Friday, March 31, 2006

Lovelock and Fatalism

James Lovelock crops up again on the today programme. Our efforts against global warming are puny, and we should concentrate on sea defences and food and energy security. Environmental organisations worry that we will shift from scepticism to despair without passing through a stage of determination. (I think this has largely already happened - environmentalists tend to think that people haven't heard them because behaviour hasn't changed much.)

Well of course it is inevitable that there will be some warming and some rise in sea levels. The question isn't and never was whether global warming happens or can we prevent it. The question is how much will there be. And the answer still depends, as it always did, largely on how much carbon dioxide is emitted.

Tens of centimetres of sea level rise may be inevitable. If we don't seek to change our energy strategies, then metres of rise will be likely. Tens of centimetres will be expensive in sea defences for the developed world, and will displace many people in the developing world. Metres of rise: multiply all those numbers up.

Some studies argue that rises of up to 2 degrees will improve agricultural output in temperate regions, reducing it in the tropics. Further rises will reduce it in both zones. So again the question is small increases or big ones.

Energy security and food security are always worth considering anyway. Sea levels don't rise so fast that we should expect to be caught out with poor sea defences, so long as we are willing to spend the money when it is clearly needed. And how do we enhance energy security? What sort of generation doesn't depend on fuel imports? Hands up anybody who can guess. That's right, renewables. Exactly what Lovelock is sneezing at.

Global warming is happening and is going to happen. One could equally say that crime happens and is going to happen. But fatalism does not lead us to disband the police. The potential for renewables is immense - the amount of power going untapped each year dwarfs our total coal, oil and uranium reserves. It is most likely we will end up using renewables a great deal in the future whatever strategy we follow. The question is how much to bring forward the investment to reduce global warming, and to give the third world more options for its development.

Tag: Global Warming

Monday, March 27, 2006

Turner, the stakeholder model, and the environment

In the conclusion of Just Capital, Adair Turner argues against "stakeholderism".

"... as a guide to practical policy it is best a cul-de-sac, at worst dangerous. It sounds attractive to ask corporations to think through the wider social 'balance of gains and losses' but in practise it is an almost totally inoperable principle. Corporations can just about imperfectly identify the complex set of actions which will maximise their own profit within given constraints, but they are ill-equipped to calibrate the second, third and nth order social consequence of their actions and lack the legitimacy to make the trade-offs involved. Is it better socially to downsize rapidly to preserve the remaining business and to free up resources for work elsewhere, or to keep workers in existing jobs at the expense of the firm's long term prospects and the productivity growth of the whole economy?"
"Adam Smith's great insight, indeed, was to identify that the complexity of economic interfaces is so great and their number so numerous and each of us so dependent on the behaviour of others, with only a few of whom we could ever hope to have bonds of friendship rather than contract, that we have to construct a system which makes self-interest compatible with civilized behaviour, rather than relying on a generalized disposition to benevolence."

The stakeholder model is further condemned for the weakness of the policy prescriptions that actually arise from it. How then has it gained so much currency? Turner again:

"For while socialism has lost the great ideological battle of the twentieth century, and most former socialists ... accept the power of the market, that acceptance has not come easily, at least at a philosophical rather than a practical level. For socialism was a creed which sought to praise and promote the intrinsic noble purposes ... its roots were both Marxist, and in Britain Methodist, its natural tone messianic. Socialists therefore respond uncomfortably to the prosaic rationality and empiricism of liberalism. More fundamentally still, they respond uncomfortably to the idea that we should accept the significant role of individual self-interest, even if we can demonstrate ... wider social goals."
Now Turner has written a chapter on the environment, arguing well that regulation, eco-taxes and spending on environmental goals are proper social choices, and do not have to be sacrificed on the altar of competitiveness. However, he does not revisit the issue here. But what is the implication for the environment of this rejection of stakeholderism?

The conclusion is that vague admonitions to corporate responsibility do not work, and that we should focus on structuring the system to civilise self-interest. This seems rather a painful pill for the environmental movement to swallow, trading as it does, almost entirely in admonition - that is in promoting "personal responsibility" for the environment. It is hard to blame Turner for ducking at this point.

Now I will admit that individuals are not quite the same as corporations. Individual behaviour is driven rather more by values and preferences, and less by a fiducary responsibility to oneself. So exhortation and example-setting may not be pointless, but nonetheless the difficulty of judging environmental consequences remains, and a system which integrates self-interest and the environment may simplify that judgment.

It is also politically difficult. People are happy to vote for admonition because they can ignore it. Stakeholder environmentalists believe it will work. Environmental contrarians will settle for a policy of admonition because it won't work. So there is an alliance between bascially left-wing environmentalists who believe in the stakeholder approach, contrarian right-wingers who don't, and those indifferent to environmental issues who will go along with the easy option. The liberal environmentalist risks condemnation from all sides, for the crime of supporting measures that will actually do something for the environment.

And it should be said that sometimes the contrarians will be right, and in many cases there is just received wisdom on both sides, and no compelling evidence. Many will dismiss arguments like this out of hand as industry lobbying, but the case should be answered before considering a plastic bag tax. If indeed the opposition is largely justified, then we have an example of a liberal measure, using a market mechanism - price - to use self-interest in the common good, failing because the good has been incorrectly identified. If this sort of thing is likely to happen much, this will be another reason for concern over environmental measures that do more than plead.

There is a mountain to climb here. I have explained the obstacles, but I do not suggest we give up. Firstly we need to focus policy on the most urgent and cast-iron scientifically supported cases, and leave the marginal and arguable ones for later. The mantra that environmental thinking must pervade all corporations and all government departements, as I said here can be dropped in favour of being more specific, and less reliant on other people believing what we think they ought to believe.

Second we need to point out to enviromentalists that 20 years of admonition has done very little. A handful of people have internalised the values coherently, and the rest of us make token efforts, or freeload entirely. By all means they may continue to admonish, but that should not be seen as a political process. Governments should set the rules, expecting self-interested behaviour, not spend my taxes campaigning at me. If environmentalism becomes the new socialism, it will go the same way as the old.

Tags: Adair Turner, Environment, Stakeholder

Monday, March 06, 2006

Nuclear: No Quick Fix

The Sustainable Development Commission has reported on the subject of nuclear power. This is a finely balanced question, and what worries me is quite how weak most of their arguments are.

Links: News item, SDC, chapter on C02 (pdf)

These are the arguments:
1. Long-term waste – no long term solutions are yet available, let alone acceptable to the general public; it is impossible to guarantee safety over the long- term disposal of waste.

Yes. Bang on. Of course if nuclear diminishes the threat of global warming, then this a question of what is the greater threat. Also how much nuclear may diminish global warming depends on the other arguments.

2. Cost – the economics of nuclear new-build are highly uncertain. There is little, if any, justification for public subsidy, but if estimated costs escalate, there’s a clear risk that the taxpayer will be have to pick up the tab.

Correct. The new Finnish reactor is getting hidden subsidies. Of course environmentalists will usually argue that it is worth paying more to fight global warming.

3. Inflexibility – nuclear would lock the UK into a centralised distribution system for the next 50 years, at exactly the time when opportunities for microgeneration and local distribution network are stronger than ever.

No, sorry, this just stinks. Microgeneration may be an alternative to grid power for people who are off-grid, but it is only a complement to grid power to those of us who have the benefit of a grid connection.

The SDC clearly sees nuclear as a political rival to renewables and microgeneration. They may be right, but it is still unfortunate. Nuclear, renewables, efficiency and microgeneration can all reduce carbon emissions, and are all alternatives to fossil fuel use.

There is absolutely no sign of an economically sound engineering case for dismantling the 'centralised distribution system'. It is driven by 'small is beautiful' wishful thinking. There is an engineering trade-off between capital-efficient and thermally-efficient large plant on the one hand, and distribution costs on the other.

4. Undermining energy efficiency – a new nuclear programme would give out the wrong signal to consumers and businesses, implying that a major technological fix is all that’s required, weakening the urgent action needed on energy efficiency.

This is just ridiculous. We should not use techonological means to reduce carbon emissions, because people may conclude that technological means can reduce carbon emissions. Sorry, this is not just ridiculous, it is gob-smackingly mind-bogglingly ridiculous.

And of course, what actually drives energy efficiency, is not the spin we put on how we generate the energy, but the price of energy. If we have more, expensive, nuclear power, cross-subsidising from gas and coal, then costs will be higher and efficiency will be promoted.

In the pdf linked above, the SDC talk about "demand reductions". Demand reduction if not a result of "technological fixes" will be much the same in economic impact as huge price increases, worse in fact if they are not brought about simply by huge price increases.

5. International security – if the UK brings forward a new nuclear power programme, we cannot deny other countries the same technology*. With lower safety standards, they run higher risks of accidents, radiation exposure, proliferation and terrorist attacks.

I largely agree with this, or rather I agree that it is a very good reason to develop and promote renewables ahead of nuclear. But it is not so compelling a reason not to use nuclear in preference to fossil fuels in already-nuclear powers such as the US, Europe, China and India, representing a lot of energy demand growth.


It is suggested that maintaining nuclear capacity would only make a difference of 8% to our carbon emissions. That may not seem much compared to a target of 60%. But it is a lot compared to what we seem to be on course to achieving. United against nuclear are anti-technology environmentalists, and "economic contrarians" who consider that global warming is inevitable and the costs of doing anything about it would be disproportionate. What an alliance!

There are sound reasons for having a mix of energy sources, both for security of supply, and because they have different characteristics of cost, flexibility and so forth. Taking nuclear out of the equation altogether means taking it out of the roles it is best at. There is no case for trying to do without renewables, or without coal or without gas. It will take better arguments than those of the SDC to defeat nuclear.

Tag: nuclear power

Sunday, March 05, 2006

Poverty stinks

After a heads up from Quaequam I've posted the following comment to Duncan Brack's essay on meeting the challenge.

Was it ever a secret that poverty is related to poor health outcomes? Of course it is related. And a large part of that relationship will be causation of poor health by poverty, although there will also be elements of causation the other way, and third factors causing both poor health and poverty.

The question Duncan misses is to what extent it is absolute rather than relative poverty that is a cause of poor health outcomes. The biggest factors impairing health, are poor diet, lack of exercise, smoking and drinking - are these consequences of poverty? - yes, to an extent.

But Duncan’s argument is not that povery stinks and we should get rid of it. It is that inequality stinks. Being on the bottom rung of the ladder is a cause of stress. The thing is that every ladder has a bottom rung, unless it is lying flat on the ground.

Now I would agree that both absolute and relative poverty do matter and should be tackled. They are not, of course, the only things that matter, so the question is how much. Duncan argues for more equality. How much more? Japan and Sweden are held up as examples. Are they equal enough, or do all the same arguments still apply to them?

It may be right to demand more of something that is good, such as equality, but if you ignore the downsides, and you don’t say how much more equality you want, then what you have is a very weak argument. Not to mention a politically terrifying unlimited aspiration for redistribution.

I absolutely agree that people in absolute poverty have very little freedom, and so supporters of freedom like the Lib Dems should fight against that poverty. What is not so clear is how much relative poverty restricts freedom.

Duncan defends the 50p top rate policy - the proceeds of which were almost entirely recycled to the middle classes, doing nothing about poverty or inequality.

It is dangerous to try to wish away the fact that prosperity brings better outcomes and better opportunities. Prosperity is not the problem, it is the solution. The largely symbolic 50p policy suggests that it is the problem.