Topic: Energy and Environment

Government the Environmental Despoiler

The Washington Post editorialized today on an egregious environmental foul-up by the Tennessee Valley Authority:

“As bad as this disaster was, what made it worse was the revelation that such pools of pollutants aren’t federally regulated.” Efforts to regulate the problem have been “beaten back by industry” in the past, the Post says.

But, wait – the TVA is owned by the federal government. It’s a government entity, not part of private “industry.” So much for the notion that government organizations are good environmental stewards because they don’t have to grub for profits.

Certainly, the environmental problem described by the Post is a serious one. But let’s not frame this as Green Government vs. Dirty Private Industry. Indeed, the federal Department of Energy, for example, has had an atrocious environmental record over the decades.

PBS in Action

I got a fundraising letter at home, an all-green envelope with a silhouetted tree and the stark message:

This is no time to fool with our planet… AN URGENT OFFER INSIDE

An environmentalist organization, of course.

But not exactly. In fact, it was a fundraising letter from MPT, which did not quite tell me anywhere that that stands for Maryland Public Television, a television network owned and operated by the State of Maryland. The letter continued in that vein: “no time to take our planet for granted … understand the stakes … cannot afford a community and nation ignorant of science.” Sounds like Maryland Government Television knows which side is right in the heated scientific, economic, and political debates over environmental issues.

True, they do promise to use their “unique ability” to “bring our community real science with no political agenda, news reporting with diverse perspectives, and programs that teach kids conservation values.” But has anybody ever seen a PBS/MPT documentary on the high costs of environmental regulation? Or the fact that the globe hasn’t warmed for the past 10 years? Or the way that markets lead to better environmental amenities? Not really a lot of diverse perspectives, as the general tenor of the letter would suggest.

MPT’s fundraising letter seems to acknowledge clearly its function: To raise money from liberals, to supplement the tax money raised from people of all political perspectives, to advance one side of controversial issues. In a world of 500 channels, why are we taxing people to support one side in a broad political debate?

How Much Will Global Warming Cost Us?

A lot more than we used to think … or so we are told.  Turns out that the economists who study this matter are not so convinced.  Those interested in what the most recent literature review has to say on this topic should go here: http://www.cato.org/pub_display.php?pub_id=9850.  Short answer: If you believe the scientific narrative offered by the IPCC, we’re probably looking at the low-end of $3-$24 per ton of carbon emissions.

The Deadliest U.S. Natural Hazard: Extreme Cold

Reuters reports that:

Heat is more likely to kill an American than an earthquake, and thunderstorms kill more people than hurricanes do, according to a U.S. “death map” published on Tuesday…

Heat and drought caused 19.6 percent of total deaths from natural hazards, with summer thunderstorms causing 18.8 percent and winter weather causing 18.1 percent, the team at the University of South Carolina found.

However, the result that heat is the most deadly natural hazard seems to be an artifact of the data source employed by the authors of the so-called “death map.” Their primary data source is the National Climatic Data Center’s Storm Data. However, the NCDC data for mortality from extreme heat and cold is questionable.

As is evident from the paper, the authors are aware that mortality data for these two types of extreme events from NCDC are substantially different from mortality data from the Center for Disease Control (CDC) based on the Compressed Mortality File for the United States. The latter uses death certificate records, which provide the cause of each recorded death (based on medical opinion). I would contend that when it comes to cause of death, particularly for extreme cold and heat, medical opinion as captured in death certificate records is probably more reliable than determinations made by the meteorologists in the National Oceanic and Atmospheric Administration’s NCDC.

The following table from Goklany (2007) provides a breakdown of mortality due to the major types of extreme weather events for 1979-2002 based on data from the CDC database for extreme cold and extreme heat, and various arms of the National Oceanic and Atmospheric Administration for floods, lightning, hurricanes, and tornadoes. It indicates that extreme cold, rather than heat, is the deadliest form of extreme weather event. In fact, over this period, extreme cold was responsible for slightly more than 50 percent of deaths during this period for the categories listed in the table.

Note that despite the hoopla about natural weather disasters, they contribute less than 0.06% to the annual U.S. death toll!

Moreover, as the following figure, also from Goklany (2007), shows, both US death and death rates from weather events are declining, despite any climate change, which we are assured can only make matters worse.

Finally, the Reuters report notes, “Researchers who compiled the county-by-county look at what natural disasters kill Americans said they hope their study will help emergency preparedness officials plan better.” [The study was apparently funded by the Department of Homeland Security.] As a taxpayer, I hope that emergency preparedness officials look beyond this study to identify and prepare for future emergencies, or they might miss out on the larger disasters, even as they prepare for lesser ones.

Little Hope for Reformers in Obama’s Ag Sec Pick

President-elect Obama is expected to announce his candidate for Secretary of Agriculture today, former Iowa governor and Democratic presidential candidate, Tom Vilsack. Although a champion of shifting some money from traditional agricultural programs such as commodity subsidies into environmental management payments, and not the worst possible pick for Agriculture Secretary, Mr. Vilsack is still essentially a friend of the farmer. He believes that the federal government should play a role in agriculture. And he is a strong supporter of “food and energy independence,” a wrong-headed policy that is a farmer-welfare program in disguise.

Mr. Vilsack will be expected to support Mr. Obama’s “green energy” stimulus plans for creating “green jobs.” To his credit, he has advocated phasing out subsidies to corn-based ethanol (a brave stance for an Iowa man) and last year endorsed removing the tariff on Brazilian sugar-based ethanol. Having said that, he has been described as “sympathetic to big agribusiness” and “ ‘a very articulate spokesperson’ for agricultural interests”.

If one were hoping for a radical change in direction in U.S. agriculture policy, the Obama administration is unlikely to provide it.

The “Fairly Impeccable” Case for (Revenue Neutral) Carbon Taxes

In the course of making his argument that Cato frequently makes counterproductive alliances of convenience (from a strict libertarian perspective, anyway) with corporate special interests, Matthew Yglesias writes at Cato Unbound:

The free-market case for a revenue-neutral carbon pricing scheme seems fairly impeccable to me. But instead of organizing its climate change efforts around seeking to ensure that any future carbon pricing plan be as close to revenue neutral as possible, Cato prefers to steadfastly defend the rights of industry to unload air pollution unimpeded.

I’m not sure how one might define a “free market case” for a revenue-neutral carbon pricing scheme, but the economic case for it would require evidence that (1) the benefits of the tax shift would exceed the costs, and (2) that the proposed tax shift is a less expensive means of addressing climate change harms than other possible remedies.

Regarding (1), the argument is intuitively plausible but is, in fact, quite problematic.  And you don’t need to be a Cato libertarian to come to this conclusion.  You will find great skepticism about the claim that a tax shift would on balance prove economically positive from economist Lawrence Goulder (a supporter of carbon taxes, by the way).  This seminal piece from economists A. Lans Bovenberg and Ruud de Mooij is also good.  As energy economist Stephen Smith observes after surveying the relevant economic literature on eco-tax shifts:

Ecotaxes are likely to involve distortionary costs at least as high as those involved in raising equivalent revenues through existing taxes. If the question is posed whether we would choose to use energy taxes, in preference for existing taxes on labour and other bases, in the absence of any environmental benefits, then the answer is almost certainly that we would not. Energy taxes would be likely to involve just as much distortion of the labour market as income taxes, and at the same time distort the commodity market. Only if there are expected to be environmental gains can the use of environmental taxes be justified, and the case for ecotax reform must be made primarily on the basis of the environmental gains that would result.

Read that last sentence again.

So, are the benefits that might flow from a carbon tax (defined at the monetarized value of the temperature reductions that might follow) greater than the costs of the same?  Energy economist Richard Tol’s review of the published economic literature suggests that the monetarized damages that follow from a ton of carbon emissions at the margin (if mean estimates of future climate change from the IPCC are to be believed) likely works out to about $2.  Hence, if a carbon tax is set above $2 dollars, it will may very well deliver more social costs than benefits.

Regarding (2), Indur Goklany makes a strong case that adapting to climate change and applying targeted public policy initiatives to directly address subsequent harms is much cheaper – and much more effective – than a policy of reducing greenhouse gas emissions.  Moreover, Goklany points out that this conclusion holds even if we accept the worse-case scenarios spun-out in the Stern Review on the economics of climate change.

Of course, Matthew Yglesias is free to disagree with the above.  But the case for a revenue-neutral carbon pricing scheme is not “fairly impeccable” … from an economic perspective, anyway.  There are ample grounds for disagreement … and that’s true even if we ignore the debate about the underlying science.