Common Tragedies

Thoughts on Environmental Economics

Apparently, e-mails can’t change physical reality

Posted by Danny Morris on December 8, 2009

This post originally appeared on Weathervane, RFF’s climate policy blog.

COPENHAGEN — While Climategate has been taking some of the wind out of the already luffing sails of the build up to Copenhagen (at least in the U.S. and Britain), scientists at the conference claim the science remains airtight. In a side event meant to highlight the findings of the Fourth Assessment Report conducted by the Intergovernmental Panel on Climate Change, Chairman Rajendra Pachauri said the only thing that deserves serious attention in relation to this issue is finding who is responsible for the hacking of files from the University of East Anglia. He also reinforced the robustness of IPCC standards and procedures, mentioning that the IPCC will conduct reviews to ensure this remains the case in light of the controversy.

In response to questions from the press, Pachauri emphasized there is no question about the science in the AR4, noting that governments must sign off on the findings of the IPCC before they are released. As much as members of the American and British press continue to harp on the scandal, Pachauri continues to stand by the work of the IPCC. The issue is certainly an attention-getter, as the room is overflowing with observers. Whether Pachauri’s confidence will do anything to quell the naysayers, my guess would be probably not.


Posted in Climate Change, COP, International | Leave a Comment »

COPping a feel

Posted by Danny Morris on December 8, 2009

Sometimes, even suckers get lucky. As a result, I’m currently stationed in Copenhagen for the next two weeks. I will be regularly blogging events as they transpire for RFF’s climate blog Weathervane, which I will also post here. In addition, I will take full advantage of the lack of stylistic restrictions Common Tragedies provides to give some insight into some of the less professional aspect of international climate meetings. As you can tell by the title, I’m already expanding my horizons (as they relate to obvious and puerile humor). Stay tuned for more throughout the week.

COPENHAGEN — The first few days of the negotiations here in Copenhagen probably will not result in any big statements or major developments. It’s mostly a time for countries to remind everyone where they stand and try to see who may be willing to give a little bit. As you might have guessed, things stared off with countries saying exactly what you would expect them to. The Least Developed Countries stressed the need for financing mechanisms for mitigation and adaptation efforts, capacity building for those efforts, and immediate financing for current impacts. The African countries made similar statements, reminding the world that it is experiencing climate change impacts already and does not have the capacity to respond effectively. The Alliance of Small Island States (AOSIS) advocated strong action now (like right now), because it quite obviously has the most to lose from inaction. The Umbrella Group, which included the United States, Australia, Japan, and other major developed economies hinted that monitoring, reporting, and verification (MRV) is going to be a important issue for moving forward.

There have been some interesting developments in the past 24 hours. Saudi Arabia, which feels that its economy will suffer major losses due to climate change, proposed an independent, international investigation into “Climategate.” When asked about the investigation proposal, IPCC Chairman Rajendra Pachuari said (with just a hint of cheekiness), “I would be worried if they didn’t ask for an investigation,” later adding “Oil and politics mix very well, I’m not sure that politics and science mix so well.”

In another development that could have broader implications for the next two weeks, Bangladesh has asked for 15 percent of any agreed-to climate fund. Bangladesh is one of the most obvious poster children to the nasty effects of climate change, and feels like it deserves justice in the form of major international funding. It’s unclear how this pronouncement will affect the dynamics among developing countries, but it will no doubt play a prominent role in the financing discussions moving forward.

Posted in Climate Change, Government Policy, International | 1 Comment »

Counting Forests Not As Easy as 1,2,3…

Posted by Danny Morris on September 18, 2009

[This post originally appeared in Weathervane, RFF's climate policy blog...]

If you’ve recently had a conversation about the world’s forests and climate change, then you’ve probably heard the figure “20 percent” thrown around. That number represents the amount of worldwide emissions currently attributed to deforestation and forest degradation.

If tropical rainforests have been a frequent topic of discussion in your social circles, maybe someone told you that more than 10 million hectares of rainforest were permanently logged or destroyed every year from 2000 to 2005. These figures represent important metrics for policymakers to understand the role forests play in environmental policy issues. Their widespread use is partially based on the assumption that scientists have accurate and consistent measurements of forest attributes from which they can derive such figures.

Forest measures and inventories, however, may not be as accurate and precise as scientists and policymakers would like. In his RFF discussion paper, Paul Waggoner highlights such discrepancies and uncertainties embedded in current forest measures. “Without accuracy, appraisals of timber will be discredited, assays of biomass will be deceptive, and claims of sequestered carbon may be fraudulent,” he writes in “Forest Inventories: Discrepancies and Uncertainties.”

His analysis comes at an opportune time as the Senate gears up to consider climate legislation and agencies like the Commodity Futures Trading Commission look to more closely regulate the nation’s carbon markets. As a major component of H.R. 2454, forest offsets will face more scrutiny about their veracity and quality in the coming months.

Waggoner showcases eleven different cases of major discrepancies in forest measures across the globe, including some within IPCC forest carbon accounting guidelines. One of the reasons for such uncertainty, he writes, is related to how forests are defined. The definition Waggoner cites—the Forest Identity—consists of four measures: area, growing stock density, biomass, and carbon. Uncertainties exist in each of these attributes and as they are combined to form the Forest Identity, their uncertainties aggregate and can result in significantly inaccurate final numbers.

So what’s the solution? Forest measures will never be perfect, nor will they have 0 percent uncertainty, but that is not why it is worthwhile to point out discrepancies. The point is to push toward acceptable levels of uncertainty in forest measures. As Waggoner points out:

Although perfect accuracy might seem the goal, it is not—at least not in the real world of affairs. Rather, the cost of improving accuracy makes good enough the goal. If the costs of surveying, monitoring, and verification exceed the consequent benefit or profit, regulation will fail and transactions abort in the long run…Thus the discrepancies and uncertainties in forest surveys must next be evaluated against standards of good enough for, say, scientific debates, timber sales, or carbon credits. Then economical methods for meeting those standards must be established.

In the mad rush toward using forest offsets to solve the world’s climate problems, voices of warning like Waggoner’s should not get lost in the din.

Posted in Uncategorized | 1 Comment »

did we miss anything?

Posted by Danny Morris on September 18, 2009

Hey all,

Did anything interesting happen over the summer? Oh, right. Well, we over here at CT Central got a little distracted by a combination of a malaise induced by the derailemtn of climate legislation and other interesting stuff related to our jobs. Blogging is fun, but it doesn’t pay the billz, unless you believe this. I’m not sure what it says, I haven’t had time to read it. Regardless, we are back and ready to rock the intertubes once more. Stay tuned to for more marginally insightful and entertaining blog posts to come. In the meantime, more about tubes below:

Posted in Uncategorized | Leave a Comment »

Amidst Conflicting Reports, China’s Emissions Message Sets Positive Tone

Posted by Andrew Stevenson on August 20, 2009

Originally posted at Weathervane, RFF’s climate policy blog.

Given the history of global climate negotiations, it is no surprise that a lack of trust remains between developing and developed nations in ongoing discussions for a new international agreement. In the context of the U.S. domestic policy debate, this distrust has—rightly or wrongly—been concentrated on China, and has led to calls for strong measurement, reporting, and verification (MRV) provisions in U.S. climate legislation and international agreements. It even led lawmakers to include a provision in the House bill that would require the EPA to report on emissions in China and India (Title V, Sec. 3).

It doesn’t help matters when major media outlets publish conflicting reports so close together (The Financial Times here and China Daily here) about a crucial component to U.S. domestic and international agreements: China’s emissions peaking date. Given the pace of China’s growth this number is arguably much more important than the U.S mid-term target for protecting the global climate, and it is certainly just as important for reaching a new agreement in Copenhagen. It’s also a critical step on the path toward setting a long-term collective global goal.

So climate change and China watchers had a collective heart attack when they read the Financial Times article in which high-level Chinese official Su Wei said China’s emissions would not peak until 2050. This is the equivalent of Deputy Special Envoy on Climate Change Jonathan Pershing stating that the United States will reduce emissions 0 percent instead of 17 percent by 2020. It would basically kill any chance of a global deal.

Thankfully, China Daily followed-up shortly highlighting a recent report by influential Chinese climate policy scholars arguing that the country could and should reach its emissions peak in 2030. Everyone breathed a sigh of relief. The United States and other developed nations will and should ask for more, but this number is likely to be within the range that they could accept as part of a global agreement. Although it was not an official government position, it’s the next best thing in China. The think tanks that published this report are close government advisers. The fact that they were quoted and featured on one of the nation’s leading English-language news websites indicates that this is a message the government wants the world to receive. China is moving ahead on clean energy with or without you, and is willing to put strong climate goals on the table if others are. An even more recent article indicates that China’s top legislative body will consider a draft resolution on climate change next week lends further credibility to this position.

This is not the first and will certainly not be the last time conflicting reports come out of China on climate or other issues. Since it is in both of their best interests, one would expect that both the media and the Chinese government will continue to improve their MRV procedures inside and outside of a climate agreement. However, it’s important to take the time to sort through the facts and recognize that, in the end, the preponderance of evidence continues to show that China will both do what it takes to be seen as a responsible global citizen on climate change, and will give everything it has to win the race on developing clean energy industries of the future.

Gentlemen, start your wind turbines.

Posted in Uncategorized | Leave a Comment »

Confidential Memo Intercepted by Common Tragedies

Posted by Andrew Stevenson on August 13, 2009

CT has just intercepted this confidential memo….

From: The Patriot Freedom America Puppies Alaska Coalition (PFAPAC)

To: Grassroots Conservative activists

First, I want to thank you for your efforts so far in derailing the President’s drive to push through a government takeover of Medicare and Medicaid. I want to offer a few notes for upcoming town hall meetings on the so-called “cap-and-tax” legislation that is coming before the Senate this fall.

1) Death panels. We have been getting a lot of questions about this, and yes, the American Clean Energy, Security and Death Panel Act of 2009 does include death panels (section 1289, page 1567 of the bill). It reads, “Sometimes the tree of socialism needs to be watered with the blood of polluters”. These death panels are concentrated in Midwestern states where population reductions can achieve the greatest impact on U.S. greenhouse gas emissions reductions. They will be made up entirely of people from California, Massachusetts, and New York, because, according to the bill “they know what’s good for you”. Again according to the bill, if population in coal-using states gets too low, immigrants from China and Kenya will be allowed to replace them in a deal brokered by President Obama. Say ni hao to your new neighbors!

2) Jobs. This is one point we don’t need to worry about, because a little-known provision in the bill calls for Soviet-style “re-education” employment for those who lose their jobs or are not in compliance. These re-education camps would teach people the virtues green living, including not bathing or showering, not eating tasty animals, and generally not having any fun. “Students” will be paid handsomely in granola and tree bark, and when finished will return home to a job in a Chinese-owned wind factory. Although this is perhaps not ideal, our arguments about the bill sending jobs overseas will be more difficult with this new provision.

3) Global government. Along with the death panels, this will be one of our primary talking points to arouse fear in the American people about the ACESDPA. The bill calls for a long-term goal of an 80% reduction in greenhouse gas emissions and gross domestic product by 2050 from the United States, while China, India, and other major developing countries will be allowed to increase both their emissions and GDP by 80%. These mandates will be enforced by United Nations peacekeepers who will have the authority to come into your living room and turn off your TV after the 8th hour of the Glenn Beck marathon. Thousands of them will also be stationed in communities all across America to generally scowl and wag their fingers at people when they drive by in SUVs.

Please target your attacks on climate legislation at these provisions, which we believe are an unacceptable intrusion that goes against all that is good about this country. Although we can’t openly condone violence, we encourage everybody attending town hall meetings to exercise their 2nd amendment rights in case your well-being is endangered by radical liberal activists. Please keep dialogue rational by limiting your rants to 30 seconds or less, which is the average attention span of an American watching a youtube clip.

Thank you, and good luck,

Your friends at PFAPAC

Posted in Uncategorized | 1 Comment »

Climate Bill Success Can Equal Treaty Success, Even With Border Measures

Posted by Andrew Stevenson on August 12, 2009

Originally posted at Weathervane, RFF’s climate policy blog.

President Obama and leaders of the U.S. Chamber of Commerce have spoken out against incorporating border adjustment measures in U.S. climate policy. Though there is great uncertainty about the economic and diplomatic value of leveling fees against nations who may not price carbon, 10 conservative Senate Democrats recently told the president such measures will be integral to their support of climate legislation.  The challenge now is walking the fine line between the objective of these senators—not just maintaining, but strengthening the House measures—and respecting the concerns of the administration and Chamber about potential trade wars and international ill-will threatening the success of global climate cooperation.  It will be a delicate balance, but one that can be achieved with a few key modifications. 

The House bill (H.R. 2454) takes a three-fold approach to ensuring the global environmental integrity of U.S. climate policy by preventing emissions leakage. It  exempts vulnerable industries from the first two years of the cap-and-trade program, provides output-based rebates until 2035, and introduces a border adjustment system in 2020 only if a multilateral agreement that meets certain conditions is not in place by 2018 and Congress and the president concur that border adjustments are necessary (with Congress given final authority). 

The border adjustments are also intended to create leverage, by encouraging major-exporting and emitting developing nations to join an international agreement.  Although the adjustments’ primary targets—China and India—have spoken out against this goal, South Korea actually cited it as one reason for being the first non-Annex I Kyoto country to announce a national targetSome have taken an optimistic view of the relationship between these measures and international agreements, while others are more skeptical

While the House bill represents a compromise on border measures that most people could live with despite not being truly satisfied, the Senate is likely to push for making the measures stronger.  In light of this political reality, the following changes could be introduced to both strengthen the measures and ensure they still reinforce, and are reinforced by, international agreements:

Provide incentives for a real negotiation.  Large, developing countries are much more likely to accept the “sticks” (border measures) of U.S. climate legislation if they come with real “carrots” (financing and mitigation commitments) attached.  Funding for adaptation and technology transfer in the House bill is well below what most estimates say is truly needed to solve the global climate problem.  Although it is clearly concerned about upsetting domestic support, increasing recognition of the necessity for a global solution in Congress indicates the administration may be able to push further on these incentives, if they are properly structured and conditioned.

Improve the likelihood of World Trade Organization consistency.  Border adjustments are likely to survive challenge in the WTO if they only enter into force after serious multilateral negotiations have failed, are targeted as clearly as possible at an environmental objective, and/or are backed by an agreement among several nations.  Therefore, providing greater incentives for a real negotiation to take place—as discussed above—would likely improve the prospects in this area.  Ensuring there are no references to specific countries or competitiveness concerns are also essential in the Senate bill.  Finally, support from the nations of the European Union and other developed nations to adopt similar measures would also be helpful when standing before the WTO.  These modifications should be in the interest of both those who want to see the measures implemented and those looking to avoid a trade war.

Make negotiating objectives flexible.  From a global cooperation perspective, the worst thing Congress could do is to provide negotiating instructions that would be impossible to achieve, thereby ensuring a repeat of Kyoto.  This means making them general enough—as the House bill does—that U.S. negotiators have flexibility about how, under what body, and with what conditions they will negotiate an international agreement on trade and climate, as long as it meets certain minimum requirements.  Since the primary thing 100 Senators can agree upon is that they do not like the House bill, it is likely that some will want to make these objectives stronger.  Instead of inserting additional specifics or calling for an explicit deal on border measures in Copenhagen, a more effective approach could be greater conditioning for U.S. financing and technology transfer on participation in an international agreement. 

Adopt a “do no harm” approach on border measures in Copenhagen.  From the perspective of U.S. domestic climate policy and global cooperation, the best possible outcome from Copenhagen on border measures is likely that nations do not condemn or even move to prevent them.  In the unlikely event that a trade and climate agreement is struck within the UNFCCC or the UN, the issue is contentious enough that it will not come until the final stages of negotiations a few years off.  The U.S.’ primary objectives for Copenhagen are likely to be gaining agreement on a long-term global goal, a broad framework for international financing, and potentially a recognition that all major emitters need to take legally binding actions if not now by a date certain.  Throwing border measures into the mix will seriously threaten those already tenuous objectives.

Overall, by strengthening the House bill with more robust incentives, targeted framing, effective negotiating objectives, and realistic expectations the “hammer” of border measures desired by conservative Democrats can be compatible with the prospects for a new global agreement in Copenhagen.

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Innovative public policy from the Mountain West: Example 2

Posted by Danny Morris on August 6, 2009

As an urban cyclist in the District of Columbia, my goals when I’m on my bike are quite simple: stay away from things that can kill you (namely cars) and maintain momentum as much as possible. They are both great ideas in theory, but not so easy to follow in practice, especially when navigating the plethora of stop lights and signs that populate our fair city. That’s why I’m a huge proponent of the Idaho Stop Law. The law, named after the clever state that instituted it in 1982, says that cyclists may treat stop signs as yield signs (they must stop for those w/ the right of way, but can proceed w/o stopping if the coast is clear) and may treat stop lights as stop signs (they must stop, but can proceed when the coast is clear, even if the light is still red). If that doesn’t make total sense, this handy-dandy video made in support of similar legislation in Oregon (which subsequently failed) will help illuminate the situation:

Like I said, i think it’s absolutely brilliant, and it’s what a lot of city cyclists do anyway. But wait, you might be asking, wouldn’t such a law result in more accidents because it would put cyclists in dangerous situations where they could be hit by oncoming traffic? Apparently not. According to the Athlete’s Lawyer (via Greater Greater Washington) reports that the year after the law’s inception, bicycle injuries dropped 14.5%. Isn’t it exciting when public policies make our lives better?

There are a lot of reasons the law makes sense (treats bikes different from cars, allows bikes to maintain momentum and reach top speeds easier, creates separation between bikes and cars going the same direction, etc), but the best reason is because it lets cyclists determine their actions based on their own assessments of their safety. Cyclists are certainly more aware of what they need to do to be safe than drivers and pedestrians, and they are in a position to determine how much time they have to cross an interaction, react to oncoming cars, etc. I don’t know why the law hasn’t been adopted in biking hubs all over the country. Sigh, if only everywhere else were as progressive as Idaho…

Posted in Cycling, Government Policy | 3 Comments »

Senators and Climate, a Mixed Bag

Posted by jab12004 on August 6, 2009

I was at the senate finance committee’s hearing on allowance distribution under climate change legislation earlier this week.  It was really interesting to see how engaged the senators were considering how much of their attention health care is taking.

There was one moment, however, which was not so proud.  Check out the video here (go to the 80th minute) of Senator Kerry talking about a carbon tax.

To put it succinctly, Senator Kerry was …misguided.  As Mr. Viard responded, a carbon tax and a cap and trade program can do the exact same thing.  While a carbon tax is a political non starter these days, no one really debates that it could accomplish a similar goal.

Much to his credit, later on in the hearing Senator Kerry asked a number of questions which were very perceptive and showed a deep understanding of the issue.

He also brought up one of the underlying issues that is driving the climate debate, the EPA endangerment finding.  Most politicians won’t come out and say it as forcefully as he did (minute 111), so it was impressive to hear.  Lets just hope that everyone gets on board so we don’t end up in command and control land.

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Innovative public policy from the Mountain West: Example 1

Posted by Danny Morris on August 6, 2009

It’s rare that the state of Utah comes up with an innovative public policy, let alone gets recognized for it. Come to think of it, it’s rare that Utah gets any shoutout not related to the dominant culture or the occasional piece on the peculiar culinary delights found in the state.That’s why last week was a particularly exciting week for the Beehive State, as both Brad Plumer and Matt Yglesias called out Utah for its clever policies. Both authors highlight a Scientific American article looking at the state’s new 4 10-hr day work week (work M-Th, take Friday off) and the effects it’s had since its inception last year:

For those workplaces, there’s no longer a need to turn on the lights, elevators or computers on Fridays—nor do janitors need to clean vacant buildings. Electric bills have dropped even further during the summer, thanks to less air-conditioning: Friday’s midday hours have been replaced by cooler mornings and evenings on Monday through Thursday. As of May, the state had saved $1.8 million.

Perhaps as important, workers seem all too ready to replace “TGIF” with “TGIT”. “People just love it,” says Lori Wadsworth, a professor of public management at Brigham Young University in Provo. She helped survey those on the new Working 4 Utah schedule this May and found 82 percent would prefer to stick with it.

The environment seems to like it, too. “If employees are on the road 20 percent less, and office buildings are only powered four days a week,” Langmaid says, “the energy savings and congestion savings would be enormous.” Plus, the hour shift for the Monday through Thursday workers means fewer commuters during the traditional rush hours, speeding travel for all. It also means less time spent idling in traffic and therefore less spewing of greenhouse gases and other pollutants. The 9-to-5 crowd also gets the benefit of extended hours at the DMV and other state agencies that adopt the four-day schedule.

An interim report released by the Utah state government in February projected a drop of at least 6,000 metric tons of carbon dioxide emissions annually from Friday building shutdowns. If reductions in greenhouse gases from commuting are included, the state would check the generation of at least 12,000 metric tons of CO2—the equivalent of taking about 2,300 cars off the road for one year.

Aside from the environmental benefits, the state workers seem to like the new arrangement:

“Utah employees actually show decreased health complaints, less stress and fewer sick days,” Wadsworth says, noting previous research finding that fatigue is typically triggered by workdays over 12 hours. Early results from another multicity survey indicate that just 20 percent of respondents said they felt they ate more fast food and only 30 percent said they worked out less. In fact, 30 percent said they exercised more. Anecdotal evidence from Utah also points to an unexpected benefit: increased volunteerism.

Hopefully, Utah’s experience will spur more discussions about non-traditional 9 to 5 work schedules. People’s ability to connect to their workplace and tele-conference regularly are making the traditional work week less and less relevant. I’m a big advocate of flexible schedules and think that more organizations would be wise to consider allowing their employees to set their own work schedules and patterns. In the meantime, though, cheers to Utah for reducing its environmental impact. This will surely make up for its new governor not believing in global warming.

P.S. Full disclosure: I am a native-born Utahn. The answer to your next question is no.

Posted in Efficiency, Government Policy | 1 Comment »

Ecosystem service stacking: Can money grow on trees (and more)?

Posted by Danny Morris on August 3, 2009

This post originally appeared on Weathervane, RFF’s climate policy blog.

Future commodity traders may look back on June 26, 2009 as the day that the Congress officially backed ecosystem service markets as the prominent vehicle of environmental conservation in the 21st Century. It was then that the sweeping American Clean Energy and Security Act of 2009 (H.R. 2454)—legislation in which carbon offset markets play a huge role—passed the House 219-212. Estimates from the EPA suggest by 2030, the U.S. offset market could be worth $4 billion. Forest offsets will likely constitute a large portion of the total market but agricultural lands will also have some significance.

While the ultimate fate of the bill remains uncertain, H.R. 2454 indicates that ecosystem service markets have a critical role in both the fight to slow climate change and the future of ecosystem conservation. In fact, reduced emissions from deforestation and degradation (REDD) and other forestry issues will likely be integral to an eventual agreement at the COP negotiations in Copenhagen this December.

Ecosystem Service Markets

While carbon markets are currently dominating discussions, they are certainly not the only type of ecosystem service market being utilized for environmental benefits. Other examples include water quality or nutrient trading, conservation easements, and habitat banking for endangered species. Section 404 of the Clean Water Act led to the establishment of wetland mitigation banks, which proved to be a successful conservation device. By 2005, 450 wetland banks had been established, with 59 selling out of credits completely.

Current ecosystem service markets have just scratched the surface. Robert Costanza and others estimated the global annual value of ecosystem services was $33 trillion. The voluntary carbon market in 2008 was estimated to be worth about $705 million. The forest carbon offset markets in H.R. 2454 provide an opportunity to expand and refine ecosystem service markets aggressively and incorporate them into the larger economic system domestically and worldwide.

Stacking

Widespread acceptance of carbon-related ecosystem services may present a vehicle for the expanded usage of other types of ecosystem services. Combining the value of these different services is called bundling or stacking, and it allows landowners and indigenous communities expanded opportunities to be compensated for maintaining and enhancing ecosystem functions. It is important to note that services will be stacked or bundled in a single ecosystem, but must be well-defined enough to separate into autonomous markets. The markets themselves will not necessarily be stacked.

One can imagine eventually linking carbon offsets with water quality credits or habitat credits. With a network of robust, functional ecosystem service markets a landowner could manage an entire portfolio on his/her land, balancing forest offsets with increased stream buffers that generate water quality market credits, understory clearing to generate endangered species habitat credits, and other types of natural capital. Such opportunities are a prospective avenue for alleviating poverty among rural or indigenous populations.

Oversight

Stacked but separate ecosystem service markets could possibly create incentives (though not guarantees) for landowners to take a more holistic management approach, looking at the functionality of entire natural systems rather than one specific usage. A fully integrated and functional ecosystem marketplace is currently far from becoming a reality, however. There are a number of issues that must be addressed to ensure the markets are robust and effective. Major concerns include:

  • Valuation: One advantage carbon has over other ecosystem services is that there are straightforward mechanisms for valuing tons of CO2. Determining accurate values for endangered species habitat credits or water filtration on a chunk of land will require better research and better valuation techniques than are currently available. Significant investments in scientific assessments and monitoring are needed before these markets can be established effectively.
  • Additionality: One of the major questions carbon markets must answer is how they can establish additionality, or proof that sequestration activities would not have occurred in the absence of the offset project investment. If other ecosystem markets link up with the carbon market on a piece of land, the landowners will likely need to show that actions that can earn other types of credits would not have occurred without additional investment.
  • Double-counting: If landowners hope to obtain multiple revenue streams, then they must manage for multiple ecosystem services. Selling water quality credits from land that is only being managed for carbon will not generate the correct incentives for landowners and will undercut the effectiveness of the water quality market. Added value of different services must be well-established enough to avoid multiple payments go to one specific type of action.
  • Capacity-building: International forest carbon offsets will be a sizable chunk of the total offset market, the vast majority of which will come from developing countries that currently lack the capacity to effectively establish, monitor, and certify offset projects. To ensure the veracity and efficacy of the market, massive capacity-building efforts are needed in places like the Congo Basin, Indonesia, and Central America. Other ecosystem service markets will also need similar building efforts, though they may be able to piggyback on the efforts to establish carbon-related infrastructure.
  • Permanence: What is the value of an ecosystem service credit if the ecosystem is damaged or destroyed soon after investment? This question will need a solid answer for markets to work properly. While permanence is currently a big concern in carbon markets, it will correspondingly affect other ecosystem markets. In order for these markets to grow and thrive, solid governance structures will be needed to establish appropriate risk premiums and other tools that can mitigate the problems related to permanence.

Stacked ecosystem services could prove to be a powerful conservation tool, but are not a silver bullet for protecting natural systems. They are designed to create incentives for people to manage land carefully. If carbon, water quality, endangered species, and other services simply morph into commodities to be traded back and forth without any robustness checks or on-the-ground coordination, then the transformative power of stacked ecosystem services will be lost. Moreover, regional issues will play a key role in determining which markets work and how. Carbon is a global good that can be traded across countries and continents; water quality and species habitat are very region-specific and will require smaller-scale markets that may or may not be trans-national.

Despite these challenges, ecosystem service markets are an innovative and potentially useful approach to conserving and restoring damaged and sensitive parts of the biosphere. The emphasis on forest carbon in H.R. 2454 may provide an opportunity to refine and expand these markets to the benefit of both ecosystems and the people who depend on them.

Posted in Ecosystem Services | 3 Comments »

Mad Max: Beyond Carbondome

Posted by Danny Morris on August 2, 2009

Things are moving slowly on the climate legislation front these days. While there were a couple Senate hearings this week and maybe a couple more scheduled for next week, climate has taken a back seat to health care and likely won’t be a major talking point until mid-September. Though eventual passage of the bill looks a wee bit shaky right now, that’s not stopping other nations from being bullish on the prospects on of a U.S. carbon offset market.

Tim Flannery, one of my favorite science writers (his book the Weather Makers partially inspired me to start working on climate issues), and 2007′s Australian of the Year, recently told the Australian government that it should set up a single trading desk that can sell carbon offsets into the U.S. market. According to Mr. Flannery, Australia could buy up 10% of the 1 billion tons of international offsets available in H.R. 2454, generating a substantial amount of revenue for the land down under:

‘‘The Government could then buy a certain amount of permits from farmers for carbon soil storage … at, say, $15 a tonne and sell them on to the US at $20 through the desk,’’ Mr Flannery said. ‘‘If we could get 10 per cent of the US market at, say, $20 that would be about $2 billion a year coming into Australia and [would] help Australian farmers expand carbon storage projects.’’

Now, you could seriously debate whether or not the benefits Flannery claims are available for Australia. Assuming he’s speaking in Australian dollars, he’s predicting that Australia will be able to corner 10% of the international offset market by selling ag and forestry credits at $17US (current exchange rates have $1US = $1.19AUD).

Consider that EPA is predicting allowances will come into the market at $13 at the low end (though they certainly could come in higher). Also consider that the huge amount of offsets in H.R. 2454 were put in their as a cost containment mechanism, meaning they will assuredly be less expensive than allowances. Lastly, while they may not be available right away, forest offsets from developing countries are going to take up a massive chunk of the international offset market and they are likely going to be much cheaper than $17. Paying for a plot of rainforest in Bolivia is probably going to be much cheaper and better PR than paying a farmer in the Murray-Darling basin to rotate his crops differently.

Aside from the economic reality, Flannery offers a compelling institutional vision for the future of the carbon market. Presuming some vaguely similar version of H.R. 2454 passes the Senate, the international carbon market is going to blow up. That rapid growth will require a lot of quality control throughout the product chain. Establishing government agencies that are wholly responsible for managing the entry and sale of offsets in the market could help provide a level of security. Of course, it could be subject to corruption in less-stable countries (like the Democratic Republic of Congo, for example). Additionally, such an institution would limit the amount of over-the-counter (OTC) sales, which is where the offset buyer makes the purchase directly from the seller. OTC transactions dominate the voluntary market currently, and limiting them will have major implications for the functionality of the international carbon market.

The suggestion of a single carbon desk is not unlike one recently made by RFF scholars Ray Kopp, Nigel Purvis, and our own Andrew Stevenson. In the paper, they argue for the formation of an International Forest Conservation Corporation, which would be primarily responsible for working with countries to prepare them to enter the carbon market and monitoring the volatility of the market. With such an entity in place, it could encourage other nations to follow Australia’s lead and establish their own carbon-specific trading agencies.

It will be interesting to see if Flannery’s proposal gains any traction with Kevin Rudd‘s government. In the meantime, I sincerely hope that carbon trading with Australians is more civilized than oil trading with Australians:

(A little forced maybe, but I gotta take my Mad Max references where I can get them.)

Posted in Climate Change, Commodities Markets, Offsets | 2 Comments »

Solving one type of knowledge problem

Posted by Danny Morris on July 28, 2009

Have you ever found yourself wandering through midtown Manhattan, thinking “I wonder how many tons of CO2 humanity has cumulatively released into the atmosphere”? Well, you’re lucky that Deutsche Bank had you in mind when they designed their new billboard:

Now you know. And I have no doubt this counter will have as much of a lasting impact on the national conscious as the National Debt counter.

H/T: G2 Weather Intelligence

Posted in Climate Change | 8 Comments »

Allocation Mechanisms – The Details Really Matter

Posted by jab12004 on July 22, 2009

A few days ago I received an e-mail from a reader asking about allowance distribution mechanisms in Waxman-Markey.  As I wrote a response, I thought it would make more sense to make a post out of it.

As it stands in Waxman-Markey, allowances will be distributed to LDCs based on a 50/50 split of their emissions and deliveries.  This is often overlooked, but it is important as to where in the country allowance value is allocated, and ultimately how prices will change.  Below i’ve listed three allocation mechanisms, their benefits and some of the problems.  Keep in mind that a “benefit” in this discussion has to do with receiving more allowances ($) and hence has to do with more consumption/emissions (which we usually consider bad).

Consumption based – This metric benefits those who consume a lot of electricity, and are really inefficient at doing so. This is bad for states like California who have invested a lot in demand side energy efficiency.  Consumption weighting also benefits those regions that already generate a lot of electricity from low carbon sources.  If you could imagine a region that only generated electricity from zero carbon sources, they would get a whole lot of free permits, and they could turn around and sell them for pure profits.  Some might argue this is unfair, but personally I think this can almost be seen as a reward for states which have spent the money to make low carbon generation investments.

Emission based – This metric is great for those states who haven’t invested money in low carbon sources of power.  Think the Midwest and the Southeast.  Some might argue that these are the states that need the most help, and that climate policy is going to hurt them the most in percentage terms.  While I think that it is important to protect coal states, it is also important to acknowledge the expensive investments some states have made in low carbon generation.

Population based – This is not a part of Waxman-Markey, but I think it deserves a bit of discussion.  This clearly would benefit those states with a high population.  In some ways, this is the fairest system since one might assume that more energy is consumed in higher population areas.  It does, however, disadvantage low population states that emit a lot of carbon.  For example, Wyoming [remember this?] with its high emissions per capita would receive a very small amount of allowances even though it emits a ton of carbon.

At the end of the day, which system you pick depends on what you think is important.  Personally (if you can’t tell already), I think it makes sense to reward those states that have already invested in lower carbon sources of power.  These states typically face much higher electricity prices than the rest of the country.  My personal feelings aside, there is an equally valid argument that the regions with lower electricity prices (and more emissions) also tend to have a lower cost of living.  Large increases in electricity prices in these areas will constitute a larger burden as a percentage of income.

In the end, it is probably a political compromise which decided the 50/50 split, so there isn’t much we can do about it.  It is just interesting that while a lot of the debate surrounds percent allocations, much less discussion has foused on the mechanism behind the allocation.

Posted in Climate Change, Uncategorized | 3 Comments »

Being for Energy Independence v. Being Against Progress

Posted by Andrew Stevenson on July 14, 2009

Plenty of criticism and analysis has already been directed at Alaska Governor Sarah Palin’s cap-and-trade editorial in the WaPo today (see here, here, and here). Instead of jumping on the bandwagon, I’d like to juxtapose it against an alternative analysis of the American Clean Energy and Security Act (ACES) by my former Congressman Mark Kirk (R-IL), who voted in favor of the bill. I’m not trying to pretend that Sarah Palin and Mark Kirk fall at the exact same point on the political spectrum (nor am I trying to set up some sort of artificial debate between the two of them). Indeed, Kirk represents a moderate suburban Chicago district (although one that would be hard hit by increased taxes on the wealthy), has always been fairly green, and had further political incentives for the “Yes” vote given his upcoming run for statewide office.

However, it’s worth illustrating that while both share the same overarching policy objective—“an ‘all of the above’ energy strategy”—Kirk’s reasoned, experienced, fact-based, forward-looking and still very much conservative analysis led him to a very different place than Palin. My overall message to the Republican Party: please, please listen to the Mark Kirks in Congress when designing your strategy on climate and energy legislation, and not the Sarah Palins.

The Starting Point

Kirk: “For 2009, our top goal should be energy independence. I support exploring for energy off our coasts, expanding nuclear power and building a natural gas pipeline across Canada to lower heating costs in the Midwest…”

Palin: “We must move in a new direction. We are ripe for economic growth and energy independence if we responsibly tap the resources that God created right underfoot on American soil…Our 3,000-mile natural gas pipeline will transport hundreds of trillions of cubic feet of our clean natural gas to hungry markets across America. We can safely drill for U.S. oil offshore…”

Kirk and Palin seem to be agreed to the standard Republican “all of the above” energy strategy, focused on promoting domestic sources of energy and reducing America’s dependence on foreign oil.

The Experience

Kirk: “…the underlying ACES bill would still lower our dependence on foreign oil by diversifying American energy production. It is time to break the boom and bust cycle of high gas prices and the need to deploy three separate armies to the Middle East (Desert Storm, Iraqi Freedom and Enduring Freedom). As you may know, I am a veteran of the Desert Storm and Enduring Freedom missions.”In 1998 and 1999, I served as part of the U.S. delegation to both the Kyoto and Buenos Aires UN Climate Change conferences. In those years, there was a significant debate about the amount and effect of atmospheric carbon dioxide. I was a skeptic and spent hundreds of hours on the subject of 1990s climate science. In the Congress, our job is to learn as much as possible from the latest peer-reviewed non-partisan scientists and then plot the best course for our nation.”

Palin: Governor of a large, oil producing state (surely there are no perverse incentives there). Well, until she resigned.

You can’t fault Palin for looking out for her constituents, and supporting increased domestic oil and gas production. However, Kirk has seen firsthand the impacts of U.S. dependence on foreign oil when fighting for his country, and extensively studied climate science. Whose experience is more valuable when judging U.S. climate and energy policy options?

The Analysis

Kirk: “The National Academy of Sciences reports that the earth’s average temperature already increased by 1.4°F, from 56.8°F in 1920 to 58.2°F in 2007. NOAA also reports that due to a 30% drop in winter ice covering the Great Lakes since 1972, evaporation may be the cause of Lake Michigan’s declining water level…I am a strong supporter of the non-partisan Congressional Budget Office. When they reported the Democratic health care bill cost $1.6 Trillion, we should take notice and rewrite that bill. That is why I have become one of the leading Republican authors of an alternative health care bill that will be the Congress’s least expensive bill, costing our Treasury very little. I read their report on ACES carefully too. CBO reports that peer-reviewed scientists expect the world’s average temperature to increase by 9 degrees by 2100, lowering U.S. economic output by 3% annually. In sum, they estimated the costs of the bill per household at $140 annually.”

Palin: “The Americans hit hardest will be those already struggling to make ends meet. As the president eloquently puts it, their electricity bills will ‘necessarily skyrocket.’ So much for not raising taxes on anyone making less than $250,000 a year. Even Warren Buffett, an ardent Obama supporter, admitted that under the cap-and-tax scheme, ‘poor people are going to pay a lot more for electricity.’ ”

It’s perfectly reasonable for two intelligent, reasonable people to look at the same study and draw two different conclusions, based on their judgment of the underlying assumptions or methodologies. However, this was not the case here. Here we have a careful review of available non-partisan scientific and economic data specific to this exact piece of legislation versus unsubstantiated statements and generalized quotes. Once again, whose argument is more compelling?

The Conclusion:

Kirk: “In sum, I would have preferred a bill that focused more on energy independence and less on some of the complications in this bill. Nevertheless, the 1990 Clean Air Act signed by President Bush established a cap and trade system to reduce acid rain that proved to be a great low-cost success…In the coming Senate debate, I hope we can repeat this environmental success and aggressively back a national program to defund Iran and Venezuela by reducing America’s need for foreign oil.

Palin: “Can America produce more of its own energy through strategic investments that protect the environment, revive our economy and secure our nation? Yes, we can. Just not with Barack Obama’s energy cap-and-tax plan.”

Hmmm…somehow there seems to still be a disagreement between Kirk and Palin about the merits of ACES and the direction of America’s climate and energy policy. Based on their experience, evidence and analysis, I wonder whom to believe?

Posted in Cap and Trade, Energy, Uncategorized | Tagged: , , , | 4 Comments »

So, the G8 meeting WAS interesting

Posted by Danny Morris on July 10, 2009

Photographic evidence that agreeing to limit warming of global temperatures to 2 degree C was not the only notable thing at the G-8 meeting this week:

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This may be evidence that B-Rock is indeed human. I also appreciate how amused Sarkozy appears. Before jumping to conclusions though, you should note this picture may have been taken out of context. Who has come forth to defend the President’s honor? Greta Van Susteren of Fox News, obviously. Just because a picture speaks 1000 words doesn’t mean those are the right words…

H/T: J-Ladd

Posted in Humor | 2 Comments »

Senate Debate vs. House Debate

Posted by Danny Morris on July 9, 2009

The beauty of writing for two blogs is you get to post the same thing twice and you get double the credit for it, or something like that. This post originally appeared on Weathervane, RFF’s fancy and informative climate blog:

How will the Senate Climate Debate Differ from the House Debate?

By Daniel F. Morris

The climate debate kicked off in the Senate this week with the Obama administration encouraging senators to pass legislation comparable to H.R. 2454, the mammoth bill that passed by a vote of 219-212 last month. In testimony given to the Environment and Public Works Committee, Energy Secretary Steven Chu, Agriculture Secretary Tom Vilsack, Interior Secretary Ken Salazar, and EPA Administrator Lisa Jackson all urged the Senate not to slow the momentum behind the passage of the House bill.

The formation of the Senate bill and the debate surrounding it will be significantly different from the experience in the House. First, a huge component of the Senate strategy will involve wrangling 60 votes to block a potential filibuster, which will probably require more compromises to accommodate Midwestern Democrats who currently feel compelled to oppose the bill. Concessions may involve the stringency of the cap in the early years of a cap-and-trade market (14% reduction of 2005 emissions by 2020 instead of 17%), allowance allocations given away to energy-sensitive industries, especially coal, oil, and manufacturing, and the role of nuclear power in the nation’s future energy portfolio.

Second, the bill will receive much more scrutiny at the committee level than the House bill received. H.R. 2454 was fully marked up only by the Energy and Commerce Committee. Input from other committees, like Ways and Means and Agriculture, were included in a manager’s amendment inserted during floor debate. In contrast, the lead for drawing up the Senate bill will be Sen. Barbara Boxer (D-CA) in the Environment and Public Works Committee, but the legislation will ultimately include pieces constructed by at least five other committees, including, Agriculture, Commerce, Energy and Natural Resources, Finance, and Foreign Relations. Senate Majority Leader Harry Reid (D-NV) has tentatively slated a deadline for the bill to clear the committees of Sept. 28, so September will be a hectic month. Boxer is indicating she wants to wait until after the August recess to take up any climate bill.

Aside from dynamics distinct to the Senate, there are a number of specific issues that may develop disparately from the House debate. Some of the prominent topics are:

  • Price collar: H.R. 2454 established a minimum carbon price (or price floor) of $10, but did not include a matching maximum price. The strategic reserve auction mechanism (Sec. 726) protects much more against extreme price volatility than consistently high allowance prices. In the interest of protecting regulated industries and reducing overall costs of the entire program, the Senate will likely take a much closer look at employing a price collar that sets both a minimum and maximum price for emissions allowances. Previous studies conducted by RFF scholars, one by Dallas Burtraw and Karen Palmer and another by Harrison Fell and Richard Morgenstern show that use of a price collar can reduce the total costs of implementing a cap-and-trade system.
  • Competitiveness: President Obama expressed some dismay about the last-minute addition of protectionist language (Sec. 3) included in H.R. 2454 targeting imports from emerging economies that do not take on similar emissions reductions. Language in the bill explicitly names China and India as countries that deserve scrutiny. Those concerned that such language will lead to conflict in future climate negotiations with the two countries see the Senate as the place to scrub the inflammatory verbiage. Foreign Relations Chairman John Kerry (D-MA) has already stated that he and others in the committee intend to make changes in the hopes of avoiding retaliatory measures from India and China. Midwest Senators Carl Levin (D-MI) and Sherrod Brown (D-OH), however, have expressed support for the provisions and disagree with the President’s assessment. The matter will no doubt receive considerable attention from both the Foreign Relations and Finance committees.
  • Market Regulation: Both chambers want to see stringent regulations for the potentially huge carbon trading markets to come out of cap-and-trade measures. H.R. 2454 split responsibility for oversight between the Commodity Future Trading Commission and the Federal Energy Regulatory Commission. Sen. Dianne Feinstein’s (D-CA) experience with FERC during California’s deregulation woes of the early part of the decade have led to her strong distrust of the agency, and she has introduced a bill giving CFTC full authority for regulating carbon markets. This debate may continue to evolve as the Senate bill begins to take shape.
  • Agriculture: In the House debate, powerful agriculture concerns found voice in Rep. Collin Peterson (D-MN), who had a major influence over the final version of the bill, including a provision that give authority to the Dept. of Agriculture to determine what constitutes domestic forestry and agriculture offsets. Many farm groups lined up against the House bill after its passage and their influence could spell doom for Senate passage. Agriculture Committee Chairman Tom Harkin (D-IA) has already expressed his dissatisfaction with the House bill and intends to protect agriculture and farmers. Expect agriculture to play an even bigger role in the Senate debate.

Undoubtedly, other issues will surface over the summer as committees begin drafting separate pieces. The Senate has somewhat of a head start in that a major energy provision has already been shepherded through committee by Energy and Natural Resources Chairman Jeff Bingaman (D-NM).

The path to President Obama signing climate and energy legislation is far from clear, however. The Senate bill must navigate skeptical and apprehensive Midwest Senators, substantial efforts from environmental groups to strengthen it, and ardent opposition from many in the Republican minority. Even though the Fourth of July was last weekend, it appears that we can look forward to plenty of fireworks for the rest of the summer.

Posted in Cap and Trade, Climate Change, Legislation, Political Economy | 4 Comments »

Desalination and Climate Change

Posted by jab12004 on July 9, 2009

I don’t pretend to know much about water, but being from California and living through droughts certainly has kept it on my mind.  While everyone knows that water will continue to increase in importance, it definitely has not reached a national level of prominence like climate change. Most people acknowledge that climate change will continue to affect water availability going forward, but it seems that water shortages are already contributing to climate change.

A recent article in the Washington Post  discusses the opening of a desalinization plant that is going to open next year in Carlsbad, CA.  Of particular note to climate change was that

Government agencies have opposed desalination because of the process’s energy consumption. The desalination plant would use nearly twice as much energy as a wastewater-treatment plant available in Orange County.

I realize that we are already using energy to treat water, but turning to large scale desalinization is a significant step.  Plants in other parts of California are also expected to be built, and many of these will require the construction of new power plants.   These new emissions will in turn contribute to climate change related water shortages.

One new power plant is a drop in the bucket compared to global emissions, but it illustrates that water needs to be a part of our national climate agenda moving forward.  If we ignore it, it will just find a way to come back and bite us.

Posted in Uncategorized | 10 Comments »

Another fallen giant

Posted by Danny Morris on July 7, 2009

The volume of celebrity deaths in the past few weeks is becoming a bit disturbing. While the world is mourning the king of pop, another king has passed quietly and sadly. John Bachar was a veritible god in the world of rock climbing. For the past 30-some years, he has been dominating walls and routes that others thought were unclimbable, and doing it all without ropes. He died Sunday while free soloing in Mammoth Lakes, CA, doing what he loved, which is as much as any of us can hope for. Grist has posted a touching (though slightly overwrought) eulogy here. Below are a couple videos that, while cheesy, show the ridiculous skills this man possessed.

I realize this post doesn’t have anything to do with economics, and is tangentially related to the environment. The reason I included it is the following: we all have our motivations for engaging in this work. Mine are numerous, but a lifetime spent in nature pushing my body and mind through skiing, climbing, mountain biking, etc., drove me to environmental work and it’s what keeps me going. It’s been a tough year for luminaries in these sports, and this is my small way of remembering their achievements. Rest in peace, John.

Posted in Uncategorized | Leave a Comment »

Unexpected Consequences of Climate Change

Posted by jab12004 on June 30, 2009

bz ISLAND 06-22-09WB

I’ll bet CBO didn’t consider avoiding these kinds of problems when they estimated the benefits of climate change legislation.

H/T bizarro for having a great comic and blog

Posted in Climate Change, Humor | Leave a Comment »

 
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