Call for Papers on Climate Policy

Harry Clarke, the Editor of “Economic Papers: A Journal of Applied
Economics and Policy” is seeking papers on climate change economics for
the June issue of the journal. The deadline is the end of April, papers received
after that may be considered for the September edition.

Frank's Blogpost

Frank Jotzo has a blogpost about China's emissions intensity target.

Debate on Unit Roots in Temperature Series

A huge debate with 1672 comments erupted on Bart Verheggen's blog regarding the issue of unit roots in temperature series. I didn't read much of it, but the main point seems to be that when there are unit roots in time series you need to take that in account when determining if there is a trend in the series and it is harder to reject the null of no trend. This is all true but you can also exploit the unit root property to find the fingerprint of other unit root variables that might be driving your series of interest. And that is what Robert Kaufmann and I did in our research on this topic. Apart from our 1997 paper in Nature it hasn't garnered a lot of citations. So it's not surprising that not many people know about it. Anyway, you can check out all the papers by following this link.

Introduction: Energy and Growth

So you know where this paper is going, here is the introduction as it currently stands:

Introduction

Is energy an important driver of economic growth and development and if so what factors affect the strength of the relationship between energy and growth? Toman and Jemelkova (2003) argue that most of the literature on energy and economic development discusses how development affects energy use rather than vice versa. The principal models used to explain the growth process (e.g. Aghion and Howitt, 2009) do not include energy as a factor that could constrain or enable economic growth. Economists do pay significant attention to the impact of oil and other energy prices on economic activity in the short-run and there was extensive discussion of the role of oil prices in the "productivity slowdown" that followed the oil price shocks in 1973-74 and 1980-81. Resource economists have developed models that incorporate the role of resources including energy in the growth process. But these ideas remain isolated in the resource economics field. Much of the relevant literature is outside the mainstream in what has come to be known as ecological economics.

The first section of the paper reviews basic physical principles and economic concepts that define the role of energy in economic production and growth. The premise is that gaining an understanding of the role of energy in economic growth cannot be achieved without first understanding the role of energy in production. The principal finding is that criticism of the mainstream theory of economic growth on the basis of the implications of thermodynamics for economic production and growth is legitimate. A theory of economic production and growth must take the essential role of energy into account. On the other hand, theories that try to explain everything on the basis of energy, while ignoring the roles of information, knowledge, and institutions are similarly misguided.

However, institutions also affect how these roles play out and, therefore, the mainstream theory of economic growth, which focuses on these considerations, is reviewed next. The limitations of neoclassical theory’s consideration of energy and other resource issues have been the subject of strong criticism grounded in the biophysical theory of the role of energy. We discuss these criticisms and alternative ecological economics views on energy and growth in the following section. These criticisms focus primarily on limits to substitution and technological change. I present for the first time a theory that rigorously embeds energy use in a mainstream economic growth model. This shows that when energy is scarce it will strongly constrain economic growth, but when energy becomes more abundant energy is much less of a limiting factor and the neoclassical model explains economic growth fairly well.

In the period since 1973 significant reductions in energy intensity have been achieved in many developed and some developing countries. In some countries, energy intensity has declined over a much longer period (Gales et al., 2007). I use the production function concept to examine the factors that could reduce or strengthen the linkage between energy use and economic activity over time. These key factors are:

– substitution between energy and other inputs within an existing technology,
– technological change,
– shifts in the composition of the energy input, and
– shifts in the composition of economic output.

Each of these themes has a subsection dedicated to its discussion. Following this, I review the empirical evidence on the causal link between energy and growth. To be useful, such studies must not be grounded in a single theory, potential mechanism, or school of thought. Therefore, the studies reviewed here are reduced form time series models that do not specify structural linkages between energy and output. As correlation and regression analysis does not imply causality from one variable to another, most of these studies employ the econometric notions of Granger causality and cointegration to test the presence of and direction of causality between the variables.

The final section of the paper presents conclusions and points to implications for energy and environmental policy.

References
Aghion, P. and P. Howitt (2009) The Economics of Growth, MIT Press, Cambridge MA.
Gales, B., A. Kander, P. Malanima, and M. Rubio (2007) North versus South: Energy transition and energy intensity in Europe over 200 years, European Review of Economic History 11: 219-253.
Toman, M. A. and B. Jemelkova (2003). “Energy and economic development: an assessment of the state of knowledge.” Energy Journal 24(4): 93-112.

Serializing Energy and Growth Review Paper

I'm updating my 2004 working paper on energy and economic growth to submit to the annual Ecological Economics Reviews published in the Annals of New York Academy of Sciences. I did publish a short version of the working paper as a chapter in the Encyclopedia of Energy but I didn't submit it to a journal because some of my fundamental ideas about energy and growth began to change just after I finished the paper. Following John Quiggin's example, I'm thinking to post here sections of the paper as I finish them. Unfortunately, my title is way boring by comparison. Please comment if you think I've left out key papers and ideas. I will acknowledge you in the final version if I use the material you suggest. The sections will just appear in the order I finish my first draft. Anyway, the first section to be posted is below. There is a large literature in this area and many papers contain reviews of the previous literature, so I only cite the few papers which I think are most critical.

Empirical Testing of the Causal Relationship between Energy and Growth

In this section we look at the empirical evidence on whether there actually is a causal relation between the two variables using studies that are not grounded in a single theory, potential mechanism, or school of thought. The main approach has used reduced form time series models that do not specify structural linkages between energy and output.

Ordinary linear regression or correlation methods cannot be used to establish a casual relation among variables because when two or more totally unrelated variables are trending over time they will appear to be correlated simply because of the shared directionality. Even after removing any trends by appropriate means, the correlations among variables could be due to causality between them or due to their relations with other variables not included in the analysis. Two methods for testing for causality among time series variables are Granger causality tests (Granger, 1969) and cointegration analysis (Engle and Granger, 1987). See Enders (1995) for an accessible introduction to these methods, and Hendry and Juselius (2000) for their application to energy economics. It is now understood that in the absence of cointegration between the variables a Granger causality test on a VAR in levels is invalid. Ohanian (1988) and Toda and Phillips (1993) showed that the distribution of the test statistic for Granger causality in a VAR with non-stationary variables is not the standard chi-square distribution. This means that the significance levels reported in the early studies of the Granger-causality relationship between energy and GDP may be incorrect, as both variables are generally integrated series. If there is no cointegration between the variables then the causality test should be carried out on a VAR in differenced data, while if there is cointegration, standard chi-square distributions apply when the cointegrating restrictions are imposed. Thus testing for cointegration is a necessary prerequisite to causality testing. A Granger causality test using a VAR in first differences will reflect the short-run marginal effect between the variables but is subject to possible omitted variables bias if the lack of cointegration implies that variables essential to cointegration were omitted from the model.

This literature first emerged in the late 1970s. Ozturk (2010) provides an extensive list of energy-growth causality and cointegration studies. Early studies relied on Granger causality tests on unrestricted vector autoregressions (VAR) in levels of the variables, while more recent studies use cointegration methods. Another key characteristic that distinguishes between studies is whether a bivariate model of energy and output or a multivariate framework is used. A third way to differentiate among models is whether energy is measured in standard heat units or whether some type of indexing method is used to account for differences in quality among fuels.

The results of the early studies that tested for Granger causality using a bivariate model were generally inconclusive (Stern, 1993). Where nominally significant results were obtained they indicated that causality runs from output to energy. However, in many cases results differed depending on the samples used, the countries investigated etc.

Stern (1993) tested for Granger causality in a multivariate setting using a vector autoregression (VAR) model of GDP, capital and labor inputs, and a Divisia index of quality-adjusted energy use in place of gross energy use. The multivariate methodology is important because reductions in energy use are frequently countered by the substitution of other factors of production for energy and vice versa, resulting in an insignificant overall impact on output. When both the multivariate approach and the quality adjusted energy index were employed, energy was found to Granger cause GDP.

Most analysts believe that capital, labor, and technical change play a significant role in determining output, yet early studies used only energy as an independent variable. When variables known to be important are omitted from the model, there will be no cointegration and a spurious regression will result. Results are frequently sample dependent in the face of omitted variables and non-cointegration (e.g. Stern and Common, 2001). This may explain the very divergent nature of the early causality literature. On the other hand, Zarnikau (1997) and Oh and Lee (2004) found using bivariate models that a Divisia index of energy use Granger causes GDP in the US and Korea, repectively.

These results are supported by Hamilton (1983) and Burbridge and Harrison (1984), who found that changes in oil prices Granger-cause changes in GNP and unemployment in VAR models whereas oil prices are exogenous to the system. More recently, Blanchard and Gali (2008) used VAR models of GDP, oil prices, wages, and two other price indices, to argue that the effect of oil price shocks has reduced over time. Hamilton (2009) deconstructs these arguments to show that past recessions would have been mild or have merely been slowdowns if oil prices had not risen. Furthermore, he argues that the large increase in the price of oil that culminated in 2008 was a major factor in causing the 2008-2009 recession. Paradoxically, as in the short-run the elasticity of demand for oil and other forms of energy is low, the main short-run effects of oil prices are expected to be through reducing spending by consumers and firms on other goods, services, and inputs rather than through reducing the input of energy to production (Hamilton, 2009; Edelstein and Killian, 2009). Therefore, models using oil prices in place of energy quantities may not provide much evidence regarding the effects of energy use itself on economic growth.

More recent work has used cointegration methods to investigate the E/GDP relationship. The first such study was conducted by Yu and Jin (1992). Again, the results of this and subsequent studies differ according to the regions, time frames, and measures of inputs and outputs used. It would seem that if a multivariate approach helps in uncovering the Granger causality relations between energy and GDP a multivariate approach should be used to investigate the cointegration relations among the variables. When multivariate cointegration methods are used, a picture emerges of energy playing a central role in determining output in a diverse set of developed and developing nations. Stern (2000) investigated the time series properties of GDP, quality weighted energy, labor, and capital series, estimating a dynamic cointegration model using the Johansen methodology. The cointegration analysis showed that energy is significant in explaining GDP. It also showed that there is cointegration in a relationship including GDP, capital, labor, and energy. The multivariate analysis shows that energy Granger causes GDP either unidirectionally or possibly through a mutually causative relationship depending on which version of the model is used. Oh and Lee (2004) and Ghali and El-Sakka (2004) apply Stern’s (1993, 2000) methodology to Korea and Canada, respectively, coming to exactly the same conclusions, extending the validity of Stern’s results beyond the United States. Lee and Chang (2008) and Lee et al. (2008) use panel data cointegration methods to examine the relationship between energy, GDP, and capital in 16 Asian and 22 OECD countries over a three and four decade period respectively. Lee and Chang (2008) find a long-run causal relationship from energy to GDP in the group of Asian countries while Lee et al. (2008) find a bi-directional relationship in the OECD sample. A number of other analysts also demonstrate the role of omitted variables in the energy -income relation (e.g. Glasure, 2002; Hondroyiannis et al., 2002; Masih and Masih, 1997). Taken together, this body of work suggests that the inconclusive results of the earlier tests of Granger causality are probably due to the omission of necessary variables - either the quantities of other inputs (and quality adjustment of the energy input) or energy prices. The marginal product of energy, and hence energy prices, should reflect the quantities of other inputs used together with energy, which Stern (2000) found were necessary to achieve cointegration.


References
Blanchard, O. J. and J. Galí (2008) The macroeconomic effects of oil price shocks: why are the 2000s so different from the 1970s? In: J. Galí and M. J. Gertler (eds.) International Dimensions of Monetary Policy, University of Chicago Press.
Burbridge, J. and A. Harrison (1984). “Testing for the effects of oil prices rises using vector autoregressions.” International Economic Review 25: 459-484.
Edelstein, P. and L. Kilian (2009) How sensitive are consumer expenditures to retail energy prices? Journal of Monetary Economics 56(6): 766-779.
Enders, W. (1995). Applied Econometric Time Series. New York: John Wiley.
Engle, R. E. and C. W. J. Granger (1987). “Cointegration and error-correction: representation, estimation, and testing.” Econometrica 55: 251-276.
Ghali, K. H. and M. I. T. El-Sakka (2004) Energy use and output growth in Canada: a multivariate cointegration analysis, Energy Economics 26: 225-238.
Glasure, Y. U. (2002). “Energy and national income in Korea: Further evidence on the role of omitted variables.” Energy Economics 24: 355-365.
Granger, C. W. J. (1969). “Investigating causal relations by econometric models and cross-spectral methods.” Econometrica 37: 424-438.
Hamilton, J. D. (1983). “Oil and the macroeconomy since World War II.” Journal of Political Economy 91: 228-248.
Hamilton, J. D. 2009. Causes and Consequences of the Oil Shock of 2007–08. Brookings Papers on Economic Activity. 2009(1): 215-261.
Hendry, D. F., K. Juselius (2000). “Explaining cointegration analysis: Part 1.” Energy Journal 21(1): 1-42
Hondroyiannis, G., S. Lolos, and E. Papapetrou (2002). “Energy consumption and economic growth: assessing the evidence from Greece.” Energy Economics 24: 319-336.
Lee, C.-C. and C.-P. Chang (2008) Energy consumption and economic growth in Asian economies: A more comprehensive analysis using panel data, Resource and Energy Economics 30(1): 50-65.
Lee, C.-C., C.-P. Chang, P.-F. Chen (2008) Energy-income causality in OECD countries revisited: The key role of capital stock, Energy Economics 30: 2359–2373.
Masih, A. M. M. and R. Masih (1997). “On the temporal causal relationship between energy consumption, real income, and prices: some new evidence from Asian-energy dependent NICs based on a multivariate cointegration/vector error-correction approach.” Journal of Policy Modeling 19: 417-440.
Oh, W. and Lee K. (2004). “Causal relationship between energy consumption and GDP revisited: the case of Korea 1970–1999.” Energy Economics 26: 51–59.
Ohanian, L. E. (1988). “The spurious effects of unit roots on vector autoregressions: A Monte Carlo study.” Journal of Econometrics 39: 251-266.
Ozturk, I. (2010) A literature survey on energy-growth nexus, Energy Policy 38: 340-349.
Stern, D. I. (1993). “Energy use and economic growth in the USA, A multivariate approach.” Energy Economics 15: 137-150.
Stern, D. I. (2000). “A multivariate cointegration analysis of the role of energy in the U.S. macroeconomy.” Energy Economics 22: 267-283.
Stern, D. I. and M. S. Common (2001). “Is there an environmental Kuznets curve for sulfur?” Journal of Environmental Economics and Management 41: 162-178.
Toda, H. Y. and P. C. B. Phillips (1993). “The spurious effect of unit roots on vector autoregressions: an analytical study.” Journal of Econometrics 59: 229-255.
Yu, E. S. H. and J. C. Jin (1992). “Cointegration tests of energy consumption, income, and employment.” Resources and Energy 14: 259-266.
Zarnikau, J. (1996) Reexamination of the causal relationship between energy consumption and gross national product, Journal of Energy and Development 21: 229-239.

Krugman on Climate Change Economics

Paul Krugman has an article on climate change economics in the New York Times Magazine. He agrees with Weitzmann that we should think about avoiding catastrophic impacts rather than trying to finesse a standard cost-benefit analysis based on the expected impacts and argues that CGE models that find the cost of mitigation to be low are probably overstating the costs.

Progress on China's 2005-2010 Energy Intensity Target

Stephen Howes provides an update on China's progress on its energy intensity goal. This goal was always very ambitious just like China's goal of reducing emissions intensity by 40-45% by 2020 is very ambitious. The modest progress made so far on the energy intensity goal does not bode well for China meeting the emissions intensity goal either, though they could surprise us. This was one of my messages at a presentation I gave yesterday at the Department of Climate Change and Energy Efficiency.

On the other hand, it looks like China may be preparing to claim that the energy intensity goal has been met but a clear explanation would be needed.

How Much Should an Online Product Cost?

Chris Guillebeau asks readers how much he should charge for his products. Could he have learned from the contingent valuation literature? :)

EERH Working Papers Statistics for March 2010

The RePEc report for March is now out:



Abstract views and downloads for the EERH Research Reports seems to have stabilized around 300 and 120 a month respectively. Follow this link for details of individual papers. We still need to get details for the most recent 12 papers onto RePEc. You can download those papers from the EERH website.

Legal Origin Strikes Again

van Ewijk and van Leuvensteijn have an article in VoxEU arguing for the EU to reduce taxes on residential mobility. What struck me was this chart:



The highest transactions costs are in French legal origin countries, moderate costs are seen in German and Scandinavian legal origin countries and the UK has the lowest costs. Ireland is stuck in the middle of the German group but the trend is still clear. This ordering is similar to the ordering of stringency of product and labor market regulation.

My research on sulfur emissions and now on energy efficiency has found that legal origin seems to make a difference in environmental policy. German and Scandinavian legal origin countries have the strictest environmental policies and English legal origin countries the weakest. French legal origin countries occupy an intermediate position.

Environmental Valuation and General Equilibrium

I'm not a fan of most approaches to non-market environmental valuation and one of my criticisms is that once all externalities would be internalized all market prices would change including in turn the valuations placed on the current non-market goods. Existing valuations of non-market environmental goods are partial equilibrium estimates which could be very misleading. I haven't always expressed that point very clearly. This point was the main point of Ayres and Kneese's original discussion of externalities and is also implicit in Ayres' comment on Costanza et al.'s 1997 paper in Nature.

Now Jared Carbone and V. Kerry Smith not only express the point very clearly in a new working paper but they also calibrate a CGE model to illustrate what happens to valuations in general equilibrium. They find quite large general equilibrium effects. This is definitely a step in the right direction.

U.S. Survey of Earned Doctorates

If you are a statistics (in sense of data) junkie, there is plenty of fascinating info in the NSF's Survey of Earned Doctorates. Did you know for instance that only 7% of Saudis want to stay in the US after getting a PhD whereas 89% of Iranians do?

Total numbers of doctorates in the US continue to grow - mainly in the sciences and in particular life sciences and engineering. There is moderate growth in economics and strong growth in business doctorates. Humanities and social science areas such as English and sociology where there appears to be an oversupply of graduates show stagnation and decline as you'd expect to see.

Final Hub Report

The final report for my Hub project titled: "Modeling International Trends in Energy Efficiency and Carbon Emissions" is finally up on the EERH website. I've highlighted the key results in previous posts so not so much to add here. This paper also has a lot of literature review and a theoretical model as well as the econometric model and results. Originally I had more radical ideas of how to use the theoretical model but for various reasons decided to abandon them. The main reason was that I decided to incorporate the variables that explain the level of energy efficiency technology directly into the production frontier model. Originally, I planned to estimate the technology trends and then use the theoretical model to explain the changes in the trend. There is a bit of a disconnect in this paper between the theory which assumes that capital and energy are non-substitutable but the empirical model finds substantial substitutability. By that point it was too late and go back and develop a new theoretical model. This paper is way too big to submit to a journal (something like 19,000 words). So much of the literature review and theory will be cut or condensed in a journal submission. I have a bunch of stuff to do before that so it will be a while. I'll be happy to get feedback in the meantime. Especially, about any mistakes in the theoretical model.

RePEc Expands Listings

Christian Zimmermann lays out recent and upcoming changes to RePEc which will include somewhat expanded rankings. I think this is a good move, but I still think that they should just list the top 20 or 25% for all the different rankings. Why list the top 25% for countries and US States but only the top 10% for fields?

Google Scholar Weirdness

Google Scholar appears to update their database about once every 10 days. Then every 2-3 months they do a more fundamental reorganization, pruning multiple entries, shuffling things so articles appear again exactly in the order of most cited etc. In this most recent shuffle the main entry for my 1996 World Development paper disappeared entirely from their system. None of my other articles seems to have gone AWOL. Very strange.

P.S. 11 April

I found the missing paper - it is now attributed to "S Stern Michael, I David"

Link to Frank's Presentation

You can find a video of Frank's presentation on Tuesday here.

Coverage in The Australian

The Australian had a story today covering our research:

How Ambitious are China and India's Emissions Intensity Targets?

Following Frank's presentation we have a new working paper up with the same title as this blogpost. This is an updated version of the papers I presented at the AARES conference and the EERH Hub Workshop in Adelaide in February.

The revised model includes variables for capital and human capital inputs. This has important effects on the estimated relative energy efficiency of China and India. Both now seem less energy efficient at each point in time than they seemed under the previous approach. India actually has relatively low energy intensity (energy/GDP) when this is measured using PPP exchange rates that adjust for the differences in purchasing power between countries:



While China was very energy intensive 20 or 30 years ago, it too has now reached similar levels to the developed economies. The new model says that these countries partly achieve their low energy intensity by using labor intensive processes instead of energy intensive processes. Once we take this into account they are in fact less energy efficient than most developed economies:



I say "most developed economies" because the model finds that China and India have similar levels of underlying energy (in)efficiency. Underlying energy efficiency tells us what energy intensity would be if variables such as labor and capital intensity, temperature, and economic structure were the same in all countries and over all time periods.

We use the model to project underlying energy efficiency and using projections of other variables from a variety of sources we come with BAU scenarios for China and India. Under these scenarios, China's emissions intensity would fall by 24% between 2005 and 2020 and India's by 29%. Yet China is targeting a 40-45% cut and India a 20-25% cut. Hence we conclude that China will require very strong policy actions to meet its target while India's target is likely close to business as usual.

Full details are in the paper. A second working paper covering Frank's analysis of other developing country targets will be up on the EERH Website soon.

Media Release: Developing Countries Set Climate Benchmark

As I mentioned, Frank Jotzo will be giving a presentation at the Crawford School today (Tuesday, 23rd March) on his work on comparing countries' Copenhagen targets and our joint work on the ambition of China and India's emissions intensity targets. Below is the media release we are putting out. We are also putting out an EERH working paper, details to follow.

TUESDAY 23 MARCH 2010

DEVELOPING COUNTRIES SET CLIMATE BENCHMARK

Australia needs to announce larger emissions targets if it wants to match the commitments shown at Copenhagen from China and the developing countries, according to researchers from The Australian National University.

The comparative study of targets announced at the Copenhagen Climate Change talks is the first Australian study to measure commitments on a common footing. It shows that China will have its work cut out to reach its very stringent targets and that developing countries might contribute over half of global emissions cuts by 2020.

The researchers, Dr Frank Jotzo and Dr David Stern of the Crawford School of Economics and Government at ANU, assessed key countries’ Copenhagen climate pledges, and put China’s target under the microscope. They found that ambitious carbon reduction policies will be needed to achieve the targeted 40 to 45 per cent reduction in China’s emissions intensity, or carbon per unit of GDP. Even so, China’s emissions will continue growing absolutely.

“The ‘business as usual’ trend in emissions intensity is well above the target that China has proposed,” said Dr Stern. “In fact, China’s proposed reductions in emissions intensity are on par with those implicit in the US and EU targets. That means that a substantial new effort will be needed to achieve their target.”

But China isn’t alone in making a commitment to significant emissions targets. Among developing countries Indonesia, Brazil, South Africa and others have made pledges which the researchers say would amount to substantial cuts.

“Compared to ‘business as usual’, the total cuts promised by developing countries may well be greater than the total reductions committed by developed countries,” said Dr Jotzo.

He added that this has implications for Australia’s emissions target, which remains at the bottom end of the five to 25 per cent range.

“Given that major developing countries are pledging to substantially restrain emissions, and developed countries have made comparable commitments to Australia’s range, it would be logical for Australia to announce a 15 per cent target, plus financing for developing countries and extra action on land-based carbon,” said Dr Jotzo.

Dr Jotzo will present the results of the study at a seminar today at The Australian National University.

For interviews: Dr Frank Jotzo – 02 6125 4367
For media assistance: Martyn Pearce, ANU Media – 02 6125 5575 / 0416 249 245

John Cochrane's Tips

John Cochrane's writing tips for PhD students. He also has some good tips on presentations in the paper. But I can't see how you can go directly to your results if people don't yet know what you are trying to do, what your question is and what your model is etc.

Some Things Coming Up...

I haven't blogged much this month as I've been very busy, mainly on trying to finish my EERH Hub project and set up the next stage in my career. A couple of the things coming up soon:

Frank Jotzo will be giving a presentation at the Crawford School at 12:30 on Tuesday analyzing the emissions reduction targets put forward by countries at Copenhagen. This will include our joint work on China and India's emissions intensity reduction targets. We will have a working paper up by then and a media release is planned. We have updated our projections since the AARES meeting in Adelaide, though the basic conclusions about China and India's targets remain.

Yesterday I got an e-mail from the Department of Climate Change stating that they had received a request from a "global news outlet" to release the names and affiliations of the people they are nominating to the IPCC to work on Assessment Report 5. I am a nominee for Working Group III. The British and US governments also have been requested to release this information. DCC will be putting the info on their website. I guess this is good if it leads to more transparency in the IPCC process.

Purchasing Power Parity vs. Market Exchange Rates

Latest in a series of articles by Richard Tol criticizing the IPCC AR4 WGIII report. This article focuses on the effect of using market exchange rates or purchasing power parity adjusted exchange rates (PPP) to project future emissions. Models that use market exchange rates, including the IPCC SRES projections project higher future emissions and emissions growth than models that use PPP exchange rates.

But recently emissions have been rising as fast as the most extreme IPCC scenarios. Ross Garnaut has called this phenomenon of very fast economic and emissions growth the "Platinum Age" If we buy Tol's arguments (which I do) this period will not be long-lasting and emissions growth will again slow down.

EERH Working Papers Statistics for February 2010

RePEc stats for February are out. Total abstract views and downloads seem to have stabilized now. The most popular paper this month is Evers et al. on the economics of ethanol production

Sounds Like a Headline from the Onion!

But it's a New York Times article: Union College Finally Admits Where It Is. I lived for 5 years in Troy, NY about 25km east of Schenectady and also in the Albany metro area when I was teaching at Rensselaer Polytechnic Institute. I think that Troy is worse than Schenectady if anything. I first arrived there in March for an interview and the cab-ride from the railway station in Rensselaer (I came up from a conference in New York City) along the East Bank of the Hudson went through some of the worse parts of town, and the heaps of dirty snow all over the place and grey sky didn't add to the attraction!

World Trade Report 2010

The 2010 World Trade Report will be about trade in natural resources. In the run-up to publication the World Trade Organization is inviting discussion on the topic. Go to their website to participate.