Wednesday, January 03, 2007

Random Notes toward the Stern Report

by Ken Houghton

Tom has promised to do the heavy lifting, but I just want to put a few notes out for reference:

Two links to Thomas Schelling (the second via a commenter to this post at Bitch)
  1. An article from Foreign Affairs entitled "What Makes Greenhouse Sense?" The de-politicized summary:
    Climate change needs to be addressed. It might take a century to reach a consensus on solving the greenhouse gas problem, but that is no excuse for wasting time getting started.


  2. His The 4th Annual Hans Landsberg Memorial Lecture, entitled Global Warming: Intellectual History and Strategic Choices (warning: video only) First 'graf from the website:
    "Our understanding of the global warming threat and the debate over strategies to mitigate and adapt to it have emerged only within the last three or four decades. We have learned much during these years -- what the science seems to be telling us, what the possibly irreversible risks may be, and what technology and policy options may be available. Still, by historical standards, the insights gleaned over the past 30 to 40 years are insufficient to form a confident basis for crafting future strategies, especially given the complexity of climate change. As practically as possible, flexibility must continue to be a hallmark of global warming mitigation policies.

  3. Reports that China's economic development is virtually offset by the increased cost of its polluting, such as this article from Shanghai Daily (report available here):
    Environmental damage is costing the government roughly 10 percent of the country's gross domestic product, estimated Zhu Guangyao, deputy chief of the State Environmental Protection Agency. China's GDP for 2005 was US$2.26 trillion.

    which leaves the question of what can truly be meant by the phrase "sustainable growth"

  4. Brad DeLong's distinction between "risk" and "uncertainty" at Grasping Reality with Both Hands.
    Alex Tabarrok protests that you should not do expensive and irreversible things before you know what is going on. I think that there is an important distinction to be drawn in decision theory between (a) risk on the one hand, and (b) the interaction of uncertainty and irreversibility on the other.

  5. ADDITION TO ORIGINAL POST: Is it just that our models are not sophisticated enough? This post on Urban Sprawl and Ecosystem Fragmentation from Professor Daniel Czamanski at Technion (blog first discovered via Mark Thoma's post here) suggests as much:
    It is important to note that urban and ecological systems are open, non-linear and self-organizing. Both display discontinuities in space and non-uniformity in time. These characteristics create a methodological challenge and require the use of innovative modeling tools. At the same time, the study of their joint dynamics can provide important insights of numerous interactive phenomena on the urban/non-urban fridge. In particular, a quantitative understanding of urban expansion and related retreat of the natural ecosystems may clarify how the functioning pieces of ecosystems could be preserved within the urban realm.

    Together with a colleague from Tel Aviv University (Itzhak Benenson) and two colleagues form Civil and Environmental Engineering at the Technion (Yohay Carmel and Maxim Shoshany) we are making first steps to develop simulation models that will be capable to generate quantitative understanding of these phenomena.

    and, finally,

  6. a rant I posted at Grasping Reality with Both Hands, in comments to this well-worth-reading post:
    Gary Becker has made a career (a rather nice one at that) arguing that we should concentrate on policies that produce legacies for the next generation, that being the way to create "sustainable growth." (I believe we are all sympathetic to that Great Idea.)

    Sustainable growth is based on many inputs, human capital being one of the primary ones. (If you don't believe me, look at the growth in the U.S. economy against high school graduation rates from ca. 1946-1967).

    To create human capital, we need healthy human beings who are able to be educated (cannot be working [on the farm] all day every day; have to be fed well enough and clothed appropriately enough that they are not ill extended periods of time, or unable to concentrate due to lack of nourishment; are enhancement by proper prenatal care [and therefore parents have access to same] so that they are not born with health issues; are sustained well through their preschool years especially nourishment, clean water, temperature controls to prevent extremes, and protection against diseases that would debilitate [including dysentery] until their bodies have developed basic skeletal and muscular protections; and, finally, economic opportunity.

    It should be intuitive, though many economists either glide over the issue or ignore it completely, that the last of those is only optimal if the preconditions are met.

    So if we were to turn "sustainable growth" into a function, it would look roughly like:

    F(food, clean water, environmental protection [here meaning clothes and the ability to protect from external temperature extremes], medical care, leisure [development] time)

    To the extent that those are suboptimally managed now, the Bequest (legacy) provided, and the amount of Sustainable Growth, is clearly BELOW where it should be.

    Hence, when we declare that future generations will be richer than the current one, we are neglecting that we are LIMITING the extent to which that is true by producing suboptimal human capital.

    Brad DeLong appears to be arguing (see this draft of [his and Konstanin Magin's] paper) that not having direct exposure to the equity markets limits the bequest that is available to the next generation. Surely, limiting it by eschewing current activity on the basis that "future generations will be richer" is no more desirable an outcome.

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