The promise of governmental buyers’ clubs

We often wonder whether the government is better suited to solving many of our problems, or whether the market should take the lead.

The current issue of The Atlantic Monthly has an article concerning the efforts of Bill Clinton's foundation which addresses this issue. The article shows how governments can work with markets for the benefit of large numbers of people and the planet by guaranteeing demand for a particular product or service. By doing this in the long-term, the production of beneficial goods and services can achieve the economies of scale that will make them practical to use within a few years, instead of decades from now.

The Clinton Foundation used this powerful idea to cut prices for AIDS drugs in Africa and the Caribbean for hundreds of thousands of people. In Clinton's words, "All we did was take something that people would naturally do in a purely business market and apply it to the public-goods market."

I'm not sure if Clinton is referring to the technical definition of "public goods" here, which refers to a good whose consumption does not reduce any other's consumption of that good, and a good that all have access to, such as information or air.

The Earth's climate is most certainly a public good, and its radical warming would most certainly be a public bad. So the Clinton Foundation worked with a new group of cities, the C40, to create large-scale demand. If big cities could come together to provide a market to jumpstart new, energy-savings technologies, it would give quite a boost to efforts to mitigate global warming. As the author of The Atlantic article points out, cities have quite a source of demand at their disposal:

Thoughts on the GISS temperature adjustment

There has been a lot of blogging recently about the problem with the temperature record for the continental U.S. RealClimate described the problem thusly:

Last Saturday, Steve McIntyre wrote an email to NASA GISS pointing out that for some North American stations in the GISTEMP analysis, there was an odd jump in going from 1999 to 2000. On Monday, the people who work on the temperature analysis (not me), looked into it and found that this coincided with the switch between two sources of US temperature data. There had been a faulty assumption that these two sources matched, but that turned out not to be the case. ...

The net effect of the change was to reduce mean US anomalies by about 0.15 ºC for the years 2000-2006. There were some very minor knock on effects in earlier years due to the GISTEMP adjustments for rural vs. urban trends. In the global or hemispheric mean, the differences were imperceptible (since the US is only a small fraction of the global area).

A few comments about this:

A review of Lomborg and Shellenberger & Nordhaus

This piece, which appears in the October 11, 2007, issue of the New York Review of Books, is posted here with the kind permission of the editors of that magazine.

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CAN ANYONE STOP IT?
Bill McKibben

During the last year, momentum has finally begun to build for taking action against global warming by putting limits on carbon emissions and then reducing them. Driven by ever-more-dire scientific reports, Congress has, for the first time, begun debating ambitious targets for carbon reduction. Al Gore, in his recent Live Earth concerts, announced that he will work to see an international treaty signed by the end of 2009. Even President Bush has recently reversed his previous opposition and summoned the leaders of all the top carbon-emitting countries to a series of conferences designed to yield some form of limits on CO2.

The authors of the first two books under review have some doubts about a strategy that emphasizes limits on carbon emissions, Lomborg for economic reasons and Nordhaus and Shellenberger for political ones. Since any transition away from fossil fuel is likely to be the dominant global project of the first half of the twenty-first century, it's worth taking those qualms seriously.

In his earlier book, The Skeptical Environmentalist, Bjørn Lomborg, a Danish statistician, attacked the scientific establishment on a number of topics, including global warming, and concluded that things were generally improving here on earth. The book was warmly received on the editorial pages of The Wall Street Journal, but most scientists were unimpressed. Scientific American published scathing rebuttals from leading researchers, and its editor concluded in a note to readers that "in its purpose of describing the real state of the world, the book is a failure." A review in Nature compared it to "bad term papers," and called it heavily reliant on secondary sources and "at times ... fictional." E.O. Wilson, who has over the years been attacked by the left (for sociobiology) and the right (for his work on nature conservation), and usually responded only with a bemused detachment, sent Lomborg a public note that called his book a "sordid mess." Lomborg replied to all of this vigorously and at great length,¹ and then went on, with the help of The Economist magazine, to convene a "dream team" of eight economists including three Nobel laureates and ask them to consider the costs and benefits of dealing with various world problems. According to his panel, dealing with malaria ranked higher than controlling carbon emissions, though again some observers felt the panel had been stacked and one of the economists who took part told reporters that "climate change was set up to fail." Lomborg later conducted a similar exercise with "youth leaders" and with ambassadors to the United Nations, including the former U.S. emissary John Bolton, with similar results.

In his new book, Cool It, Lomborg begins by saying that the consensus scientific position on climate change -- that we face a rise in temperature of about five degrees Fahrenheit by century's end -- is correct, but that it's not that big a deal. "Many other issues are much more important than global warming." In fact, he argues, it would be a great mistake either to impose stiff caps on carbon or to spend large sums of money -- he mentions $25 billion worldwide annually on R&D as an upper bound -- trying to dramatically reduce emissions because global warming won't be all that bad. The effort to cut emissions won't work very well, and we could better spend the money on other projects like giving out bed nets to prevent malaria.

Lomborg casts himself as the voice of reason in this debate, contending with well-meaning but woolly-headed scientists, bureaucrats, environmentalists, politicians, and reporters. I got a preview of some of these arguments in May when we engaged in a dialogue at Middlebury College in Vermont²; they struck me then, and strike me now in written form, as tendentious and partisan in particularly narrow ways. Lomborg has appeared regularly on right-wing radio and TV programs, and been summoned to offer helpful testimony by, for instance, Oklahoma Senator James Inhofe, famous for his claim that global warming is a hoax. That Lomborg disagrees with him and finds much of the scientific analysis of global warming accurate doesn't matter to Inhofe; for his purposes, it is sufficient that Lomborg opposes doing much of anything about it.

Harvard economist disses most climate cost-benefit analyses

Harvard economist Martin Weitzman has a new paper in which he points out that the vast majority of conventional economic analyses of climate change should carry the following label:

WARNING: to be used ONLY for cost-benefit analysis of non-extreme climate change possibilities. NOT INTENDED to cover welfare evaluation of extreme tail possibilities, for which a complete accounting might produce ARBITRARILY DIFFERENT welfare outcomes.

In short, if you don't factor in plausible worst-case scenarios -- and the vast majority of economic analyses don't (this means you, William Nordhaus, and you, too, Bjørn Lomborg) -- your analysis is useless. Pretty strong stuff for a Harvard economist!

On whether to advocate weaker climate change bills

This post is by ClimateProgress guest blogger Bill Becker, Executive Director of the Presidential Climate Action Project.

How fearsome must the headlines be about tomorrow before people change their ways today?
-- Nancy Gibbs, TIME

In Greenland today, the ice is thawing at a pace that is alarming climate scientists. Meanwhile in Washington, D.C., Congress remains frozen on the issue of carbon pricing. And that may be a good thing.

Carbon pricing, as most readers of Gristmill know, is the idea that some portion of the costs of greenhouse-gas emissions should be reflected in the price consumers pay for carbon-intensive fuels. The energy that is causing global climate change would cost more than the energy that isn't, and the marketplace would become the ally of climate stabilization.

There are two schemes on the table. The first is a carbon tax -- simple, straightforward and, according to conventional wisdom, political suicide. The second approach is carbon trading. Carbon emissions would be capped; polluters would buy and sell emission permits. Carbon trading is more complex and would take longer to make a difference, but because it is not a tax, it appears to be the favored approach in Congress.

Several cap-and-trade bills have been introduced in Congress, some setting tougher goals than others. The word on the street is that the leading bill will be proposed soon by Senators Warner and Lieberman. It reportedly will call for a 15 percent reduction in carbon emissions by 2020, compared to current levels. Therein lies the rub. Is the glass (of melted ice) half empty or half full?

Photos of species threatened by climate change

The following photos and excerpt — highlighting the threats posed to animals and plants by climate change — are drawn...

BioWillie pens a biodiesel book

Willie Nelson is talking about biodiesel again. This time in book form, and the result is On the Clean Road...

Bridge to the 21st century?

Since 1998, the American Society of Civil Engineers (ASCE) has been publishing an "infrastructure report card" detailing the sorry state of the various parts of our infrastructure. Unfortunately, national attention on the physical infrastructure only rises when something catastrophic happens, as it did in New Orleans in 2005, in Minneapolis on Wednesday after the collapse of a large bridge, or during an electrical blackout.

Like our ecosystems, the physical infrastructure is an essential part of the economy; the economy literally rests on the foundation of ecosystems and the infrastructure. Like the various ecosystems, such as forests and grasslands, lakes and rivers, the infrastructure has increasingly been treated like an asset that can be milked for all its worth, without investment. Like our ecosystems, the neglect of our infrastructure is the result of maximizing income in the short term; instead of insuring that there is some slack in a bridge or a forest, the economy has become nonresilient.

Globalization of the fuel vs. fuel debate

Last Thursday, Canada's Prime Minister, Stephen Harper, announced substantial subsidies to boost Canada's production of biofuels. Under its "ecoENERGY for Biofuels" program, the government will provide up to C$ 1.5 billion (US$ 1.4 billion) in the form of incentives over nine years to producers of renewable alternatives to gasoline and diesel fuel.

"With leading-edge technology and abundant supplies of grains, oilseeds, and other feedstocks, Canada is uniquely positioned to become a global leader in the production of biofuels," said the prime minister.

Today, the BBC ran a story explaining that, in part thanks to the increasing diversion of Canadian durum wheat into biofuels, supplies of this very special grain are getting tight. The result: the price of pasta, one of Italy's staple foods, is forecast to go up by about 20 percent this autumn.