crisis, here are some sensible policy recommendations, starting with the no-brainer (and non-starter) idea of making U.S. food aid cash rather than crops.

7. I discussed the G-8 summit last week while guest-blogging at Free Exchange. Leaders at the summit have pledged to cut greenhouse gas emissions by 50% from current levels by 2050. Cue muffled laughter.  Addendum: Creative ambiguity — whether the 50% cut is from current or 1990 levels was left undefined.

Assorted links

1. The Lieberman-Warner bill dies in the Senate. The vote represents a “giant step forward” according to one sponsor.

2. Ryan Avent is a real live journalist now.  Here’s a new piece about the lack of political leadership on public transit issues.

3. The carbon footprint of food — buying local may not be the answer after all.

4. Pay by the pound — the future of air travel?

Farm bill

I’ve been surprised by the lack of attention that the U.S. farm bill has received in the corners of the blogosphere I frequent. The current food crisis is getting lots of attention, but the farm bill… not so much. I’ve refrained from commenting largely because of how shamefully little I know about U.S. farm policy.

I suspect that some of the current silence among bloggers is a result of similar ignorance, but a larger portion represents a combination of shame and despair. Nearly every policy wonk of any political persuasion agrees U.S. agricultural policy is a disaster — conservatives hate it (or should) for the massive governement handouts, while liberals decry (or should) who the handouts go to and the environmental damages they cause. But at the same time the political interests entrenched behind leaving policy ‘as is’ mean that substantive reform is a non-starter. Hence the shame and despair.

Now that the bill has passed (over the President’s veto) I thought I’d point you to the best post I’ve seen so far on the bill’s problems: Greg Mankiw quotes an insider at the White House on some of the bill’s most distasteful provisions. Do read the whole thing, but here’s a couple candidates for worst part of the policy:

Too much spending: The bill increases spending by almost $20 billion over the next ten years, at a time when net farm income is at an all-time high. …

New sugar program: The bill would make the government buy sugar for 2X the world price, store it, then resell it at about an 80% loss to the taxpayer. Sugar sells for about 11¢/lb on the world market. The US government would have to buy sugar for about 22¢/lb, store it, and then auction off the excess to ethanol plants. …

Using food aid $ inefficiently: Under current law, US food assistance for hungry people around the world must be spent purchasing US crops. The President proposed to allow up to 25 percent of US global food assistance to be spent purchasing food from local farmers (in the country where the people are starving). This allows US dollars to be spent purchasing food, rather than paying transportation costs.

Meanwhile, the WaPost editorial page highlights another real loser from the bill:

…the bill could authorize up to $16 billion more in crop subsidies than previously projected…

The culprit is a new program called Average Crop Revenue Election, or ACRE for short. ACRE gives farmers an alternative to direct payments, which come regardless of how much money they make, and other subsidies. Starting in 2009, farmers can choose to trade in some of their traditional subsidies in return for a government promise to make up 90 percent of the difference between what they actually made from farming and their usual income. …

[ACRE] pegs the subsidies to current, record-high prices for grain, meaning farmers would get paid if prices fall back to their historical and, for farmers, perfectly profitable norms. A program that started out as a streamlined insurance policy against extraordinary hardship has mutated into a possible guarantee of extraordinary prosperity. [emphasis added]

As the editorial makes clear, the policy change could have actually been a welcome reform, by providing a way to transition from direct subsidies to a more insurance-based model where farmers got paid in bad years. The problem is that by using record-high grain prices as the baseline for ‘usual income’, the program is insuring that farmers make bank. On the other hand, there’s always the chance that this won’t cost the government as much as we think:

The farm bill’s defenders insist that a budgetary disaster will not come to pass, because grain prices will not come down much during the five years the bill will be in effect.

Ah, what a relief! The government won’t have to pay for this program because the world’s urban poor are going to continue to be choked by food prices for the next five years. Glad we got that cleared up.

If readers are aware of other good analyses of the farm bill I’d be thankful for a pointer. Here’s Tim Haab recently on the effects of U.S. farm subsidies.

Getting what you pay for: food & energy prices

In a relatively recent post, Rich asks how food and energy are different.  His implicit point (and I agree) is that in many ways they’re not that different.  My preliminary thoughts on why escalating food prices haven’t been getting as much press are: 1) oil is “sexy” in the sensationalist media sense of the term, food isn’t “sexy” until we start talking about riots and starving children, 2) the component of rising food prices that is related to rising energy prices suggests an inherent lag - energy prices are leading food prices, and 3) there may be some variation in the degree of regressivity in rising food prices versus rising gas prices.

I expand on number 3 and offer some other thoughts below…

Assorted links

1. Agricultural Subsidies: Still a Bad Idea. Felix Salmon explains why removing ag subsides and taxing carbon are similar, and why they both make sense. Free Exchange squares the circle with a discussion of biofuels.

2. Who Pays a Tax? Tim Haab’s two-part series is here and here.

3. 6 Cities That Were Caught Shortening Yellow Light Times For Profit. What happens when your city stands to make money off of lawbreaking? Yep, that’s right, they make it harder to avoid breaking the law.

4. Malaria and the politics of disease. Efforts to fight malaria seem to be ramping up quickly. But even if near-term success can be achieved, will many be left worse off in the long run?

5. Congestion pricing works. Evidence from California.

6. Location, location, location. The premium for urban living.

7. The cost of siting transmission lines.  This came up yesterday in the seminar on curbing electricity demand at RFF as one of the key uncertainties in the future of electricity, given the political or economic forces that will bring new types of resources onto the grid in the coming years.  (Video from the event should be up in the next few days.)

Assorted links

1.  New York City’s congestion pricing plan dies in Albany.  Felix Salmon and Ryan Avent are depressed and disappointed, respectively.  Disgust comes to mind as well.

2.  Tyler Cowen has been providing a thought-provoking discussion on Jeff Sachs’ new book Common Wealth: Economics for a Crowded Planet.  The first three installments are on climate change, water policy, and biodiversity.

3.  Someone was listening to Rich’s complaint about the lack of coverage of escalating food prices: Paul Krugman discusses it on the New York Times Op-Ed page.  Plus the blogosphere is on the case – Energy Outlook examines the food-energy nexus, Free Exchange questions whether grain markets are behaving rationally, while this guy just wants to know he’ll still be able to afford his craft beer.

4.  David Zetland is blogging on the economics of water.

5.  Tim Haab issues a green jobs analysis challenge.

6.  And speaking of Env-Econ, UCLA couldn’t push me past Tim on Saturday night, so he edged me out in the Env-Econ NCAA tournament pool. But the combination of the Memphis win and UNC loss actually put Evan in front of both of us and gave CT bragging rights in the EE-CT showdown.  I think I’m now supposed to thank Evan for providing me cover when my “mouth starting writing checks my ass couldn’t cash.”  Or something like that.

The Ethanol Recession?

If you had qualms about corn ethanol before, how about facing the prospect of an Ethanol Recession? From the LA Times:

Economists are cautioning that the nation’s growing dependence on corn would make for a double jolt in the event of a drought across the Midwest: soaring prices not just for food but also for gasoline. Analysts now warn that a “corn shock” might not be far off — and it could lead to $5 gas and $3.50 eggs as the effects reverberate across the economy. “We are replacing price volatility from the Middle East with Midwestern weather price volatility,” said Michael Swanson, a Wells Fargo & Co. vice president and agricultural economist.

As our food and fuel sectors become more and more integrated, we face the possibility that high food prices would be made all the more potent by a slowing economy driven by high fuel prices. However, in lamenting the consequences for our grocery budgets, it’s easy to forget that other economies would likely be hit even harder than our own. Lester R. Brown, president of the Earth Policy Institute, notes:

“The rest of the world is less able to pay high prices for food. What’s annoying for us is life-threatening elsewhere.”

Honestly, in general terms, I think we would all do well to think in these terms as we go forward making policy.

Fish: farmed or free?

The BBC News has an article summarizing a new study, published in the journal Science (gated), that reports on the negative impacts on wild salmon stocks from farmed salmon in British Columbia:

Dr Krkosek and colleagues compiled data on the numbers of pink salmon in rivers around the central coast of British Columbia.

They compared populations of salmon that had come into contact with salmon farms with those that had not been exposed, from 1970 to the present day.

Using a mathematical model of population growth rates, they show that sea lice from industrial fish farms are reducing the numbers of wild pink salmon — a Pacific salmon species — to the extent that the fish could be locally extinct in eight years or less. …

Scientists say commercial open-net salmon farms are a “haven” for sea lice – naturally occurring parasites that attach to the skin and muscle of salmon.

Mature fish can survive being infested by a few lice but tiny juvenile salmon are particularly vulnerable to attack.

They come into contact with sea lice when they swim past fish farms on their migratory routes from rivers to the sea.

The actual study compiled data from 71 rivers where salmon migrate and spawn, including 7 rivers where salmon must migrate past at least one farm. The researchers found that from 2002 to 2006 the parasite-induced mortality rate among juvenile salmon exposed to lice along these rivers ranged from 16% to 97%, with mortality commonly over 80%. The BBC News article points out, however, that there are benefits to salmon farming, and there are ways to do it without putting wild salmon at risk:

Dr Krkosek said the impact of fish farms on wild salmon has been “an emotionally, politically and economically charged debate” in Canada.

“Salmon are considered a natural treasure to Canadians, but salmon farming has a lot of economic opportunity – we really need economic activity to supplement coastal economies where fisheries and other resource centres are not doing as well,” he explained.

“So there are economic benefits to having salmon farms, but the way that it is currently being done is very damaging to the environment and there are better ways of doing it.” …

“The most obvious thing to do is to move the farm out of the way of the wild fish,” Dr Krkosek told BBC News.

“Don’t put them on the migration route, and don’t put them near the spawning rivers. Another option is to move to closed containment technology where the net pen is replaced with a physical barrier that prevents the exchange of parasites – that would solve the problem too.”

The value of smart land management: pollinators edition

The CS Monitor had a recent article that followed up on the collapse of honeybee colonies. It turned out to be a smaller problem than many feared:

Last fall, honeybee hives began showing up mysteriously vacant. Entire adult bee populations seemingly vanished without a trace, often leaving the queen, juveniles, and honey behind.

By spring, what beekeepers had called “autumn collapse” or “fall dwindle dis­­ease” had a new name: Colony Collapse Disorder (CCD). CCD hit nearly one-quarter of commercial beekeeping operations in the United States. Affected operations lost between 50 and 90 percent of their hives. …

Ultimately, pollination went smoothly this year. Imported bees replenished domestic stocks, and good weather aided weak hives.

What I found most interesting about the article, however, is that natural wild pollinator species could be doing a lot more of the pollinating for U.S. agriculture if there were smarter land management practices and less reliance on monocultures:

…honeybees’ predicament has brought long-sought attention to the usefulness – and plight – of natural pollinators. …in a forthcoming study in Ecology Letters, Rachael Winfree, a postdoctoral research associate at the University of California, Berkeley, finds that, when present, wild pollinators can do much of the pollinating.

In the New Jersey watermelon farms she studied, they did 90 percent. As compared with the vast monocultural fields of California’s Central Valley or the Great Plains, the eastern agricultural landscape is dominated by many small farms interspersed with patches of natural habitat.

Check the article out, there’s plenty of interesting info, including this tidbit:

Dry conditions also contributed to a record low honey harvest – 150 million pounds compared with the usual 200 million to 250 million…

Expect to pay more for honey this year.