Climate Change and the World Economy Now Available

Our collection of classic papers, Climate Change and the World Economy, is now available via Elgar's website. For more information on this project please check  my previous blogposts.

Elsevier Article Usage Dashboards and Tips for Early Career Researchers

The new article usage dashboards are a nice feature of Elsevier journals. Here is the dashboard for my 2013 article in Energy Economics:

It's interesting to see where our paper is being downloaded. China is in the lead. Obviously there are a lot of downloads in Sweden and Australia as the authors are Swedish and Australian and the data is Swedish. Also, there are a lot of downloads in Turkey, which has a lot of researchers in energy economics.

There is also a link in the Dashboard to a page with lots of useful guides for early career researchers. Some of the advice will also be useful for more senior researchers looking to get greater impact from their publications.

Reforming IPCC Communications

The IPCC is currently discussing whether to change its approach to publications and communications in future years. We (Frank Jotzo and I) were asked about our opinions as former lead authors by the people in the relevant government departments here. It seems to make sense to have more of a continuous reporting model given the capability of the web. Perhaps each chapter could be updated one at a time on an ongoing cycle or even a Wikipedia style format could be adopted. On the other hand, the large septennial assessment reports do generate a big media splash for a few days when they are released, which the continuous communication format would not. If assessment reports are continued, then maybe they should all be released simultaneously, or each Working Group release its report 2 years apart. The 5th assessment report cycle saw WG1 release its report in September 2013 and then WG2 and WG3 released their reports two weeks apart in April 2013, which was somewhat confusing. We also thought that the IPCC plenary should be less prescriptive about the contents of each chapter including sub-sections and what should be in each subsection.

COIN in the UK have released a short report with some more radical suggestions. In particular, they think the IPCC should do human interest stories that are more suitable for most media outlets and use social media more effectively.

Australian Energy Intensity Decomposition

This post is based on part of a presentation that I gave yesterday in a short course here in at ANU. Australia has improved its energy intensity over recent decades but the gains have been quite small. My research suggests that adjusted for industrial structure etc. Australia is relatively energy inefficient compared to other developing countries. The following graph removes all these other factors, resulting in a measure of "pure" energy efficiency:

A declining trend implies increasing energy efficiency. I advised Muhammad Shahiduzzaman on his PhD research at the University of Southern Queensland. Subsequently, he published a paper in Energy Policy on decomposing Australian energy intensity. The following graph from the paper shows the effects of structural change at two levels of aggregation on Australian energy intensity:

The shift between the larger sectors helped reduce energy intensity but the shifts between smaller categories of industries tended to increase energy intensity. Real intensity is the residual energy intensity once the structural effects are removed. The Australian Bureau of Resource and Energy Economics has also carried out research on energy intensity trends and decomposition. The following graph shows the decomposition for the transport sector in Petajoules:

The activity effect here is the energy use increase due to increased passenger and tonne kilometres for passenger and freight transport respectively. Structural change - shifts between road, rail, air etc. contributed very little. There was a substantial efficiency improvement but it was outweighed by the large increase in activity resulting in a substantial increase in energy use in the sector. The final graph in this post, shows the decomposition for the residential sector in Australia:

In this decomposition, the activity effect is the increase in energy use due to increased  population. The BREE researchers defined the structural effect as due to larger houses, smaller households etc. I think it is debateable as to whether this should be considered structural change rather than change in the level of activity. In any case the efficiency improvement is of the same order as either the activity or structural effect and so energy use increased here too.

Modeling the Emissions-Income Relationship Using Long-Run Growth Rates

We have a working paper out on a new way of modelling the relationship between emissions and GDP per capita, a literature that has been dominated for more than two decades by the environmental Kuznets curve (EKC) approach. I presented an early version of this paper at the AARES conference at Port Macquarie in February. I will also be presenting it at the 6th Atlantic Workshop in A Toxa, Spain in late June and then at the World Congress of Environmental and Resource Economics in Istanbul a few days later.

The paper emerged from our work on Chapter 5 of the recently released Working Group III volume of the IPCC 5th Assessment Report. Reyer Gerlagh, who was one of the coordinating lead authors on my chapter drew up a version of the following graph and asked me if it would be suitable for the section I was writing on economic growth and emissions:

 

I liked this graph so much that I said we should write a paper about it, which we have now completed. Rather than compare the levels of emissions and GDP per capita as is usually done in the EKC literature, the graph compares the average growth rates of these two variables over a 40 year period (1971-2010). We can see that faster economic growth is associated with faster carbon emissions growth but that there is also a lot of variation around this main trend in the data. The further "southeast" a bubble is, the faster emissions per dollar of GDP (emissions intensity) declined in that country. As you can see China (the big red circle) and the US the big blue circle both had rapid declines in emissions intensity. But emissions intensity also rose in many countries and it is not immediately obvious how it relates to development status.*

One of the nice things about using growth rates rather than levels of variables is that it avoids several econometric problems that have plagued this literature. First and foremost is the issue of unit roots and non-linear functions of unit roots raised by Martin Wagner. Differencing the variables removes that issue, but using long-run growth rates focuses attention on long-run behavior, whereas using first differences would focus on the short-run. Then there is the issue of time effects raised by Vollebergh et al. We think our approach does a good job there too. The constant in a regression of emissions growth rates on income growth rates represents the rate of emissions growth if there were no economic growth. We think this is a good definition of a time effect. The paper discusses further econometric issues.

The other nice thing about using growth rates is that we can test the three main leading approaches to modelling the emissions-income relationship in a single framework:

In this equation all variables are in logs and "hats" (or more elegantly circumflex accents) indicate growth rates. On the lefthand side is the emissions per capita growth rate. As mentioned above the constant, alpha, represents the time effect. G-hat is the growth rate of GDP capita. The estimate of beta(1), therefore, tests the IPAT theory that growth causes increases in impacts. The term beta(2)*G(i) tests the EKC theory. This is because if beta(2) is negative then beyond a certain income level (the "turning point") more growth reduces emissions rather than increases emissions. The other main approach to modelling emissions growth has been the convergence approach, including the Green Solow Model of Brock and Taylor. We test this with the fourth term in the regression, which is the level of emissions intensity in the first year of the sample. If delta is negative, then countries with high initial emissions intensities saw more rapid decline in emissions. We also test for any effect of the level of GDP (gamma*G(i)) and for various other exogenous variables including fossil fuel endowments, legal origin, and climate.

It turns out that for both carbon and sulfur dioxide the effect of growth is very significant and close to a one to one effect. For sulfur there is a significant time effect - emissions fell by about 1.2% a year for a typical country when there was no economic growth. The convergence effect is also highly significant and probably explains a lot of the reduction in emissions intensity in both China and the US. But there is no environmental Kuznets curve effect in the full sample estimates.** While there is a marginally significant coefficient for one dataset, all the turning points are far out of sample and insignificant.

The environmental Kuznets curve has become so iconic that it often appears in introductory environmental economics textbooks. It probably is valid as a stylized fact for urban air pollution concentrations but it's not a good model of emissions of either carbon dioxide or sulfur emissions. We're hoping that the figure of the growth effect above and this one of emissions convergence:

might replace it.

* The blue circles are the developed countries that were members of the OECD in 1990. Orange is "economies in transition"  - Eastern Europe and the former Soviet Union. The other colors are the developing regions in Asia, Latin America, and the Middle East and North Africa.

** When we split the sample into two periods we find a very significant coefficient for sulfur in the second period, but the turning point is at $38k and is not statistically significant.

Is Piketty's Work Flawed by Computational Errors Too?

The Financial Times claims that, like the work by Reinhart and Rogoff on debt and growth, Piketty's research on changes in inequality over time is also beset by computational errors. Though the theoretical component of Piketty's book has been controversial but as the article says, the critics have still praised the historical research. The biggest differences seem to be in estimates of wealth inequality in Britain in recent decades. The data the FT correspondent provides shows no increase in concentration in wealth in the top 1% and top 10% in the UK in recent decades. That would weaken Piketty's conclusions overall, but it doesn't seem it destroys them. Piketty's response is here.

Unionization in Australian Universities

After seeing that Alison Booth's paper from the Quarterly Journal of Economics was the most downloaded paper from ResearchGate at Crawford this week, I was curious what fraction of employees at Australian universities belonged to the National Tertiary Education Union. Apparently NTEU has 26,000 members. It also seems that there are 113,000 employees in the university sector. On that basis the unionization rate would be only 23%. Of course, quite a lot of those are casuals or PhD students working as lecturer A etc.* But the total number of full-time staff is 86,000. That implies 30%. Also there were 67,933 staff on continuing contracts. If the latter is the real target market for the union then the rate is 38%. Based on this, social custom doesn't work well in the university sector to overcoming free-riding. Let me know if any of my assumptions are wrong as this is the first time I've ever looked at this issue.

* There were 41,730 academics at levels B and above, but the union also represents non-academic staff.

Regional Kaya Identities

As well as the global Kaya identity, Chapter 5 of the WGIII IPCC report also includes regional Kaya identity graphs:

OECD-90 are the countries that were members of the OECD in 1990 and are considered to be the "developed countries" for the purpose of this study. Economies in Transition are the former Soviet Union and formerly centrally planned Eastern European economies. The remaining countries are the developing world and are split into three geographic regions.

We drew the graph for each region with the same y-axis scale so that the huge differences in growth rates between regions would be more apparent. GDP per capita grew by far more in (developing) Asia than anywhere else and grew least in the Middle East and North Africa. But emissions grew the second most in the latter region mainly because population grew fastest in that region but also because, unlike other regions, energy intensity rose over time. Emissions growth was also quite strong in Latin America because energy intensity did not decline much there. Both these regions had low energy intensity at the beginning of the period. The global pattern in changes in energy intensity reflects convergence across countries in energy intensity.

The Global Kaya Identity

Another post on our chapter in the recently released Working Group III IPCC report, Chapter 5. I previously posted on what got left out of the final edition of the Summary for Policymakers and on the key messages from the whole report.

A key feature of our chapter is that we organized it around the idea of the Kaya Identity, which is an extension of the famous IPAT identity to explain changes in carbon emissions:

or in terms of formulae:

Sections of our chapter deal with each of the terms in the identity. It's important to understand that the identity is not really a causal relationship. A 1% increase in GDP per capita might be associated with less than a 1% increase in carbon emissions if energy intensity for example declines as a result of the increase in income. This seems to be the case in fact as our upcoming research will show. Still, it is a useful accounting framework for understanding the factors driving change. If the other terms in the identity are held constant then a 1% increase in any of the right hand side factors increases emissions by 1%.

In the technical summary we use the Kaya identity to decompose the changes in global energy related carbon dioxide emissions for each of the last four decades:

 

The bars show that reductions in energy intensity have contributed to the slowing in growth in carbon emissions. However, this has been overwhelmed by the increase in population and income per capita. This exercise made me much more aware of how important population growth has been in driving emissions growth over the last 40 years. In the most recent decade, though, income per capita growth became the most important factor and emissions growth accelerated to a record level.

13 Years On Our Book Becomes an E-Book!

The book was published in 2001 but the conference it is based on was held in Boston in 1996! Anyway, the e-book is now online and the introductory chapter is open access.

Submissions to AJARE Way Up, Acceptance Rate Way Down

Really interesting data from the editors of the Australian Journal of Agricultural and Resource Economics. It's unusual to see time series stretching back 15 years of submissions, acceptances, articles published etc. for a journal. The page budget today is slightly higher than in 1999 but less than what it was in 2000. The number of articles published though actually doubled. But submissions tripled. In the last year half of new submissions have been desk rejected.

First Invited Paper Published in Energies Special Issue

I am the editor of a special issue of the open access journal Energies. The special issue is on energy transitions and economic change. I'm happy to announce that the first paper that I invited for the special issue has now already been published. It is by Steve Sorrell and is on the rebound effect.
The first contributed paper has also been published. Others are still in the peer review process and a few we also already rejected.

The model for these special issues is that the editor invites a number of people to contribute papers and there is also a general call for contributions. The journal is publishing papers as they are ready but you can still submit papers up to the 15th July deadline.

House Prices and Wind Farms

House prices within 2km of UK wind farms reduced by 5-6%.

Natural Resources and Economic Growth

Carlo Carraro, Marianne Fay, and Marzio Galeotti call for mainstream macroeconomics textbooks to talk about the role of natural resources in economic growth and development. This is something that ecological economists have been calling for 25 years plus. But it is good to see more people getting on board. I wonder though how much consensus there is on what we should teach students about this.

Summary by Policymakers

Robert Stavins comments on his blog that given the outcome of the IPCC SPM approval meeting in Berlin the report should be called the "Summary by Policymakers" rather than the "Summary for Policymakers". For more commentary on the process see my article in The Conversation and this commentary in Science.

New Article in The Conversation

Michael Hopkins, an editor at The Conversation, suggested I follow up my blogpost on the IPCC 'censorship' controversy with a piece in The Conversation. That article is out today. The censorship story has also been picked up on by Science magazine.

If you are wondering whether to contribute to sites like The Conversation, I think it is well worth it, though it is a bit more work than I usually put into a blogpost. My blogpost last Thursday on the censorship issue has received 210 hits so far according to Google. People who just navigated to my home page rather than selecting the article title aren't counted, but probably don't amount to a huge number of additional views. Our 13th April article in The Conversation has got 4720 hits so far and my previous two articles there have gotten 1681 and 1859 hits each. Three of my blogposts have exceeded those numbers (11-13000 hits) and they are all about PLoS ONE and impact factors. My next best blogpost is this one with 1666 hits. Typical numbers are in the low hundreds if I'm lucky. So, I can get much more reach on a site like The Conversation than a typical post on my blog about my own research achieves. Of course, not all stories are going to be suitable for sites like these, but it's worth thinking about what might be suitable.

More Debate on the Little Ice Age

Back in 2010, I discussed a paper by Kelly and O Grada on the Little Ice Age. Or rather, on the lack of a Little Ice Age. Commenters on the thread including O Grada have pointed out that that debate has made some progress in the last few years. The authors published a paper in the Journal of Interdisciplinary History, which was part of a special issue on the topic. Now, they have followed up with a response to their critics' articles from the special issue.

Chapter 5 and the Summary for Policy Makers

Chapter 5 was one of the main chapters of the Working Group III 5th Assessment Report at the centre of the controversy this week on so-called censorship of the Summary for Policy Makers (SPM). The SPM is an executive summary of the report for the IPCC member governments. Those member governments get to dictate what points from the underlying report get included in this summary and how they are "spun". However, there is also a Technical Summary that is written entirely by the researchers responsible for the main report. The material from Chapter 5 that was in the draft SPM but eliminated in the plenary meeting in Berlin referred to emissions from specific groups of countries. This blogpost provides a quick overview of the deleted figures, some of which are still in  the Technical Summary.

The first graph breaks down emissions by broad global regions:

 

The developed countries are represented by the members of the OECD as it stood in 1990 (since then Mexico, Korea, Czech Republic etc. have joined). Eastern Europe and the former Soviet Union are designated "Economies in Transition" and the developing world is broken down into Asia (importantly including China and India), Latin America, and the Middle East and Africa. The left-hand panel shows emissions year by year since the Industrial Revolution and also breaks them down into energy and industrial and land use related emissions. The former continue to increase but the latter appear to have peaked. Since the 1970s, the majority of growth in energy and industrial emissions has come from developing countries and particularly Asia. In an attempt to better represent the historical responsibilities of each group of countries the right-hand panel shows the cumulative historical emissions of greenhouse gases by region.* China and particularly India have campaigned to get historical contributions to global warming better-acknowledged. But the results of our analysis show that less than half of the cumulative emissions now come from the developed countries as a whole (more when only energy and industrial emissions are considered). This, presumably, isn't the message that developing country delegates wanted to see.

The next controversial figure breaks down total and per capita greenhouse gas emissions by country income groups:

The leftmost panel shows total emissions which increased everywhere due to population growth. But they particularly increased in upper middle income countries (which includes China). The total emissions from this group are now almost equal to that from the high income countries. On a per capita basis, emissions were flat in the developed world and declining in the poorest countries (as emissions from land use declined). They rose in the middle income countries. The figure does, however, also show that in all developing country groups per capita emissions remain much below those in the developed countries.

The final deleted figure deals with emissions embodied in trade:

Looking at the emissions generated in producing imports and exports, the developed countries and economies in transition ("Annex B") import more "embodied" emissions than they export. The opposite is true of the developing countries ("Non Annex B"). Emissions that include the net emissions embodied in trade are termed "consumption emissions" in contrast to the "production emissions" that are the total emissions emitted within a country and are the usual way of calculating emissions.** These numbers are derived using input-output modelling. The results are often used to argue that developed countries have reduced their emissions by offshoring production to developing countries, which is a controversial question. But properly answering this question is more complicated than this. They are also used to claim that developed countries are responsible for their consumption emissions rather than their production emissions. But both importers and exporters gain from this trade. Because of these controversies I can understand the decision to drop the discussion and figure from the SPM.

* These do not directly correspond to the amounts of gases in the atmosphere. A large fraction of annual carbon dioxide emissions are absorbed by the ocean, vegetation etc. and methane only survives for an average of 11 years in the atmosphere before being oxidised to carbon dioxide and water. So, I am not very enthusiastic about treating cumulative emissions of carbon dioxide equivalent greenhouse gases as an indicator of historical responsibility.

** Economists would usually use the term "production emissions" to refer to emissions from production activities  and "consumption emissions" to refer to emissions by consumers. This initially caused some communication problems among researchers from different disciplines in our chapter team.

Full Working Group III 5th Assessment Report Now Available on the Web

Here it is. I really should also do a post on our chapter, Chapter 5.

774 ABC Melbourne

I was just interviewed on 774 ABC Melbourne radio. They wanted to know about the IPCC Report being "censored". So, I explained that the governments get to edit their own executive summary - the Summary for Policy Makers - from a draft provided by the scientists but they can't touch the underlying report or the Technical Summary, which is a second executive summary. Also the SPM has to be fully referenced to the underlying report so it is a question of picking and choosing what to emphasize rather than censoring. The main changes in the SPM are a downplaying of "international cooperation" in favour of an emphasis on "sustainability, justice, and equity" in the framing statements and the deletion of graphs and discussion of how emissions break down on a regional or development level basis in any way. This apparently reduces the onus on development countries to take actions equivalent to those of the developed world and focuses more on the distributional issues rather than contributions to the total problem. Though emissions per capita are much lower in developing countries they now emit the majority of total emissions and are catching up in terms of their contribution to the accumulated greenhouse gases in the atmosphere.

IPCC Media Update

I was on ABC News 24 at 12:10 today. Clip doesn't seem available yet. Went over to parliament house studio for the interview. Just me in the room with the cameraman and questions coming from the news team in Sydney. JJJ piece was cancelled in favour of another story after they recorded the interview with me. I may be Sky News or Radio National (7:05-7:15) tonight, details to come. Our story is now up on the Crawford website. There is also a story on an interview I did with the Guardian.

Key Messages from the IPCC Working Group III Report

Here are some of the emerging key messages from the IPCC WG III report. You can download the Summary for Policymakers. The full report should be available tomorrow.

• Emissions grew faster than ever since 2000.


• Most of the growth is coming from middle income countries like China and India. Per capita emissions are still low in most developing countries, meaning a lot more growth in emissions can be expected under business as usual.


• We need a broad portfolio of solutions to solve the problem including renewables, carbon capture and storage, carbon dioxide removal, and energy efficiency. There is no silver bullet.


• Already delay is meaning that it is getting harder to stay within the 2 degree limit.


• Estimated costs of meeting this goal are still relatively low GDP would be 2-6% by 2050 than it otherwise would be. Because GDP per capita would likely double globally by 2050 this means the doubling is delayed by 1-3 years or growth is 0.005% to 0.017% lower per year than it would otherwise be in the interim.


• On the other hand, the lower estimates of costs depend on untested technologies at realistic scales to capture carbon from burning fossil fuels or to remove it directly from the atmosphere.


• There is an increased recognition of the problems of integrating renewables into energy supply systems. Costs of energy storage or backup will be crucial.


• Countries such as China are focusing heavily on the co-benefits of reducing emissions, including reducing local air pollution and improving energy security.

IPCC WGIII AR5 Report Media

Working Group III's contribution to the IPCC 5th Assessment Report was released this evening. We have a story on the Crawford School website and an article in The Conversation. I will be interviewed tomorrow morning for TripleJ's Hack program. Live interview with Radio National that I mentioned in an earlier version of this post is now off - they found someone to report from Potsdam instead.

Port Macquarie Conference Paper Now on the Web

Our paper from the Port Macquarie AARES Conference is now on the web. We plan to have an updated and extended version of the paper on the web as a formal working paper in the next week or so. I'll write up a discussion about the paper then.

John List to Take Up Fractional Appointment at Monash

A coup for Monash University -  John List to take up fractional appointment at Monash!

One motivation for this move would be the ERA. But the census date for ERA 2015 is 31 March 2014. Staff need to be affiliated at that date for their prior publications to be counted. Also the ARC is cracking down on institutions claiming the publications of affiliates. For those employed in less than a 0.4 fractional position, at least one publication must list the institution as an affiliation on the publication. As a reviewer for ERA 2012, I think some institutions really abused the system with their claims of affiliates' publications in ERA 2012. So, this move by Monash is either a long term plan, or has nothing to do with the ERA.