Foundation Seminar Slides

As I previously wrote, my "foundation seminar" is this Tuesday, 1st November at Crawford School at 12:30pm (yes, Melbourne Cup Day). There will also be some lunch/drinks before that. The slides are now online. I'm thinking to do a blogpost series on the stylized facts after I give the seminar. Maybe someday this will be a paper too.

Energy and Climate Policy

The NYT has special section on energy. It's a mixed picture with stories about technological breakthroughs mixed with stories about reduced public support for some alternative energy sources. Meanwhile, Clive Spash has a new paper with Alex Lo on Australian climate policy. As you'd expect they are critical of it as it's not radical enough and is too generous to large polluters in their opinion.

How Does PLoS ONE Have Such a High Impact Factor?

The journal accepts 70% of papers, so how come it has an ISI impact factor of more than 4? The journal accepts all papers that are technically correct, irrespective of significance. That's why we sent our recent paper on malaria and climate change there after dealing with reviewers who didn't like the work or claimed it not to be important at other journals.

An article from last year says that it is due to the $1350 publication fee. Authors who have the money are probably stronger as they have research grants or work at well-funded universities.* Though as the article points out they will waive the fee for anyone who claims they can't afford to pay. Also impact factors are higher in biomedical areas than others. The typical medical article in an ISI journal gets 6 citations after 2 years, which implies an impact factor of 3. I think another reason is that the journal is open access.

The author, Phil Davis, thinks that PLoS ONE could face a problem if they get a flood of low quality articles chasing the impact factor, which would impose costs on the journal as they would have to reject them and not get paid. At the moment the academic editors are volunteers and so the costs of rejected articles are lower than that of accepted ones. But they could move to a submission fee model in that case and only waive fees for developing country authors or not at all.

In 2010 PLoS ONE's IF increased despite publishing more articles.

(HT: Tom Kompas)

* There is an assumption that an author won't pay the fee from their private funds. We paid the fee using my coauthor's funding from the Wellcome Trust who mandate open access publication.

Greenhouse Gas Emissions from Shale Gas

"Unconventional" shale gas obtained through hydraulic fracturing or fracking has been very controversial recently. Local residents have claimed that their water has been contaminated in areas of Pennsylvania by the activities of the gas companies. There has also been concern about earthquakes triggered by the process. It turns out according to Robert Howarth (brother of Rich Howarth, editor of Ecological Economics) et al. that due to heightened methane emissions, gas obtained in this way has a higher total warming potential in the short run (of several decades) than does using coal. This is despite the fact that when burnt gas emits around half the CO2 for each joule than does coal and gas combustion is on average more efficient in producing electricity - it is a higher quality fuel. I've long wondered about whether leakage of methane gas negated the benefit of reduced carbon dioxide from natural gas, which is one reason I researched the literature on global emissions of methane. It turns out that emissions from conventional gas production and distribution systems do not negate the greenhouse benefits of gas.* But emissions from fracking might.

* Wigley (2011) argues that in the short-run switching to conventional natural gas from coal increases global warming even without any methane leakage. This depends on the reduction in sulfate aerosols produced by burning coal, which cool the climate. But sulfate aerosols are being reduced anyway even if we stick with coal use. This is taken into account in Wigley's analysis - switching to gas though still results in a faster than BAU reduction in aerosols. OTOH even under a 10% leakage rate switching to gas reduces climate change relative to BAU after 2140.

Economic Logic Links CCEP Paper to Current US Political Debate

Some republican candidates for president are saying that they would create jobs by cutting regulation, and in particular environmental regulation, as recently discussed by Paul Krugman. The Economic Logic blog links Bruce Chapman's recent CCEP paper to this current US political debate. In the Australian case, the mining industry is growing and predicted job losses are in terms of fewer net jobs being created in the industry rather than absolute losses. And the headline figures ignore the number of jobs being created elsewhere. Bruce also shows how the numbers are small compared to the annual flows of workers in and out of employment. So even if the predictions are true the effects are unlikely to be noticeable to anyone in particular.

2010 Annual Energy Review is Released

The US Energy Information Administration has released the 2010 Annual Energy Review. It is a great resource. I often use graphics from the AER when teaching. Gregor.us posted a great chart from the report of the cost of addition to oil reserves. But, very disappointingly, they have dropped the chapter on international trends from this year's report. This was the chapter that was most useful for me.

Foundation Seminar

As I am a new professor and continuing academic staff member in the Crawford School I am scheduled to give what is called a "Foundation Seminar" also known as an "Inaugural Lecture". This will be on Tuesday, 1st November in the Acton Theatre at the Crawford School. There will be drinks from 12pm with the seminar from 12:30-1:30pm. The title and abstract follow:

Energy and Economic Growth: The “Stylized Facts”

In 1961, Nicholas Kaldor highlighted six “stylized’’ facts to summarize the patterns that economists had discovered in national income accounts and to shape the growth models being developed to explain them. Recently Charles Jones and Paul Romer introduced a set of “new Kaldor facts” for growth economics. This lecture will attempt to summarize what we know about energy and economic growth in a similar set of stylized facts and to explain the patterns we see. It will draw on the recent research of the speaker and colleagues in Australia and Europe.

There should be a video available after the event and I'll post the slides too.

Guest Post on the "Oil Drum"

A guest post written by me appeared today on the blog "The Oil Drum". It's a summary and commentary on my paper "The Role of Energy in Economic Growth" which appeared in Ecological Economics Reviews this year. There are a lot of comments. Go over there to read them. I'll try to respond to some of them soon (it's a crazy day over, today for me (Energy Change Institute open day where I'm presenting, CRWF8000 teaching, and the IPCC WG3 ZOD deadline looming). I've also added "The Oil Drum" to the blogroll.

Special Issue of Climatic Change on RCP Scenarios

A little while ago I blogged about van Vuuren et al.'s paper that provides an overview of the new emissions scenarios - called RCPs - that will be used in the IPCC's 5th Assessment Report (AR5). You can now access all the papers in the special issue from a summary page. I think that these are all open access papers. There is also a special issue on the way the AR5 will deal with uncertainty. A number of these papers are open access.

Pascual et al. Respond

Mercedes Pascual and colleagues have written a response to our paper in PLoS ONE. Our paper is largely a response to the Pascual and colleagues criticism of our 2002 papers in Nature, Emerging Infectious Diseases, and Trends in Parasitology.

I won't comment on it further at this stage until my colleagues have had time to read it.

Sims and Sargent Win Nobel Prize in Economics

Sims and Sargent were announced as winners of the Nobel Prize in economics on Monday. I've been a heavy user of vector autoregression models in my career including this recent paper, which discusses some of the issues that Sims discussed in his 1980 paper "Macroeconomics and Reality". I met Sims once at Princeton. I visited the department for a few days to work with David Bradford. I gave a presentation on applying time series econometrics to climate change, which he attended. That was a bit scary :)

BTW, this is also the 500th post on Stochastic Trend!

Tax Forum Outcome

Now we know why the low income tax offset wasn't completely abolished on "Carbon Sunday". It was so Wayne Swan could announce some concrete reform after the tax summit...

New CCEP Working Papers

We have some new working papers from CCEP. The latest is from Zhongxiang Zhang who will be an associate in the CCEP network. It is titled "Who Should Bear the Cost of China's Carbon Emissions Embodied in Goods for Exports?".

Recently we also put up papers by Leo Dobes and Bruce Chapman "Financing Adaptation to Climate-Induced Retreat from Coastal Inundation and Erosion" and Harry Clarke and Robert Waushik: "Australia's Carbon Pricing Strategies in a Global Context".

Do You have Good Examples of the Role of Energy in the Economy?

A journalist wrote to me for help. They are writing a popular book on the effects of energy scarcities on our economy, wealth and way of living. What good non-academic sources are there that he could use? He is especially looking for strong examples that people can relate to to illustrate two things: our massive reliance on energy in everyday life, and the key that it holds for growth.

Completed a Choice Modeling Survey

This week, I was a respondent to a choice modeling survey for the first time. The purpose of the survey was to find out about reliability of supply of water, electricity, gas etc. So this was something that I as a consumer have a lot of knowledge about and a lot of interest in and it is a clear private market. So all the criticisms about environmental valuation don't apply here. Choice modeling is often used to obtain environmental valuations and I think it is superior to other approaches in that application.

The online survey gave us eight different scenarios of possible packages with varying prices and utility reliability that we could pick from. Each scenario had three different packages - our current service plus two alternatives. Each alternative had around 10 different characteristics. I've always wondered whether survey respondents could handle that and thought that you just need to give each respondent one choice set and survey more people. I was just overwhelmed with information.



I chose the current package in every case. Partly because of the information overload but also because saving $50-$400 a year on my utility bill is just not worth it to me to suffer from multiple power cuts each year and the like, which is what the trade-offs were about. Even when I lived in East Jerusalem in the 1980s as an undergrad student we didn't have that many power cuts (Troy, NY was almost as bad :)). So I'm thinking the results of this survey will be pretty insensitive to price except for the more extreme scenarios at low incomes. $400 is a big deal to someone on $30,000 a year (Australian full time minimum wage), but $50 isn't for someone on $60,000 (average wages).

Being a social science researcher myself I always feel sympathetic to people carrying out surveys and often do them. But I get really annoyed when a surveyer has me on the phone for more than a quarter of an hour asking endless questions or when an online survey turns out to have tens of pages of questions. Why do people design surveys like this that are going to either have less patient people drop out of or refuse to respond or just give random answers to either from impatience or choice fatigue?

Wiley-JoES Online Conference: Communications with Economists

The Journal of Economic Surveys will be holding an online conference from 16th to 18th November. Keynote speakers are Tom Stanley, David Hendry, and Charles Nossair and there are other interesting sessions too. Registration is free. There will be live videocast of the key sessions on the web and they will also be viewable after the event. There will be commissioned discussants as well as discussion by partcipants. Sounds like an interesting venture and I plan on participating.

Why Our Malaria and Climate Change Research is Important

This morning I was interviewed by Clement Paligaru on the Breakfast Show on Radio Australia. This is Australia's international broadcaster. One of the questions that he asked me was why it was important to know that malaria was declining despite climate change rather than thinking that malaria incidence was increasing due to climate change. What I came up with was that if we think that the disease will just become more widespread in the face of climate change regardless of what we do we might be apathetic about doing the things which have reduced the incidence of the disease. I'm not sure how convincing that is. But the rise in cases in the 1990s was probably due to resistance to chloroquine, an older antimalarial drug, and not climate change. That is something that is important to know.

Good Casual Analysis from Bad

Recently, I wrote about Tatu Westling's paper on "male organ" length and economic growth. I argued that it was likely a case of omitted variables bias and there wasn't real causality here. And certainly this relationship wasn't stable over time. This paper did get a lot of media coverage and hence a lot of downloads. Now Westling has teamed up with a fellow student to analyse the incident. They find that other papers on their website also experienced an increase in downloads which can be attributed to a spillover effect from the interest in Westling's paper. They use differences in differences and regression discontinuity methods. This sounds pretty solid as the interest in the paper in question was a pretty exogenous shock. So having star papers in your working paper series will help increase downloads of other papers. This is similar to the Matthew effect in citations. Authors with lots of citations tend to get more and more citations and publishing a landmark paper will result in your other papers getting cited more too.

Malaria Cases in Kericho, Kenya

In my IPCC AR5 chapter writing group we have been told to think of "iconic figures" we could use in the chapter. In our paper on malaria and climate change in East Africa, I think this is the iconic figure:



It just shows monthly malaria cases at the tea estate hospital in Kericho, Kenya. The increase in malaria in the 90s was linked by some researchers to climate change. But in this decade, malaria cases have collapsed at this location. In the meantime we find that there does seem to be a significant increase in temperature especially when the most recent years are included in the analysis. The figure is simple and really easy to understand.

Temperature and Malaria Trends in Highland East Africa

Our article: "Temperature and Malaria Trends in Highland East Africa" is published today in PLoS ONE. I've noted some of the key points already in a series of posts as the article developed. The key points are:

• In 2002 we (Hay et al., 2002) could find little evidence of significant increase in temperature or precipitation in the East African highlands in a period of a surge in malaria cases. It, therefore, seemed most likely that the increased malaria was mainly due to other causes such as increased drug resistance.


• This was a very controversial finding, which has been discussed by various other researchers who generally find that there has been a significant increase in temperature in these areas and that, therefore the increase in malaria was likely due to this.


• We have now tested the more recent versions of the UEA CRU database as well as the temperature series from Kericho in Kenya prepared by Omumbo et al. (2011) using a new robust test for trends in series.


• Using the new test, we find that there is no significant trend in the data we originally tested but that there is a significant increase in mean temperature in the newer versions of the CRU database for the same pre 1995 period. This change in data explains the results of several of our critics.


• When the post 1995 data is included in our tests the results show an even more significant increase in temperature.


• We do not find a significant increase in temperature in the Kericho data for the period up to 1995 but there is a significant trend when post 1995 data is included.


• We conclude that there is now clear evidence of increased temperatures in highland East Africa especially in the last 15 years.
• The twist is that malaria incidence has now declined. So it's still not clear if climate change was the main cause of the surge in malaria and despite recent warming malaria has radically reduced and, therefore, other factors appear to be more important than climate in malaria incidence.
  

Press release version.

Launch of the Masters of Energy Change and Public Seminar

An Energy Change Institute public seminar. Program:

• Introduction by Energy Change Institute Director Ken Baldwin


• Andrew Blakers, ANU College of Engineering & Computer Science


• David Stern, Crawford School


• Tom Faunce, ANU College of Law

Monday 26 September 2011 5.30 – 6:30pm, followed by light refreshments.

Tours of ANU energy research facilities at 4:30

Building 131 Finkel Lecture Theatre, John Curtin School of Medical Research, Garran Road.

The official launch of the new ANU Master of Energy Change will follow the event.

Econometrics for Grumblers

Econometrics for Grumblers is the title of a recent paper in the Journal of Economic Surveys by Markus Eberhardt and Francis Teal (Working paper version). It is a survey of the cross-country economic growth literature with an emphasis on the econometric problems encountered. The biggest problem is that the state of technology or productivity is unobserved - the famous "residual" in the Solow model - and that:

1. The levels of the inputs - human capital and labor etc - which are usually explanatory variables in a growth model are affected by this unobserved variable. This results in a correlation between the error term in the model and the explanatory variables. The explanatory variables are then said to be endogenous.

2. The state of technology is non-stationary and probably has a stochastic trend.

3. The level of technology and rate of change are different in every country.

4. But the level of technology and rate of change are likely correlated across countries.

These aren't the only problems of course :) These issues have lead many to reject the usefulness of doing cross-country economic growth econometrics. Eberhardt and Teal review the literature thoroughly highlighting the underlying assumptions of each study and suggesting a new approach that they have used in their work.

I have been struggling with the issues in 1 to 4 above in a lot of my recent research, particularly on the environmental Kuznets curve and energy efficiency. I've used a variety of econometric techniques to try to deal with the issues but this gives me some new ideas to check out in more depth.

CCEP Working Papers in August 2011

We put up several new papers and so got quite a lot of downloads this month. Papers tend to get a lot of downloads when they first appear on NEP. We got out highest number of abstract views and second highest number of downloads this month since launching the series. In terms of downloads per item, only two STATA related series rank higher in the world! But new series tend to have a high rate of downloads per item, of course.

Erratum: Elasticities of substitution and complementarity, Journal of Productivity Analysis 36(1): 79-89

I hate looking at my published papers because there are often typos in them which I didn't catch at the proofs stage... One of our PhD students, Nitin Gupta, found a typo in my paper: Elasticities of substitution and complementarity, Journal of Productivity Analysis 36(1): 79-89. The formula in equation (20) for the Allen Elasticity of Substitution between inputs Xi and Xj, AESij, should be:



The denominator is wrong in the formula in the paper. The formula for AESii is correct. Note that these formulae only make sense if you have normalized the data in some way. If, for example, you have indexed all variables to one in the first year then the formula will give the elasticity in the first year. It makes the most sense when like me you have normalized on the sample mean for each variable and so this elasticity is at some notional mean point. If you want to calculate the elasticity at different points in time or you haven't normalized the data then you can't use this formula. This is because the parameters associated with the first order terms in the translog function depend on the units used.

The good news is that I used the correct formula in all the calculations in the paper. The bigger picture message is don't believe that a formula is correct just because it is printed in a refereed journal!

From Correlation to Granger Causality

A rough draft of a new paper so don't cite it but comments are welcome. I have posted a couple of sections already on the blog. It's written for a workshop where I meant to present on "From correlation to causality" and I think I need to talk about both major approaches - instrumental variables and Granger causality. Then I do a Granger causality analysis of a bunch of variables with 150 year time series from Sweden to illustrate the points but also to contribute to the literature on energy and growth. The results support causality from energy to output but that relationship appears to have weakened or reversed in the second half of the 20th Century. Or maybe it is just harder to find anything significant in a shorter time series. Energy prices have a more significant impact on GDP than energy quantity in a model of GDP, energy price, and energy quantity, but again the relationship seems to weaken.