22 Jul 2011

Notes from EAERE

I attended the annual meeting of the European Association of Environmental and Resource Economists in Rome.

Here are a few miscellaneous notes:
  • Rome is beautiful (the "gala dinner" was at the Villa Giulia, picture at right).
  • Our hotel put shampoo in little plastic sachets. These are better than plastic bottles (cost, environment), and I wonder when they will catch on everywhere?
  • The EU's Directorate-General for the Environment has a booklet with the title " EU environment policy supporting jobs and growth" [no web link? WTF?] that pitches a "win win" version of environmental protection. Although I agree with the sentiment, they recast data to make their case in a way that's more agit/prop than fact. According to the booklet, e.g., 40% of Romanian employees work in the "natural resources" sector. I reckon they are coal and steel workers.
  • Dale Jorgenson gave a boring talk on the industrial distribution of impacts from higher energy prices (link to presentation; look at top papers here for his work), but one of his numbers was fascinating: he estimated that the quantity of coal sold would fall by 62% by 2060 but its price would rise by 370%. Using a baseline revenue of 100 in 2010, that implies revenue of 140 in 2060 (constant dollars). That's a win for those who remain in the coal business (and any investor with a diversified portfolio).
  • Check out the World Business Environment Survey.
  • In the panel session on climate change, Richard Tol made the interesting claim that global warming (currently locked in at +2.1C since we're at 430ppm CO2e now and will be at 450ppm in a few years) is estimated to reach +4.1C with optimal policy by the 23rd century. It will reach +4.6C without any policy. The upshot (to me) is that we need to start working on adapting to climate change. Distributional problems (bad for Bangladesh vs. not much Norway) are going to be more important than these mean temperatures. Oh, and remember that the chance of "human wipeout" exceeds 50 percent with a +5.7C increase in average temperatures.
Coming soon, notes and links to interesting papers...


  1. Is there any authority for that figure other than Tol himself (or one of his associates at the GWPF)?

  2. @EWI -- Tol is in the business, so I assume he's using consensus figures. Check out his Dublin webpage...

  3. bah, how is that a win for the coal business? those expectations are already capitalized into the current value of coal assets. a win for the coal business would be favorable news about future carbon regulation, or innovation in carbon capture tech

  4. @ David

    His figures and his means of arriving them (like his FUND) are far from any consensus, from what I've seen.

    It's not a stretch to say that both Richard Tol and his close associate Lomborg are "controversial".

  5. @EWI -- good point x2. Got better figures (4.1 v. 4.6) on Tol? Didn't know DJ has a fund. For what? Investment? Seems like a total waste of $$.

    @HoBs -- I see it another way -- coal should stop bitching and get to work.

  6. @ David

    FUND is only up to v3.6, last I heard. Smarter people than I recently had a look at it:


  7. Tol does have an opinion, but I'd say the figures he uses are pretty much in line with economic consensus, at least I find his surveys (see in JEL) convincing.
    It's a consensus that many scientists and activists don't like, or don't understand, and it is a shaky consensus with notable dissenters (Weitzman and Stern for example), but a consensus nonetheless.

    And as for coal whining, 50% reduction in production means fewer jobs which is a legitimate reason for whining, and higher revenues do not mean higher profits necessarily if costs go up.

  8. @HoBs -- but they WOULD whine, wouldn't they? And jobs are NEVER an excuse to pay attention to an industry (cf. horse and buggy). Given existing stocks of coal, I am not sure that costs will go up. Seems that DJ assumes taxes or some other reason to cut back production.

    @EWI -- interesting link. I see the problem with measuring biodiversity loss, but that's not what I was pointing out -- it was the narrow difference between BaU and optimal mitigation.


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