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Questions for Will

Posted by Daniel Hall on August 5, 2008

Will Wilkinson has a hypothesis:

Here is a thumbnail sketch of my position on the sustainability of economic growth. What do you think is wrong with it?

(a) energy is not scarce; the historically most efficient sources (oil, coal, etc.) are;

(b) a well-functioning price system will shift energy consumption to (cleaner) alternative energy sources as prices for historical extracted sources of energy rise;

(c) the initial high price of alternative energy will temporarily slow growth, but competition and technological progress will eventually push prices below the historical trend and even asymptotically approach zero, increasing average rates of growth;

(d) environmental quality is a global public good, but;

(e) this is most likely to be secured as a consequence of growth — as a consequence of the technological innovation that both creates and is created by growth — together with the rising scarcity and prices of the most environmentally degrading energy sources.

So,

(f) there are no meaningful limits to growth from either the scarcity of energy, or from negative environmental externalities from economic production, since in the medium run, those externalities are positive.

He asks what is wrong with his position. My response:

  1. Fossil fuels are scarce? Yes, fossil fuels are non-renewable, but what is the relevant metric for scarcity? Even if we are at peak oil we have decades of use left. And coal is not scarce on time scales I would call relevant. The U.S. and China have enormous reserves. Coal will certainly last more years into the future than we have used it so far. I remand Will to the Energy Information Administration or the International Energy Agency to obtain facts on energy reserves.
  2. What is Will’s evidence for (b)? Because to date, while alternative energy sources have gotten cheaper over time, the cost of conventional energy sources has fallen even faster. Evidence please.
  3. What does Will mean by a well-functioning price system? Most economists would consider unpriced externalities to be evidence that a price system is not functioning properly. I do agree that a price system which included a charge for the societal cost of greenhouse gas emissions would shift consumption to cleaner sources. But in (f) Will concludes that externalities from environmentally destructive economic production are positive in the medium term. This suggests we should be subsidizing, not taxing, conventional polluting sources of energy. How does Will square (b) and (f)?
  4. What does Will mean by medium run? In the last century alone we have managed to run carbon dioxide concentrations in the atmosphere up by about a third. They are now higher than at any point in the history of modern man. But if we burn all our “scarce” fossil fuels then CO2 concentrations will be at least quadruple (and maybe ten times or more) preindustrial levels. This would be unprecedented in near geologic history (tens of millions of year). Most scientists who study the impacts of warming agree this would be a disaster.

Here is Felix Salmon with more. Tyler Cowen largely sides with Will.

Posted in Climate Change, Externalities | Leave a Comment »

Assorted links

Posted by Daniel Hall on July 8, 2008

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 laughterAddendum: Creative ambiguity — whether the 50% cut is from current or 1990 levels was left undefined.

Posted in Agriculture, Cap and Trade, Climate Change, Externalities, International, Transportation | 3 Comments »

Barnyard Externalities

Posted by Rich Sweeney on November 28, 2007

From the Economist,

The hunt for the odourless pig
Nov 22nd 2007 | CARROLL COUNTY
From The Economist print edition

Regulating America’s big farms

        IN TWO long buildings in Carroll county, Indiana, some 8,000 pigs are doing what they do best: eating, defecating and squealing. Cute, they are. Tasty, they will be. But livestock operations like this one are increasingly under scrutiny. Above the pigs’ heads are instruments measuring dust and noxious fumes. Farther east, in Randolph county, the local planning commission will vote next month on whether to limit the expansion of pig farms.

        As America’s pig, cattle and poultry farms have become bigger and more efficient, so have fears of the effect on their surroundings. Some 450,000 of America’s 1.3m livestock farms qualify as “confined feeding operations” (a poultry farm, for example, with more than 30,000 hens). About 19,000 farms are designated as “concentrated animal feeding operations”, with more than 100,000 hens, 700 dairy cows or 2,500 pigs. The question is how best to police these enormous flesh generators.

        The huge farms have not carried on with total impunity—they have been regulated by the Clean Water Act’s permit system for polluters since the 1970s. Last year, however, in response to a court decision, the Environmental Protection Agency (EPA) was forced to limit the number of farms covered by its rules on permits and manure management. Some states are therefore stepping forward to create their own guidelines.

        As officials work to set rules, the main concern has been to protect water supplies by dealing with waste properly. But there is another obvious problem: farms stink. The rise of mega-farms and the relentless expansion of America’s suburbs mean that residents are encountering the pungent aromas of the countryside as never before—and are starting to sue. Quite apart from the nasal discomfort, the olfactory factor can depress property prices.

        To gather proper data and fend off arbitrary penalties under the Clean Air Act and other laws, livestock producers are now paying for a national study of emissions. The study, led by Purdue University, Indiana, and overseen by the EPA, is proceeding well, despite a few hitches. (Pigs in Missouri chewed through some equipment.) Albert Heber, of Purdue, is also looking into ways to lessen the stink—by modifying animal diets, for example, or by biofiltration. To test the technology, he has graduate students sniff samples of smelly air from plastic bags. The able-nosed and strong-willed get $30 a session, and earn it.

Posted in Externalities | Leave a Comment »

 
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