My highlights from EAERE 2012

My highlights from the 19th annual conference of the European Association of Environmental and Resource Economists:

• I was surprised to see how crude estimates of travel costs still are in non-market valuations of recreational sites;
• Also, how few of those studies have done a proper qualitative analysis before they do their quantitative study;
• Linda Nøstbakken had a very nice paper on how a combination of diversified monitoring and self-reporting incentives can greatly enhance monitoring of fisheries legislation;
• Martin Quaas proposed using a "shadow interest rate" as a way of expressing the quality of fisheries management;
• Nick Hanley is a Les Paul man:

And rightly so; Fender people are evil.

I played the fiddle in a Prague biker bar

So this is Bajkazyl:

It started out as a bicycle repair workshop but since last year they have a bar and live music almost every evening. Prague has a small but growing scene with young people interested in traditional Breton and Czech dances, so we played some Breton, French, Dutch and Czech tunes and pissed off a lot of cyclists doing that. Prague has a wonderful liberal atmosphere: any Dutch bike repair workshop trying this would have its ass sued to hell within a week.

Yet another scientific fraud scandal in the Netherlands

Dirk Smeesters, professor Consumer Behaviour at the Erasmus University of Rotterdam, is suspected of scientific fraud. Worse than that, he is not the first one. And what really irks me about the issue is the complacency among many researchers, especially natural scientists. Many of them argue that these cases only prove the self-cleansing power of science: after all, hasn't the impostor been caught? Fraud will always be detected.

But how many impostors do not get caught? I think it is more difficult to detect fraud in the social sciences than it is in many (but not all) natural sciences. Take Hwang Woo-Suk, the Korean guy who faked data claiming he cloned human embryos. Such fraud is bound to be detected. His peers will have good reasons to reproduce his results so they can apply the same technique, or even improve on it. Companies may want to commercialize the technique. When it turns out it doesn't work, people would ask him for more details on how he did it, and try again. Somewhere down the line they would get suspicious because he is either not willing to share the details of his work, or his recommendations don't help.

The work of Diederik Stapel and Dirk Smeesters is different. There is less incentive for replication, because the experiments tend to be fairly simple: it is not that they are some fancy new technology. You would not learn anything new from it, and you would not be able to publish it ("We did the same as Stapel et al. but it didn't work" - "Well, your experimental set-up was probably wrong"). Diederik Stapel's findings have been applied in many Dutch schools. The only way to find out whether they worked would have been to do randomly select the schools where we apply the insights - try explaining to parents why their kids are not being taught according to the latest insights in educational science. And even then, our evidence would be no more than a p-value: a probability that the treatment has no effect. Graham Bell could demonstrate his telephone worked, but it doesn't work like that in the social sciences.

Granted: bad arguments against ecological footprint

While writing my post on Ecological Footprint I came across a lot of sound arguments against it, but, to be fair, also a few less convincing ones. Here are two that hold more than a grain of truth, but simply will not convince the EF's proponents.

"Land prices will stop you from sequestering carbon"
The argument goes like this: it's unrealistic to assume all carbon emissions are mitigated by planting trees, because as more and more land is covered by 'carbon farms' (yes, not only the term exists, so does the practice), land will become so expensive that you will resort to other ways of climate change mitigation.

Of course you would expect land prices aree extremely high when the last square meter of agricultural land is converted to a carbon farm: after all, we only have one planet. But perhaps that is exactly what EF tries to tell us? Nevertheless, the argument points towards another problem with EF: it assumes sequestration is the only way to deal with GHG emissions, or at least the cheapest way. But although adaptation to climate change has long been a dirty word in the climate debate, it would be bad science and bad policy to dismiss it straight away - especially if sequestering carbon becomes prohibitively expensive. Given the choice between starvation and building better coastal defenses, my motto would certainly not be let em eat tree bark.

"You can overshoot temporarily without wrecking the planet"
EF counts any policy that increases stocks of carbon as unsustainable, but it is possible to accept a slight, temporary increase in carbon stocks without inflicting major damage to the climate system. Indeed, it might even be optimal to do so. If we could eradicate poverty by a temporary spurt in economic output to build up capital (read: build machines, infrastructure, establish institutions, etc), after which we close biophysical cycles again, bringing our impact on the planet within safe boundaries, the elevation to a higher but sustainable standard of living may more than offset the temporary damage inflicted on the environment.

But to me this sounds too much like the drunk who is caught by police while starting his car and tries defending himself with the excuse that he wasn't planning on actually driving it. Are you really trying to tell me that flying to distant holiday destinations several times a year (just to name an example) is supposed to be temporary, and to help developing countries get richer? Don't get me wrong here: I think everybody is free to take a long vacation on the other side of the globe if he or she likes, although we should do so facing prices that convey all relevant costs, and that includes our impact on the environment. But most people would assume that our current way of life is at least supposed to be maintained indefinitely, and otherwise to be expanded. The EF's proponents argue that this is impossible. There may be a lot to be said against their position, but claiming it's all meant to be temporary is not one of them.

James Lovelock on greens and skeptics

James Lovelock, the inventor of the Gaia hypothesis (that life on Earth functions as a complex system), has for years been an environmentalist's pet scientist. Lately he made a few remarks that sounded skeptical to some, and now he's turning into the skeptics' pet. They should think again. Here's what he says in The Guardian about skeptics:

They've got their own religion. They believe that the world was right before these damn people [the greens] came along and want to go back to where we were 20 years ago. That's also silly in its own way. I don't see how any true scientist could be either a believer or a denier. The term "sceptic" has been hijacked, too.

I could not agree more. I recently had a discussion with a friend who I understand to be skeptical about monetary valuation of nature. She answered "I'm not skeptical, I happen to have good arguments." What have we come to now that "skepticism" has taken on the meaning "refusing to believe despite overwhelming evidence"?

Lovelock also makes some good remarks on environmentalism, shale gas, and climate change.

Worried about climate skeptics? It can be much, much worse

John Whitehead of the Env-Econ blog has the following about a new bill in North Carolina:

Business interests along the state's coastline pushed lawmakers to include language in a law that would require future sea level estimates to be based only on data from past years. New evidence, especially on sea level rise that could be tied to global warming, would not be factored into the state's development plans for the coast.

The proposal has been described by some as "criminal", but the first that sprang to my mind was the infamous Indiana bill that set π equal to 3.2.

It's going to be an interesting EAERE this year

Whoever is bored of the EAERE welcome reception and wants to hear some weird music: I'll be playing that evening in Prague with these guys:


Meet L'Arrache-Coeur, a Czech group playing a very liberal interpretation of French trad music and klezmer. The guy playing the hurdy-gurdy (that's the instrument that looks like a cross between a fiddle and a coffee grinder) is Daniel Kahuda: Daniel stayed in Wageningen a few years ago, where he was a regular visitor of our monthly folk session.

Some years later I was in Prague for the European Congress of Conservation Biology (with very mixed feelings, I must say - see my posts on economics vs ecology). We met up and had a few great gigs and sessions. Here is a picture taken at the Grabstejn World Fest, where we played with L'Arrache-Coeur's accordion player František Tomášek and Puck Duits, who is one of Holland's best bagpipe players.

Anyway, L'Arrache-Coeur is playing on Wednesday evening 27 June, and Daniel invited me to join them. The place is called Cafe-Bar Bajkazyl, and apparently it's a cross between a bar and a bike rental. I have no idea what I'm getting myself into, but I'm sure it'll be fun. Environmental and resource economists welcome.

Elinor Ostrom: 1933 - 2012

From the Environmental Economics blog (who got it from Indiana University):

The entire Indiana University community mourns the passing today of Distinguished Professor Elinor Ostrom, who received the 2009 Nobel Prize in Economic Sciences for her groundbreaking research on the ways that people organize themselves to manage resources.

This is a very sad day for natural resource economics. Elinor Ostrom single-handedly demolished the Tragedy Of The Commons paradigm: whereas textbook economics tells us that common pool resources will eventually be depleted, she described plenty of counter-examples where they were managed fairly well. Her work was so unique many economists simply refer to it as "Elinor Ostrom's work".

She will be sorely missed.

The Living Planet Report (2): Ecological Footprint makes for nice reading but abominable science

WWF's latest Living Planet Report presents a bleak picture, some hopeful trends, an awfully bad indicator and lots of pious words on sustainable development.

Oh boy: the Ecological Footprint

NGOs like WWF love indicators like the Ecological Footprint. Its message seems simple: if we want to continue living the way we do now, we need more planets to offset all the bad thing we do. Alas, it is one of the worst concoctions that ever came out of an econophobic environmentalist's imagination. At best it tells us things we already know. At worst it suggests policies that are harmful to people AND the environment. It is claptrap. Trash. Ecological Footprint is evil. The objections are legion, but the main ones are:

• EF tells us nothing about how "bad" or how "serious" impacts are;
• It depends strongly on carbon emissions and makes wildly strong assumptions on how carbon emissions are mitigated;
• It is biased against cities and trade.

Ecological Footprint does not tell us how bad impacts are

Suppose we have two pollutants. One will, if it reaches a certain concentration, kill all life on the planet. Theoretically we can reduce its concentration with some technology that takes very little space, but because we think it is too expensive we haven't installed it yet. (Let's say we can install some device on the North Pole that sucks the pollutant out of the air.) The other pollutant causes a nasty rash among a small share of the population. Reducing its concentration requires the planting of huge areas of forest, but we can use these forests also for recreation, timber, and all other kinds of uses. Which pollutant should be banned?

EF would say: ban the second pollutant. Not because that pollutant causes a rash, not because EF aims to kill all life on the planet, but because mitigating that pollutant's emissions takes more hectares than mitigating the first pollutant. So one problem with EF is that it ignores how a given activity affects our well-being, or that of future generations. All that matters is how far we are from a steady state, and this "how far" is measured in hectares. Why hectares? Are they such good indicators of the well-being of humans, or life on Earth in general? No. But it gives you pretty pictures: you can show your readers a picture of Earth besides one or two other planets and tell people we also need the other planets. And then your readers can say: "Oh no! We need two more!" It's a great propaganda tool.

Ecological Footprint depends strongly on carbon emissions

In fact, EF ignores toxic substances altogether, because, you guessed it, they are so difficult to translate into hectares. The only exception is carbon emissions: after all, we could in theory plant trees to absorb and store carbon. (Please don't start now that carbon is not a pollutant but plant food, and that anthropogenic global warming is a leftist conspiracy to take away your SUV. Conspiracy theories give me a rash.) This is what the EF assumes: that we need to grow trees in order to absorb all the carbon we emit. No wonder carbon makes up about 50% of the global Ecological Footprint! In case you haven't noticed: the fact that 50% of the EF is caused by carbon emissions is not the result of the gravity of human-induced climate change (which I agree is serious), but of the assumptions that the EF makes on how we should mitigate those emissions (which may be or may not be realistic but is in NO way related to the consequences of human-induced climate change). Moreover, there are many ways of mitigating carbon emissions, many of which take less space than planting trees: Carbon Capture and Storage, for instance.

Ecological Footprint is biased against cities and trade

If the LPR simply presented the EF as an indicator of whether we can keep up current consumption rates indefinitely or not, it may not necessarily be wrong, although it would be useless: we already know from IPCC, IUCN, and other bodies that we are having impacts that are drastically altering ecosystems, and are likely to limit future generations' well-being. The problem so far seems to be that it is presented as a quantitative measure of how bad things are, which it is not. However, the LPR (as well as the EF's proponents) go further than that: they claim cities are evil, and they base that claim on cities' Ecological Footprint.

The reasoning is like this. Imagine a city that covers 100 km². Of course it cannot exist on its own: after all, it is a city, population density is high, so it is impossible to feed all the city folk by growing food on the mere 100 km² covered by that city. So it buys food from the rural areas around it. The inventors of EF claim this is a bad thing. Our imaginary city could have an ecological footprint several times its physical surface area, because all that farmland provides food to the city. So according to EF's proponents it is unsustainable, and should reduce its footprint to something more in line with its physical size. Cities are parasites on their surroundings, the EF folks claim.

This 'parasitism' is nothing more than trade. A farm's footprint is smaller than its physical area because it only uses a fraction of the food it produces: the rest is sold, mainly to city folk. This is good: farmers can specialize in farming, city folk can specialize in activities for which it pays to be close to other people, such as trade, banking, research, and education. Throughout history, cities have been hotbeds of innovation, of revolution, of new ideas being spawned, spreading, and finding fertile ground.

No wonder EF is also biased against international trade: densely populated countries (read: countries where land is in short supply) like Singapore and The Netherlands import a lot of food and timber from countries that have lots of land. This way everybody can do what he or she is best at. Really, you don't want to live in a world where everybody grows his own food, fetches his own water, generates his own energy, builds his own house, and pulls his own teeth. Trade enables division of labour, which enables us to do a lot more with the same resources.

Better indicators? Prices!

If EF is so bad, is there any other way to express the state of the world's environment in one figure? The short answer is: no. The issues are too diverse, and too numerous to be translated in a single figure. The long answer: what should such an indicator reflect? At least it should reflect how serious the issues are, because policy makers will set their priorities with the help of the indicator. Prices may be imperfect reflections of what people want, but they are still way better than an arbitrary variable like surface area. (Why not Joules? Or grams? I know: less pretty pictures.) The indicator should also reflect not only our current happiness, but also our impact on the future. So a country that throws a big party squandering its natural resources should have a lower value than a country that uses the same amount of resources more wisely. The first issue is not in EF, and the second issue only partially (and using, as I said, a poorly suited unit). Gross National Income, which is widely used by economists but also criticized by ecologists, is also a very poor indicator of wealth, mainly because it ignores natural resource depletion. But there are better, less well-known indicators: the latest edition of The World Bank's Little Green Data Book presents not only Gross National Income of different countries and regions, but also their Adjusted Net National Income, which is GNI minus consumption of fixed capital, and depletion of energy resources, minerals, and forests. And thankfully, the word "footprint" is nowhere to be found.

Living Planet Report (1): Living Planet Index paints a bleak picture, but be careful with your interpretation

WWF's latest Living Planet Report presents a bleak picture, some hopeful trends, an awfully bad indicator and lots of pious words on sustainable development.

The Living Planet Index

The bleak picture is painted by the overall trends in The Living Planet Index, a weighted average of the abundance (or density, or another indicator of well-being) of a 'basket' of species. You can argue about the weights each species gets, of course, but the overall message is that most of the species they monitor are still in decline.

The hopeful trends are in the North: rich country LPIs are rising. There could be many reasons for this. Unsurprisingly, the LPR claims that the rising trends in the North are only possible because rich countries 'export', as it were, the damaging activities necessary for their consumption to poorer countries. I don't doubt this is one of the drivers, but I can't help thinking that it also matters that as we grow richer, we start caring more for the environment. Whether this means that we should all be poor (little consumption of natural resources) or rich (high preference for conservation) is a very, very old discussion in environmental economics.

The LPR also states that just because things are getting better, that does not mean they are going well. The report rightly points towards the fact that Atlantic cod stocks in some places are only a few percent of what they were mid-nineteenth century. Although cods stocks are improving, they could have been a lot better (i.e., we could have had a lot more bacalau than we're having now). Be careful, however, not to interpret this as that we should strive for pre-industrial levels for all species. After all, this would mean that we should never fish at all. The report does not make this claim explicitly, but such claims are made in other indicators. It is important to keep in mind that biomass levels that give us Maximum Sustainable Yield generally lie at about 20%-50% of what the biomass would have been if we did not fish at all. So if a stock is at 5% of its pre-fishing level it could be at about 10% of its optimal size. Always keep in mind: what do we want? Pre-industrial or even pre-human biomass levels are poor benchmarks for that.

Next post: Oh boy. They're using the Ecological Footprint