Transition to a non-carbon economy
Fri, Nov 21 2008Global issues
Climate
The objectives of climate-change mitigation programs such as those in the Garnaut Report or in the Australian Government's absurdly-named 'carbon pollution reduction scheme' cannot be achieved by 2020 or 2050 without a massive, and rapid, transition away from carbon-intensive energy sources of primary energy for base-load power generation, transport etc.
But forcing rapid change in the way we power production and consumption across the economy —for example, by means of carbon-quota (or tax) penalties— will cut growth and will redistribute resources to less productive sectors such as government and (probably) some households. Certainly, the emission controls will affect business and consumer plans, but the wealth impacts also risk undermining our capacity to invest in the infrastructure necessary for an eventual energy transition.
Prof. Vaclav Smil argues that the inertia of energy systems is much greater than these 'transformational' programs acknowledge. Unlike information systems that the micro-processor revolutionized within the span of half a working-life, a transition in energy systems takes generations because it requires fundamental changes in large-scale 'cooperative' infrastructure such as transmission networks as well as in the organization of production and consumption.
Temperatures in Victoria
Wed, Nov 19 2008Data
Global issues
Climate
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An update to the previous post on the temperature record in the state of Victoria. The Australian Bureau of Meteorology says that 2007 was the hottest year on record, although satellite data show the Southern Hemisphere is not warming. The chart (above) shows their records for Victoria since 1950.
How hot has it been in Victoria?
Sun, Nov 16 2008Data
Global issues
Climate
The Australian Bureau of Meteorology claims that 2007 was the hottest year on record for Victoria
"The year 2007 was Victoria's warmest year on record with a mean annual temperature 1.18°C above the long term norm. This is 0.37°C above the previous record, set in 1988" BOMBut, if so, Victoria must have had a dramatically different year from the rest of the Southern Hemisphere, whose land-temperatures show almost no trend over the past twenty years—except possibly a slight cooling since 2001 (click the thumbnail).
A modest proposal for the ‘G-20’ summit
Sun, Nov 09 2008Data
Trade data
Global issues
Trade framework
WTO
The IMF's Managing Director should not try to talk down expectations for next weekend's summit. We deserve much more from these leaders that, so far, have done little to match their promises of reform of global governance over the past decade.
The G-20's role should be to set up the best conditions for a recovery in real markets, not just in financial markets. But, on their past behavior, it is likely they'll re-cycle yet another low-credibility statement about completing the noxious Doha deal that was on the table last July.
A more modest program to open world markets that is not burdened with the second-thoughts, exceptions and safeguards would do much more to lift global market confidence if it could be quickly implemented. Here's a blast-from-the-past idea that could also set up a still more effective resumption of Doha when the new U.S. administration (and the new EC Commission and Indian Government) is ready to deal
Garnaut Review Economic Model
Fri, Sep 05 2008Global issues
Climate
On a quick first reading of the supplementary report, this seems to be the key data related to the modeling results. For the more moderate 550ppm CO2 objective, the costs of a 10% cut in 2000 carbon emissions to 2020 are estimated at 1.1% of GDP (1.8% cut to consumption) comprising a net decrement of about 0.1+% of GNP per year. In other words, the expected net benefits are somewhere toward the end of the century (and seem to comprise assumptions about 'avoiding catastrophies').
Despite the boost to growth in the second half of the century, the sacrifice in the first half of the century is substantial, though the loss to GNP is fully recovered with a margin by the end of the century. The benefits that are purchased by this sacrifice take several forms. One is insurance against the effects of severe and possibly catastrophic outcomes on material consumption during this century. Another is increased protection against loss of non-market services this century. Yet another is avoidance of all of the rapidly increasing costs in through the 21st and into the 22nd century and beyond: the rapidly increasing negative impact on material consumption; the risk of outcomes much worse than the median expectations from the applied science (although beyond the 21st century, the median outcomes include more and more of the severe and possibly catastrophic); and the impacts on non-market values.
Drought in the “Sunburnt Country”
Fri, Sep 05 2008Global issues
Climate
Ian Castles has published—as a tribute to Dorothea Mackellar's poem, My Country (often known from a line in its second verse as 'A Sunburnt Country'), published just one hundred years ago today—a typically well-mannered but meticulous criticism of the CSIRO's paper on the future incidence of drought in Australia. Ian detects, and documents, the CSIRO authors' habits of ignoring pertinent but inconvenient criticism and points to some not-quite-credible claims that the CSIRO authors have previously published—in the IPCC's Fourth Assessment report.
It defies belief that the range of rainfall change in 2080 (relative to 1990) from all of these scenarios and models could be from minus 27 per cent to plus 54 per cent for “Northern NSW, Tasmania and central Northern Territory” - and yet be from minus 80 per cent (i.e. one-fifth of the 1990 level) to nil “within 400 km of western and southern coasts” [From One hundred years of drought and flooding rains - On Line Opinion]
Precautionary principle, misleading and undemocratic
Fri, Sep 05 2008Global issues
Climate
Public policy
The "precautionary principle" makes a dishonest claim (I don't say that people who invoke it are dishonest) because it pretends to be one thing—a justification—while being, in fact, a very different thing—an explanation. I say it justifies, at best, a wager and that wagers should not be the basis of public policy in democracies, certainly not when we are debating a decision that will cost us billions of dollars in taxes and probably still more in lobbying and tax-avoidance.
The unravelling trade consensus
Tue, Aug 26 2008Global issues
Trade framework
WTO
An much better account of the real, secular challenges facing the WTO than Larry Summers' jumbled column (see the Sidebar) can be found in Simon Evenett's dissection of the failure of the Doha Round, written almost a year ago. I think Simon has set the bar too high, but his call—presaging that of the Warwick Commission—for a period of reflection and a new start for the WTO is and intriguing account; accurate and carefully-argued.
"The EU and US pursued agricultural trade negotiating strategies that were not politically viable in their trading partners and their demands for tariff cuts on industrial products (driven up by the extent of unilateral reform in developing countries) could not be reconciled with some of the development-related princi- ples adopted for this Round. Finally, what was on the negotiating table was small compared to other developments in the world economy, making the cost of saying "no" easier and poten- tially reducing the attention spent on concluding the Doha Round in the first place." from Reciprocity and the Doha Round Impasse by Simon Evenett
“Sensitive” farm quotas revealed
Thu, Aug 14 2008Global issues
Trade framework
WTO
Details are starting to emerge of the expansion in import tariff-quotas in the EU that might have conceded included in a Doha deal. They are large numbers by any measure, because the EU now comprises 27 middle and high-income economies.
Next steps for agriculture agreements
Wed, Aug 13 2008Global issues
Trade framework
WTO
The WTO's Doha Round of trade negotiations did not 'collapse'; they failed. The failure was not caused by the disagreement over the Special Safeguard Mechanism. The poor quality of the proposed agreements reflected much deeper problems that might also have caused the collapse of consensus. The Doha enterprise had priorities that were no longer aligned with the commercial realities of world markets and that had been by-passed by the political realities of the trading system.
It is important to understand the lessons of the Doha Round’s collapse and not be misled by the hope that extending its processes still further (more ‘Chairman’s’ proposals) will cure its shortcomings. Even if more tweaking could reveal the elusive ‘landing zone’ for consensus, agreement could only resuscitate a feeble and mostly irrelevant result for the sake of closure, rather than for the sake of substantial progress on contemporary trade problems.
Rather than engage in 'shuttle diplomacy', Pascal Lamy should be encouraging WTO governments to reflect on the systemic changes needed before returning to the project of multilateral market liberalization.
Fortunately for Australia, some of the factors that brought Doha to an end favor our market interests and allow us time to undertake the research and the diplomatic work necessary to help re-construct a more effective framework for multilateral trade agreements.
Australian food trade barriers revealed
Wed, Aug 13 2008Data
Trade data
Global issues
Trade framework
WTO
The World Bank's World Trade Indicators (WTI) are a relatively new, but very powerful, way of describing global trade policies and regulations. Their simplified metrics help to reveal the 'big picture' that emerges from a blizzard of trade and tariff data collected by the UN and WTO. Their method is theoretically sound but—as always—has limits and perspectives that need some interpretive care.
The latest (2008) results show world trade barriers continuing to fall rapidly through 2007
Over the last decade, countries have improved many aspects of policy relevant for trade. Worldwide, Most Favored Nation (MFN) average tariffs have fallen from 14.1 percent during 1995–99 to 11.7 percent during 2000–04 and further to 9.4 percent in 2007—a decline of more than 33 percent. In addition, a substantial amount of trade is conducted at a zero MFN tariff rate (MFN-0) or through preferential trade agreements… The most recent estimates indicate that all regions and income groups have witnessed substantial real growth in trade during this time. In 2007, average real growth in trade, 7.7 percent for the world as a whole, is within the 7–9 percent growth range of the last decade.
But one result that surprises is the very high level of revealed non-tariff protection of Australian agriculture.
Farmers unhappy about CSIRO drought ‘alarmism’
Thu, Aug 07 2008Global issues
Climate
In my experience you can count on farmers to sniff out hype. Even before David Stockwell completed his statistical analysis, the NSW Farmers' Association President thought the CSIRO had exaggerated the problem.
"Association president Jock Laurie says while the Climate Report does say ‘exceptionally high temperatures’ are likely to occur frequently, this does not equate to drought. Alarmist reporting has added confusion and pressure to farm families at a time when they can least afford it. 'We have received a number of calls from members who were extremely agitated, confused and upset about the reports of drought every second year in future.' Mr Laurie said." extract from: Stock & Land
CSIRO Drought Model ‘fails’
Wed, Aug 06 2008Global issues
Climate
David Stockwell at Niche Modeling has completed his analysis of the CSIRO's Exceptional Circumstances Drought Report. His conclusion punctures the hyperbole of it's launch.
"In a statistical re-analysis of the data from the Drought Exceptional Circumstances Report, all climate models failed standard internal validation tests for regional droughted area in Australia over the last century. The most worrying failure was that simulations showed increases in droughted area over the last century in all regions, while the observed trends in drought decreased in five of the seven regions identified in the CSIRO/Bureau of Meteorology report. Therefore there is no credible basis for the claims of increasing frequency of Exceptional Circumstances declarations made in the report. " extract from: Niche Modeling
In a model of transparency that CSIRO could do well to follow, David has posted his R programming as well as access to the data sets that he extracted from CSIRO, so those with the skill can reproduce his results.
Designing a carbon tax
Wed, Aug 06 2008Global issues
Climate
Trade framework
"Experts" are struggling for space in the media to peddle designs for a carbon "pollution" reduction tax. Paul Kelly in the Australian newspaper seems to approve a proposal by Geoff Carmody of Access Economics for a consumption tax in place of a cap-tax-equivalent on production of Australian carbon.
"'Australia can only control its consumption of emissions,' he says. 'Attempts to control Australian production are likely to drive it offshore with less stringent or no policy controls over emissions." extract from: The Australian
Carmody's argument, apparently, is that we're better off setting a consumption tax that will hit imports rather than exports and setting the tax rate to achieve only the 'weighted average' of carbon prices in other developed economies.
But will that really help Australia to weather (probably un-necessary, and even unlikely) global emissions controls?
Doha defeated by contrary goals, rear-view mandate
Sat, Aug 02 2008Global issues
Trade framework
WTO
Joseph Francois argues the Doha Round was strangled by an outdated agenda and unworkable principles, including the MFN rule. We're better-off burying our mistakes, he argues, and moving on.
"In a sense, developing countries are collectively asking that food prices go up and down at the same time. The inconsistency reflects divergent interests across the newer, non-OECD members of the WTO. It also highlights the fact that remaining impasses over agriculture are as much an excuse as a cause. The problem is irreconcilable differences in views on trade policy, linked to differences in stages of economic development
…The Doha Development Round was as much distraction as opportunity, with an agenda focused too much on intractable and outdated issues. Negotiations of some form should and will resume. The questions are "where?" and "between whom?" It is important that (developing) WTO Members allow them to take shape in Geneva, even if they do not have an immediate interest in participation, so that the plurilateral agreements that emerge are open to future accession. This means that WTO Members will need to be flexible in defining and allowing scope for sector level negotiations, or negotiations between a subset of Members, in place of an integrated process involving all Members." extract from: VoxEU
Go back? Go forward? Take a powder and lie down?
Fri, Aug 01 2008Global issues
Trade framework
WTO
Well…the third of these is not an option except, possibly, in Europe where dispirited WTO delegates can drift off to the beach for the summer holidays. Simon Evenett—to whose work I've recently refered—is not at the beach, it seems. He has prepared a very timely paper for VoxEU.org on the best way to manage the collapse of the Doha negotiations.
During the Doha Round WTO members strived to wrap together a series of disparate accounts into a Single Undertaking that all would sign up to. In some respects this has been unfortunate as it obscures other often-more-flexible WTO agreements that can advance common goals. So-called critical mass agreements and plurilateral accords could be viable alterna- tives to agreements that require every WTO member to sign on to binding disciplines. A better understanding of the state policies and circumstances where the former approaches are more suitable is certainly worth reflecting on. This is not an easy area but riddling multilateral accords with numerous exceptions for different classes of WTO members, as has been done during the Doha Round, isn't that appealing either. Part of the deliberation exercise could be to determine formula from which a multi-track, yet coherent WTO emerges.
I agree. As I mentioned in my earlier post, Andrew Stoler at the Institute for International Trade and I have already begun a project in collaboration with leading research institutions in Brazil, China, India, and Indonesia to tease-out precisely this option.
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Peter Gallagher is a leading Australian consultant on trade and public policy.[bio].
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Why ‘Bretton Woods’ bis won’t happen
"In fact, the emerging multilateral, multipolar world – long called for by those uncomfortable with American power – shows every sign of being highly dysfunctional." Gideon Rachman at the FT