Essential Concepts of Global Environmental Governance

I have a very short chapter on the environmental Kuznets curve in this book which will be published later this year (June or July) by Routledge. The book consists of 100 more similar entries on environmental governance topics and will be marketed as a textbook.

Draft ERA 2015 Submission Guidelines Released

This document provides a helpful list of changes from ERA 2012 to ERA 2015. The changes are minor. A good one, is a clampdown on abuse of affiliated researchers - some universities submitted a lot of publications by foreign-based researchers that they claimed as affiliates that did not include any mention of the university submitting the publication to ERA. So it looks like that for the moment the aim of measuring the broader impact of research as the UK REF is attempting to do has been shelved. At least as part of the ERA exercise.

Power to the People

Power to the People - authored by Astrid Kander (my collaborator), Paolo Malanima, and Paul Warde is now available from Princeton University Press. The book is the culmination of a long-term research project to reconstruct the energy history of Europe and then explore how developments in energy interacted with developments in the economy. That research is a foundation for our exploration of the role of energy in long-run growth, and our ongoing research under our ARC grant on energy transitions.

Scooped

This is how I feel today:

The positives are that: I'm not a PhD student, we won't waste time on doing the research, and it must have been a good idea (unfortunately an obvious one for those who know the various literatures). Well, I had better read the (working) paper in detail and see if we still have an angle. If we have an angle all will be revealed in due course.

ARC Discovery Projects 2015 Funding Rules Released

The ARC released the funding rules for the current grant round. A single document now also includes the rules for the DECRA, Laureate fellowships, and Discovery Indigenous Grants. A separate document reveals the specific changes to the Discovery program in this round compared to previous rounds. The most important changes, I think, are that :

• You can now apply for five years of funding rather than just three.
• There are no DORA fellowships for 2015!
• The limit on publication costs of 2% of non-salary part of the budget (which could be very little in many cases) is abolished and now you need to justify specifically the publication costs on the proposal.
• International Collaboration Awards are no longer awarded on a pro rata basis but up to $20k and up to 12 months.

The ARC has apparently not yet released the instructions for applicants.

Harvard MIT Atlas of Economic Complexity

This is an interesting effort to assess the complexity of production and the level of local production knowledge across the countries of the world. The index of economic complexity is derived from the diversity and ubiquity of the goods which countries export. The rich data available on world trade is the strength of the indicator but also its weakness. It doesn't take into account of course any of the sophistication a country might have on the service side of the economy or in non-tradables. Australia ranks very badly. Based on the index the Zimbabwean and Australian economies have the same level of sophistication. Australia's complexity has also declined as minerals have increasingly dominated exports over time. With the upcoming demise of Holden and Ford, Australia is going to look even less sophisticated. Obviously, the Australian economy doesn't produce as wide a range of sophisticated products as the major industrial exporters. Still, it does seem that it has more sophisticated knowledge than the developing economies it ranks with in this analysis.

A Meta-analysis Investigation of the Direction of the Energy–GDP Causal Relationship: Implications for the Growth-Degrowth Dialogue

A new paper by Kalimeris et al. is the third meta-analysis of the energy GDP causality literature. The previous two studies are Chen et al. and, of course, our own paper in press at the Energy Journal. This paper covers more studies in fact than either of the previous two papers, 158, but the number of individual tests analyzed is not much greater than in our study. Like Chen et al. the authors only classify results according to the direction of causality and not the magnitude or significance of the test statistics.

The authors attempted to use "Rough Set Data Analysis", which attempts to find decision rules in poorly defined data sets. The results show that there are no well supported conclusions about causal directions in the meta-sample. The main method used in the paper is like Chen et al. a multinomial logit regression analysis. Using this approach, Kalimeris et al. find, as we did too, that the cointegration techniques are more likely to find causality in some direction than are other techniques. This makes sense as there must be Granger causality in at least one direction in order to find cointegration between the variables. But they could not come to any general conclusions about the direction of causality.

Cost Concepts for Climate Mitigation

A new paper in Climate Change Economics by Paltsev and Capros lays out the different metrics one can use to assess the costs of climate change mitigation. The main content of the paper has been around for a while in working papers and a book chapter, which I have cited previously. The paper makes the following points inter alia:

• Total costs of abatement depend on both the marginal cost and the amount of emissions abated, as we discussed in our paper linked above.
• In a second best world where there are existing distorting taxes, the costs of abating emissions are greater than simply integrating the area under a marginal abatement cost curve.
• Terms of trade effects are very important at the macro-economic level. For example, as we are finding in our current research using the G-Cubed model, the loss of GDP in OPEC countries under a climate mitigation policy would come more from the reduction in demand for oil then from domestic abatement efforts.

My Year in Review 2013

This was a year of further consolidation and was less eventful academically than 2012, which I also reported was more of a following through on things planned in 2011. It certainly wasn't boring though! And there is plenty to report.

This was my second and final year as research director at Crawford. Renée McKibbin will be taking over from me in 2014. One success this year was getting Megan Poore hired on a continuing contract as HDR (higher degree by research = PhD) academic skills adviser. She continues to do an amazing job working with PhD students in the School. Also our annual PhD Conference was the biggest and best ever, with more than 200 registrations. Megan guides the PhD students in organizing the conference. Coinciding with the end of my term as research director, Robyn Walter, our HDR administrator, will be retiring. As I also wrote last year, Robyn has done a fantastic job of keeping everything running smoothly in this space at the Crawford School (we have about 120 PhD students), dealing with all aspects of student applications, scholarships, milestones etc. I really appreciated having such an experienced staff member to help me through these two years in my role, which made my life so much easier than it might have been.

Canberra in Google Earth 3D Building View

I formally published two journal articles this year. One was the paper on standard errors for journal impact factors published in the Journal of Economic Literature. The other was the paper on Granger causality in the long-run energy GDP dataset for Sweden coauthored with Kerstin Enflo and published in Energy Economics. I also published a very short book chapter. I do also have a paper published already in a 2014 issue of Climatic Change and we have another paper in press at the Energy Journal. We also have a couple of papers under review. So, already there is a good chance of publishing more papers in 2014 than in 2013. And of course the Working Group 3 contribution to the IPCC 5th Assessment Report will be out in 2014 and there will a couple more book chapter style pieces.

Work continued on the research funded by the ARC grant we were awarded in 2011. We hired Yingying Lu as a postdoc to work on CGE modelling with the G-Cubed model. Following Astrid Kander's visit to Canberra last year, in September I visited Lund for two weeks. As this grant will end in early 2015, it's now time to apply to the ARC for another grant. Zsuzsanna Csereklyei will be visiting Canberra in January and February and working with me on developing a proposal focusing on energy efficiency. We've also been working on a paper that hopefully we can soon put out as a working paper.

I gave presentations at two conferences - one was the First International Workshop on Econometric Applications in Climatology in Guelph. The other was the ANZSEE meeting here in Canberra. Actually here in the Crawford Building, which is why I didn't write that I went to two conferences :) Besides those, the only non-teaching presentation I gave was to a visiting delegation from the Ho Chi Minh National Academy of Politics and Public Administration about research assessment.

I attended my last IPCC meeting of this assessment cycle, this time in Addis Ababa, Ethiopia. This was my first trip to Africa south of the Sahara. I also visited Kenya after the meeting in Ethiopia. Spain and Israel also featured in the trip and there were plane changes in Germany, Turkey, and Abu Dhabi as well...

On the teaching front, I taught the Energy Economics course for the second time - in the second semester. Chris Short, Hugh Saddler, and Paul Burke were again guest lecturers. I also again taught an introductory microeconomics course - Economic Way of Thinking I and I again gave a series of three lectures in our flagship CRWF 8000 course in the first semester.

My most popular blogpost that I wrote this year was one on my paper on uncertainty in journal impact factors. Of course, that was near the beginning of the year and so has had plenty of time to accumulate hits...

Some things lined up for 2014, which I haven't already mentioned above, include:

• Both Yingying and I and many other of our colleagues will be at the AARES meeting in Port Macquarie in early February. Yingying will present a paper on the first results from our CGE research. I am supposed to talk about "Rethinking the Emissions-Income Relationship in Terms of Growth Rates".
• There will be another research trip to Sweden as required by the terms of our grant.
• Astrid Kander will be visiting Sydney in February to collaborate with researchers at UNSW on embodied emissions in trade. This work emerged from discussion at the seminar she gave when she visited ANU in 2012. Jack Pezzey and I plan to meet with her there to work on our next paper in preparation for a presentation he will give at the Economic History Society meeting in the UK.
• Then there are a bunch of conferences in mid-year that we plan to submit abstracts to. The biggest is the World Congress of Environmental Economics in Istanbul. In 2013 I didn't get out of the airport in Istanbul, so 2014 will hopefully present progress on that front :)
• The deadline for the special issue of Energies on "Energy Transitions and Economic Change" will be in July and we hope to get the first articles online during 2014.
• I should be more involved with the ANU Energy Change Institute this year. I will be serving on the executive committee and assisting in convening the Masters of Energy Change from the social science side.
• I'm also hoping to increase my pace of research after completing my term as research director and maybe even write more posts on this blog than this year.

 

Granada, Spain (and me)

Data from Stern and Kaufmann (2014) Climatic Change Posted on My Website

As I've already had a couple of requests for the data, I have posted the data from our forthcoming paper in Climatic Change on my website.

Cuts to ARC Funding, Strategic Research Priorities

In yesterday's mid-year budget update, the Australian government announced cuts to ARC funding. $103 million will be cut over a 4 year period and diverted instead to medical research. This actually amounts to about 3% per year of the ARC budget. So, it's not as bad as one might think at first.

Back in June the government announced new Strategic Research Priorities to replace the previous National Research Priorities. I heard that these may be undergoing some revision. We'll only get new funding rules and instructions for all schemes in January. But I think we should assume that we will need to address these new priorities in ARC proposals to be submitted in the upcoming rounds at the beginning of 2014.

11/12/13

Americans won't appreciate this, but I just realised while signing my name that today is the last day this century where the date can be written as three numbers one apart in order. For countries which list the year first it's 13/12/11. For Americans December, 13, 2014, will be the last such day this century.

Researchers Work Times Vary Around the World

If downloading papers from Springer = working then this paper by Wang et al has fascinating evidence on when researchers are working around the world. They got several days data on downloads of academic articles from Springer by location and time of day and composed download curves across the day for both weekdays and the weekend. Most of the cultural stereotypes hold up - late lunch in Spain and almost no lunch break in the US and UK. Australians tend to have a more defined workday than other English speakers. Americans, Chinese, and British work particularly hard at the weekend compared to other countries.

Blunt Instruments

"Blunt Instruments: Avoiding Common Pitfalls in Identifying the Causes of Economic Growth" by Samuel Bazzi and Michael Clemens is an interesting read. I have long thought that it is hard to find valid instrumental variables in macroeconomics, this paper provides lots of evidence for this.

So-called "endogeneity" of explanatory variables in regression analysis is mainly due to the following:

• Reverse causality - Feedback from the dependent variable to the explanatory variable.
• Omitted variables bias - When variables that are correlated with the included variables and the dependent variable are excluded from the regression, the included variables are attributed as explaining too much or too little of the variance in the dependent variable.
• Measurement error - When there is error in measuring the explanatory variables their regression coefficients tend to be biased towards zero.

All of these lead to correlation between the explanatory variables and the true underlying error term (but by design not to the actual estimated regression residuals). One approach to dealing with these issues is instrumental variables regression where variables that are correlated with the explanatory variables but supposedly not with the true residuals are introduced. The instrumental variable estimates effectively only use the part of the explanatory variables associated with the variation in the instrument in estimating the regression coefficient. Bazzi and Clemens point out that there are many pairs of econometric studies that claim to have found the same strong and valid instruments for different explanatory variables but don't include the explanatory variables included in the other studies in their models. If a study finds an instrumental variable is strongly correlated with an explanatory variable and it is used as an instrument in another study that doesn't include the explanatory variable in question then the instrument must be invalid as it will be correlated with the error term. Bazzi and Clemens show that many studies published in top journals suffer from these problems.

Of course, there is much more in the paper, but I think that is the key point.

Carbon Tax Thresholds

Jack Pezzey and Frank Jotzo have a new short piece in Nature Climate Change on carbon taxes with free emissions thresholds.

Jack Pezzey comments on this piece:

"We're hoping this piece will shift economists' views on a basic assumption about carbon taxation, which we argue is unnecessary, and is stifling the adoption of a tax, with its well-known advantages over carbon (emissions) trading.

The basic, unnecessary assumption is that a carbon tax must be charged on ALL emissions coming from any source that's included in the tax scheme. Our commentary notes that current tax schemes typically do charge for all emissions from included sources, and have low tax rates with key emitters given even lower tax rates or excluded altogether. On the other hand, charging a high tax rate on all emissions would generate implausibly large revenues, at least in the short to medium term. We highlight the academically established, but institutionally ignored alternative of taxing only emissions above fixed thresholds, which are equivalent to free tradable permits in many ways.

We're not arguing that carbon tax thresholds are always a good idea, or that they solve the intractable problem of international cooperation on emissions control, just that a tax with thresholds should always be considered as an option whenever emission pricing is debated (or explained in textbooks). For example, starting a carbon tax at a low rate and with no thresholds may be a good idea. But the trading equivalent of this is full permit auctioning and an unambitious emissions cap, which in the profession is now usually seen as inferior, so why not also consider a higher tax rate with thresholds, the equivalent of the standard trading system seen in practice, with some free permits and (sometimes) a more ambitious cap?

We do not advocate for carbon tax thresholds as a permanent feature. Rather, we see them as transitory measures that facilitate the introduction of carbon taxes, at higher tax rates than might otherwise be possible politically. Carbon tax thresholds could be phased out over time. In the article, we point out the potential benefits from treating carbon taxes as a source of fiscal revenue, and recycling it to achieve greater efficiency in taxation, and to assist low-income households in dealing with energy price increases.

Thresholds also raise contentious issues which complicate taxation; but as we note briefly in the paper, and at length in the Supplementary Information, many of these issues have already been "dealt with" for free tradable permits, that is, resolved, albeit imperfectly, well enough to allow permit trading in practice. So we contend that similar resolutions can be found for tax thresholds, but only if they are first put on the agenda."

Energy and Climate: A Primer

A new online textbook written by Cutler Cleveland (who was my PhD adviser) published by Trunity. You can request a desk copy just like you can for conventional hard copy textbooks.

The book's theme is that "a stable, predictable climate is an essential life support function of the Earth. Human use of carbon-based fuels such as oil, natural gas, and coal has increased the quantity of greenhouse gases in the atmosphere that warm the planet. The increase in the Earth's temperature since 1850, and the increase that is forecast to occur over the next 100 years, pose grave risk to all nations. The "climate problem" and the "energy problem" thus are are intimately linked, and must be tackled together."

Produce a List of All Your Department's Publications on RePEc

Something I just discovered, you can make a list of all an academic institution's publications on RePEc. Here is the link for the Crawford School. I don't know where you can access this list from the menus on IDEAS (let me know if you know) but you can produce a list for another institution by pasting the institutions EDIRC handle into the URL in place of Crawford's.

P.S.
René Böheim explains in the comments how to navigate to the list of publications for each institution. I hadn't noticed that link before...

Can Negotiating a Uniform Carbon Price Help to Internalize the Global Warming Externality?

Martin Weitzman has a new NBER working paper on whether negotiating a common global carbon price will be more likely to succeed than negotiating for emissions quantity reductions has been. His answer is, yes, on the grounds that it is easier to negotiate a common carbon price than separate emissions reduction targets for each country, and that each country has an incentive for a high price on everyone else and to collect taxes itself. For the developed countries it also has the political advantage that they won't be forced to buy permits from developing countries and transfer money overseas.

But, as we showed in our paper in AJARE last year, a common carbon price will impose much higher total direct costs on developing countries than developed countries. Developing countries already argue that global warming is mainly the historical responsibility of the developed countries and, therefore, they should take stronger action. So, a common carbon price doesn't look very politically attractive to developing countries unless there are large side payments. Weitzman misses this dimension of the problem. This will negate the supposed political advantage that developed countries would see in retaining all their carbon tax revenue. Weitzman does admit that: "The model of this paper is so abstract and so removed from reality that it is open to enormous amounts of criticism on many different levels" (p. 17). He does write that: "Nothing in the model excludes side payments to help obtain an international agreement on harmonized national carbon prices" (p18). But won't those change the political acceptability of such an approach?

Fossil fuel exporting countries are a group that will suffer high GDP losses under any emissions reduction plan. Not only do they have fossil fuel intensive economies, but the reduction in demand for fossil fuels under a carbon tax reduces their income, which maybe a cap and trade approach does not do to the same extent. I'm skeptical that they would find it optimal to agree to a high carbon tax. These countries differ from the players in Weitzman's model who only suffer costs from their own abatement.

I do think that carbon taxes have important advantages over cap and trade schemes but I'm skeptical that a global uniform tax rate would see more success than a global Kyoto style quantitative emissions reduction.

Anthropogenic and Natural Causes of Climate Change

I have a new article coauthored with Robert Kaufmann in Climatic Change titled "Natural and Anthropogenic Causes of Climate Change." In the paper, we test for Granger causality between temperature and, as the title says, potential natural and human causes of climate change. We find that both natural and anthropogenic factors cause temperature change and also that temperature causes greenhouse gas concentration changes. Although the effects of greenhouse gases and volcanic forcing are robust across model specifications, we cannot detect any effect of black carbon on temperature, the effect of changes in solar irradiance is weak, and the effect of anthropogenic sulfate aerosols may be only around half that usually attributed to them.

It is very important in Granger causality testing to control for as many other possibly relevant explanatory variables as possible. So, in the paper we always include all the causes we consider in each regression model. We found only one other paper that attempted to do this - Triacca et al. (2013) - which was very recently published after we initially submitted our paper. And the latter paper still does not include anthropogenic aerosols. This was the main reason why we wrote this paper. The paper is also a follow up on our 1997 paper in Nature which pioneered the application of Granger causality testing to climate change.

All models in the paper include all the potential causes, the differences between models in the paper are in terms of:

1. Sources of temperature data - We use both the HADCRUT 4 and GISS3 datasets.

2. Time periods - We look at the full 1850-2011 period as well as the post 1958 period. Regular atmospheric sampling  of carbon dioxide started in 1958 at Mauna Loa.

3. Ocean heat content - The ocean stores most of the heat accumulated through global warming. It is important to include it in climate modelling especially when using short time series. But we only have data from 1955 on. So we estimate models with and without this variable.

4. Restrictions on the equality of climate sensitivity across causes - All explanatory variables are converted to radiative forcing in Watts per square metre. If we aggregate all of these together into total radiative forcing we assume that the relative sizes of the effects have been correctly estimated and the dynamics of temperature in response to changes in radiative forcing are equal across all factors. So we estimate both more restrictive models that impose these assumptions and ones that don't. In particular, we allow the size of the effects of anthropogenic aerosols to vary. There is particularly high uncertainty concerning the size of the effects of sulfur and black carbon aerosols.

Another important dimension of the paper is that we use Granger causality tests that are robust to the non-stationary (potentially stochastically trending) nature of the global climate data. These are the Toda-Yamamoto Granger causality tests.

First Issue of Asia and the Pacific Policy Studies Now Online

Most of the papers for the first issue of the Crawford School's flagship journal are now online in "early view". All of the papers for the first issue have now been finally approved. It looks like a few more still need to be processed into the journal format (I know that there should be a paper by Bob Costanza and Shuang Liu in this issue). The journal is open access - so no problems or fees for anyone to download the papers.

The Economics of Global Climate Change: A Historical Literature Review

I have a new working paper coauthored with Frank Jotzo and Leo Dobes up on RePEc titled: The Economics of Global Climate Change: A Historical Literature Review. It is a by-product of a book of collected papers we edited for Edward Elgar to be titled Climate Change and the World Economy. The paper has three sections. The first is on trends and drivers of emissions, the second on mitigation and impacts, and the third on adaptation. I wrote the first section, Frank wrote the second and Leo wrote the third. I then edited all the sections together into a hopefully coherent whole. The paper is titled "A Historical Literature Review" because we focus to some degree on the evolution of the literature from some of the early classic papers to the latest contributions. Of course, there is no way we can write a review that is at all comprehensive. The IPCC reports struggle to do that. I think we do cover some of the key papers in the literature and it could be a useful reading guide for further research.

2012 SNIP and SJR Values Released

I'm a bit behind the curve here but new values for Elsevier's bibliometric indicators SNIP and SJR were released on 18th October. The indicators have been refined further. Both SNIP and SJR are supposed to now average 1 for the journals included in Scopus. But I found that only 5949 journals had a SNIP of one or greater out of 18684 journals with a non-zero SNIP. For SJR only 3234 journals out of 19988 had values of of one or greater. So, this is pretty confusing. Also, unfortunately The Energy Journal still has missing values. We use SNIP internally at Crawford School, because it is the best indicator we have to compare across journals, but clearly there are still some questions about it both regarding the normalization and the very large number of journals with missing values.

ANZSEE 2013 Presentation

I'm at the ANZSEE 2013 conference. As it is in the Crawford Building, I don't actually need to go anywhere to be "at" the conference :) So far it has been quite interesting with an opening plenary by John Thwaites from Monash on the report of the National Sustainability Council. My presentation is on Thursday morning at 8:30am in Weston Theatre in the Crawford Building. It's titled: "Identifying the effect of the elasticity of substitution on the rate of economic growth"...

Steve Dowrick

Here is a link to the obituary that Bruce Chapman and Maria Racionero wrote. All I can add is that I interacted a bit with Steve after I started working for the Environmental Economics Research Hub at Arndt Corden Department of Economics in 2009. I found him to be a very friendly and helpful person. Steve came in to chat a few times when he happened to be visiting over at Arndt Corden and took an interest in my work and also gave me some very nice comments on my draft proposal for the ARC (my first) - he said that if it was up to him he would fund it - this made me feel much more confident! I certainly saw him as a role model.

I knew he had been ill and then heard recently that he had died. It was very sad news, especially as he was only 60 years old.

New Journal: Energy Research and Social Science

Another new journal in the energy space: Energy Research and Social Science. Published by Elsevier and the editor in chief is Benjamin Sovacool. The journal will cover all social science approaches and all energy technologies.