23 Nov 2017

Flying: a very guilty pleasure

Isa writes:*

One of the most polluting things an individual can do is flying, something which has - just like almost any other human activity – exponentially increased since the 1960s with 9 percent annual growth. The average Dutch person flies 4200 kilometres a year, equal to a round-trip Schiphol-Porto, earning a fifth place in our list of most greenhouse gas (GHG) emitting activities. The impact of flying increases proportionally with the amount of passenger-kilometres, e.g. a round-trip to Bali puts flying on the first place in our list of GHG emitting activities .

One of the major factors of the rather extreme exponential increase in passenger aviation is, of course, economic growth. Yet, the demand of flying has grown disproportionally compared to our welfare. This can be explained by the continuously decreasing price of flying, government subsidies, non-existent taxes on kerosene - in contrast to any other fuel - and non-internalized negative external costs such as climate change and air pollution. Additional factors are social changes, such as the equation of more frequent and distant travelling with living ‘the good life’.

Even though the aviation industry keeps on innovating, especially in terms of energy efficiency, this will not be sufficient to compensate for the environmental damage, even though this is what most projections rely on (see figure at right). Substituting kerosene for biofuel (pdf), for example, will require a major proportion of the world’s harvesting grounds, which would lead to conflicts with food production. Other technologies such as hydrogen are also still far out of sight. Instead of hoping for new or radical technologies to reduce emissions, which might not even be economically possible, we should consider ways of reducing demand.

We could try to convince everyone that an old-school, cycling holiday to Limburg would be the way to go; or that inter-railing your way through Europe is really awesome, even though quite time-consuming; or that holidays to exotic far-away places are over-rated. Studies have shown that it is rather difficult, and as economics like to say, ‘inefficient’, to try to change people’s behaviour solely through communication campaigns. Underlying this is the complex and institutionalized nature of behaviour, which results in inherent resistance to change.

Seemingly, the fairest and most efficient method to change behaviour while simultaneously compensating for environmental degradation would be enacting the polluter pays principle, which implies getting rid of aviation subsidies and internalizing social costs. By using the pricing mechanism, the demand for flying would go down, while the destructive competitiveness between aviation companies would possibly obstruct prices going further down. The people that would still fly under this new price would (unintentionally) offset their environmental impact, whereas others would be obstructed from flying.

Two potential problems are the possible increase in car travelling when the price of train tickets remain relatively high, and the need for international agreements on the price of flying. Recently, the president of the European Rail Infra Managers declared that they are committed to invest more in improving the efficiency and connectivity of European train travelling, to compete with other ways of travelling, simultaneously calling for the European Union to create a level playing field. Since 2012, commercial aviation has been included under the EU emissions trading (system for flights within te European Economic Area, which requires aviation companies to monitor and offset a part of their emissions. From 2021 onwards, a similar scheme will be implemented on a global level, but only for increased emissions compared to the 2020 level. Even though these are steps in the right direction, commercial aviation is still projected to grow strongly, thus creating a gap (see figure at left). Besides, the current cap and trade system gives 80% of the allowances away for free, with a cap of only 5% below the average annual level of emissions in the years 2004-2006

Bottom line: efforts are being made on a European and international scale to cap commercial aviation emissions, but these are quite minimal and do not resolve the projected gap between emissions and targets. As biofuels can conflict with food production, and as other technologies are not developed yet, we should look at ways of decreasing demand. This could start at eliminating government subsidies and tax exemptions on aviation, lowering the demand of flying while simultaneously offsetting emissions.

* Please help my environmental economics students by commenting on unclear analysis, other perspectives, data sources, etc. (Or you can just say something nice :)


Ed Dolan said...

I was a little put off by the title. My first thought was that we don't need to be guilty about consuming anything that we pay for in full. Yes, we should feel guilty about using a product that harms others if we don't pay compensation for the damage, but the question is less one of guilt than one of proper pricing.

When I read the post, I was pleased to see that it deals thoroughly with the pricing issue. Our guilt for flying would definitely be reduced if we paid a higher price for the pleasure--one that reflected in full the damage done to the planet and its inhabitants by the associated carbon emissions.

That still leaves one question, though: Even if we paid some kind of carbon fee for jet fuel, would any of the revenue from it go to compensate the people actually harmed, many of whom live far away? No doubt a royalty system that made micropayments to Pacific islanders every time we bought an airline ticket would be impractical. Even if we had an appropriate carbon fee, the revenue would go to our own government. But, wouldn't the governments of rich countries like The Netherlands and the US have a moral obligation to pass part of that through to people in poorer countries, perhaps as some kind of aid program if not in cash? If wouldn't we, as citizens, continue to bear some degree of guilt? There is food for thought here.

Isa said...

Dear Ed Dolan,

Thank you for your response!
You have a good point in raising the "who gets the money" point, because indeed, if the tax money is not going to be spend on the people or on restoring the things that are actually suffering from the damage caused by flying, then what is the point of doing it. I will definitely have to focus on this during my cost-benefit analysis.

However, the question in this case is also: is it better to prevent or cure? With that I mean, is it better to offset your flight or to lower the demand? I would say, it depends again on where the money goes to, if the GHGs from flying are exactly compensated, then indeed, there is nothing to feel guilty of. Nonetheless, taking into account the amount of compensating that would need to happen (I have seen estimates of thousands of trees per flight, but this needs careful research) this might not even be possible to do in reality, and in that case it would be better to lower the demand.

You point out that the richer countries (that are causing most of the damage) have a moral obligation in compensating the poorer countries, also because the latter happen to face most of the consequences/costs. However, this would be an adaption type of strategy, instead of a mitigation strategy. Don't you think it would be better to spend the money on mitigating climate change instead of adapting to it?Especially taking into account the long-term consequences?

(by the way, I really like your book, and will definitely read it again for my Economic Policy master!)

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