25 November 2013

The Most Important Question Facing the American Economy

The WSJ today interviews Larry Summers who makes a case for why policy makers should be focusing more attention on growth policy rather than deficits:
We've had 10 bipartisan budget processes. We've had zero bipartisan growth processes. We've had budget summits up the yin-yang. We've had no growth summits. We have gotten the idea that addressing the deficit is the defining challenge facing the country. . .

. . . if you take the longest-run deficit and take the official forecasts, if we increase the growth rate by two-tenths of 1%, you solve the entire identified fiscal-gap problem.

If we get the growth rate up, the debt problem will stay in control. If we continue to be a country that doesn't increase the fraction of adults that are working, that doesn't catch up with its GDP potential, that grows at 2% or less, we can have all the entitlement summits in the world, and we're gradually going to accumulate debt and have a serious debt problem.

We should be focusing on growth. Growth creates a virtuous circle, which creates more growth.

In a growing economy, employers work harder to train the next generation of workers. In a growing economy, there are more ladders for kids to get on, which puts them in a better position to lead 10 years down the road.
It is an argument that Summers has been making for a while:
[T]he national debt is an asset that we owe ourselves. To the extent that it is not an asset that we owe ourselves, it represents borrowing that we, as a country, have an opportunity to invest in growing our economy and borrowing, actually, at a remarkably low interest rate. And so if we can invest that money well, we can actually generate large returns that can provide the wherewithal to pay the debt back.

Are we devoting too much to uncontrollable mandatory and entitlement programs relative to the discretionary programs - like the national parks, like the FBI, like basic cancer research - that have to be appropriated every year? Yes, we are. So I don't want to be heard as saying that we have no budget issues; far from it. The point I want to stress is that the most important question facing the American economy is, can we accelerate the growth rate?
One reason that politicians shy away from addressing this question explicitly is that they know, in principle, what sorts of actions lead to reducing deficits and debt -- governments should spend less. Such actions have a short-term, demonstrable effect and are also politically popular in an era where government is decidedly not popular.

In contrast, the actions that policy makers might take to increase long-term growth rates by 0.2% do not have a clear consensus among economists and also have a far more tenuous causal connection to outcomes, especially on sort-term, political time scales.  There is also the problem that one commonly recommended set of actions to boost long-term growth -- more investment by governments -- would actually require more government spending, and a likely increase deficits in the short term, presenting a political problem.

Writing in the FT, Martin Wolf explains:
[A]nother possibility, discussed by Mr Summers and supported by many economists (including myself), is to use today’s glut of savings to finance a surge in public investment. That might be partly linked to a shift to lower-carbon growth. Another possibility is to facilitate capital flows to emerging and developing countries, where the best investment opportunities must lie. It makes no sense for so much of the world’s savings to seek investment opportunities where they do not apparently exist and shy away from places where, one hopes, they do.

The underlying argument that more has happened to high-income economies than just a financial crisis is persuasive. It is also hard to believe that a surge in business investment in these countries would manage to absorb the excess desired savings of the world. Why, after all, should one expect any such thing to happen in countries with ageing populations, high wages and sluggish economies? But these countries do then confront a challenge far bigger than the damage done by the crisis alone, big though that is. They may face a far longer-term future of weak demand and enfeebled supply.

The best response, then, is measures aimed at raising productive private and public investment. Yes, mistakes will be made. But it will be better to risk mistakes than accept the costs of an impoverished future.
The political question focused narrowly on debt gets reduced to the content-free issue of more or less spending. It is important to emphasize, as Wolf does, that any significant program of government investment will have its share of mistakes (Obamacare rollout, Solyndra etc.). However, such mistakes are not a case for not making investments, they are a case for making investments smarter.

Of course, if governments don't invest there will be no such mistakes. There will also be much lower long-term growth as well -- a cut-off-your-nose-to-spite-your-face argument if there ever was one. Given the long-term history of government investments in stimulating growth, those who argue against such investments going forward must also present an alternative explanation for how economic growth will increase going forward. A debt policy is not a growth policy.

As Summers argues, the most important question to ask and answer is: What can be done to accelerate the growth rate?  The answer is politically inconvenient, because a big part of it involves smart government investments and policies, which in today's political environment is not a topic that gets much serious attention. It should.

22 November 2013

Graphs of the Day: Major US Hurricane Drought Continues

Data here.

The US good luck with respect to hurricane landfalls -- yes, good luck -- continues. The graph below shows total US hurricane landfalls 1900 through 2013.
The five-year period ending 2013 has seen 2 hurricane landfalls. That is a record low since 1900. Two other five-year periods have seen 3 landfalls (years ending in 1984 and 1994). Prior to 1970 the fewest landfalls over a five-year period was 6. From 1940 to 1957, every 5-year period had more than 10 hurricane landfalls (1904-1920 was almost as active).

The red line in the graph above shows a decrease in the number of US landfalls of more than 25% since (which given variability, may just be an artifact and not reflecting a secular change). There is no evidence to support more or more intense US hurricanes. The data actually suggests much the opposite.

If you are interested in a global perspective, Ryan Maue keeps excellent data. Here is his latest graph on global ACE (accumulated cyclone energy, an overall measure of storm intensity).
To date 2013 is at 73% of the global average and the North Atlantic is at 30%. We'll post up our updated data for global landfalls through 2013 before the end of the calendar year.

20 November 2013

A Fork in the Road

At Guardian Political Science I have a piece up on the stark difference between the conclusions of the IPCC on extreme events and the views being expressed by many climate campaigners, some very prominent.  For those who follow these issues, there will be nothing new or interesting in the piece. The data shows what it shows.

A feeble response to my piece by the Guardian's in-house climate blogger invokes the Google-based research of Chris Mooney, confuses trends and projections yet still grants the central point of my argument: "that the data aren't good enough to confidently link rising hurricane intensity to human greenhouse gas emissions so far doesn't mean there isn't a link ... It's not so much the climate change we've seen so far that we're worried about." Exactly (emphasis added).

More significantly, the issue of attribution of the costs of present extreme events to historical greenhouse gas emissions threatens to collapse the entire climate negotiations. As I write in my piece linked above, the demands from poor countries are a direct result of rich-world leaders asserting their nation's responsibilities for those damages. Connie Hedegaard, EU climate commissioner, opened the climate conference last week making a non-too-veiled association of Typhoon Haiyan with emissions. Now she says: "We cannot have a system where we have automatic compensation when severe events happen around the world."

But why not? If the rich world is indeed causing climate disasters via its emissions, then of course it should being paying compensation to poor nations victimized by those actions. At present, the state of climate science doesn't presently support such claims as a matter of causality (don't take my word for it, read the IPCC).  Climate campaigners will have to decide which way to go, as they can't have it both ways.

18 November 2013

Japan's New Emissions Targets

A government panel on measures to tackle climate change approved on Friday a new goal to reduce the nation’s greenhouse gas emissions by 3.8 percent by 2020 from the 2005 level. . .

Prime Minister Shinzo Abe said he is sure that Japan can substantially contribute to global efforts to tackle climate change. The government will steadily implement necessary measures to achieve the new emissions reduction target, he said.

The new goal means a setback from the target of reducing emissions by 25 percent from 1990 by 2020, which was set in 2009 by the administration led by the Democratic Party of Japan. The DPJ is now an opposition party.
In a 2009 paper I explained why Japan's proposed emissions targets were unrealistic and would almost certainly not be met (paper here, open access, note a figure correction here).

The graph at the top of this page shows the implications of Japan's new emissions reduction target (3.8% below 2005 levels) in terms of implied carbon-free energy. The graph considers only carbon dioxide and is based on an assume of no change in demand from 2012 to 2020.

The graph shows a few things worth pointing out (data from BP 2013):
  • In 2010, prior to the Fukushima nuclear disaster, Japan got 18.5% of its total energy consumption from carbon-free sources. In 2012, it was 6.4%.
  •  Post-Fukushima the nuclear shutdown has lead to energy consumption being replaced by fossil fuel (95% - coal, gas, petroleum) with wind and solar contributing 1.5%. 2012 consumption is the same as it was in 2009.
  • To meet its new emissions reduction target (in terms of carbon dioxide) Japan will need to increase its proportion of carbon-free energy from 6.4% in 2012 to 9.1% in 2020, assuming no increase in energy consumption.
  • Japan can hit its 2020 target by restarting 9 of its 50 shut nuclear power plants (again, assuming no new increase in demand), replacing an equivalent amount of coal.
  • Setting aside technical, political, social and other considerations, Japan would need to increase wind and solar by ~720% from 2012 levels by 2020 (replacing equivalent coal) to meet the emissions target.
The new emissions target is perhaps the clearest indication yet that Japan's government, despite being pro-nuclear, does not see a return to the levels of nuclear power that existed prior to Fukushima. The Japanese government has said as much:
Japan’s environment minister, Nobuteru Ishihara, said that the new target “does not consider the possible effect of nuclear power plants reducing emissions” and that Japan “would set a more definite target” once it settled on what sources of energy it would use in the future.
The Japanese government appears to have read The Climate Fix;-)
"We're down to zero nuclear; anyone doing the math will find that target impossible now," AFP reported Ishihara saying in Tokyo after announcing the new target. The original goal was "unrealistic in the first place," he said. "The current government seeks economic growth while doing our best to meet emissions targets."
Japan is back to "mamizu" climate policy.

No THB2 ... At Least for Now

Not long ago I mentioned on this blog I that I had set to work on an 2nd edition of The Honest Broker, my 2007 book with Cambridge University Press After a lot of work and thought I've decided at this point not to press forward with it, for two reasons.

One is that after going through the first five chapters I made a few revisions, but mostly very small and very nuanced. I actually really like these chapters as they are. The second is that getting into further details on each of the four ideal types (well, five) means ... getting into the details.  I have a lot of interesting material on science advisory processes, but it is wonky and technical. These issues are important, and I will be writing on them, but first in the academic literature. One of the things that people seem to like about THB is that it is short and accessible. So I am taking the approach that if it is not broken, don't fix it.

Will the be a THB2? Probably down the road, but more likely as a sequel than as a second edition. So readers are stuck with The Skeptical Environmentalist and the Iraq war as the major case studies. For today's students that is ancient history. Fortunately, new cases arise where science meets politics almost daily.

Thanks to all the readers and colleagues who wrote in with comments and advice!

12 November 2013

Are Typhoon Disasters Getting More Common?

This morning I have been engaged in a Twitter debate with Jeff Sachs, of Columbia Earth Institute, motivated by his tweet as follows.
The reference is to a paper by Elsner et al. (2008) in Nature which shows an increase in the strongest tropical cyclones in some basins over the sub-climate time period of 1981-2005. Unfortunately for Sachs that paper does not show trends significant at the >90% level for the strongest cyclones in the western North Pacific basin (the world's most active and where Haiyan occurred). The lesson here is that if you are going to pick cherries, make sure that the fruit is not a lemon.

Fortunately, there is a more relevant study (Weinkle et al. 2012, here in PDF) which looks specifically at landfalls in the western North Pacific basin. Landfalls are of course what cause disasters. The data from that paper for the major landfalling tropical cyclones (i.e., Category 3+) is shown at the top of this post. The trend line is added by Excel, and shows a decline. However, the western North Pacific basin has been shown to exhibit very large variability, so I wouldn't put much weight into any claims of trends up or down (but don't believe me, check IPCC). That said, recent research has looked at the recent decline in activity in that basin.

Given this data, substantial research on it and a strong IPCC consensus does anyone really want to debate that typhoon disasters have become more common? If so, my comments are open to you.

11 November 2013

Deeply Conflicted About Weather Extremes

Last week I gave a talk on how the IPCC has treated the issue of extreme weather events over the years. I concluded that despite some very positive signs that the community is reclaiming scientific integrity on this issue (see IPCC SREX and AR5), some part of the community -- especially visible leaders -- remain deeply conflicted. Following my talk a few colleagues asked me for evidence of that deep conflict. Here is a good one.

Have a look at the picture above (courtesy @JPvanYpersele on Twitter) of IPCC Chairman Rajendra Pachauri presenting the findings of AR5 and SREX to COP19 delegates earlier today in Poland at this year's big UN FCCC climate confab.

For those curious, here is what the IPCC AR5 actually reported (here in PDF) on tropical cyclones (of the sort emerging from the smokestack in the image from Al Gore's movie shown above in Pachauri's slide):
"Current datasets indicate no significant observed trends in global tropical cyclone frequency over the past century … No robust trends in annual numbers of tropical storms, hurricanes and major hurricanes counts have been identified over the past 100 years in the North Atlantic basin... In summary, this assessment does not revise the SREX conclusion of low confidence that any reported long-term (centennial) increases in tropical cyclone activity are robust, after accounting for past changes in observing capabilities"
Does the image chosen as the top line representation reflect the science reported by the IPCC? You be the judge. It is never too late for climate scientists to start demanding greater scientific integrity from the public faces of their community. Silence speaks loudly too.

07 November 2013

Responses to Bazilian and Pielke on Global Energy Access

Issues in Science and Technology has just published in its Fall 2013 issue four letters in response to our article, Making Energy Access Meaningful (here in PDF). Three of the responses are constructive, one is somewhat less so. This post offers a summary of our original paper, the letters and a few thoughts in response.

In a nutshell here is what our paper argued:
Our distinctly uncomfortable starting place is that the poorest three-quarters of the global population still use only about 10% of global energy—a clear indicator of deep and persistent global inequity. Because a modern energy supply is foundational for economic development, the international development and diplomatic community has rightly placed the provision of modern energy services at the center of international
attention focused on a combined agenda of poverty eradication and sustainable development. This priority has been expressed primarily in the launching of the UN Sustainable Energy for All initiative (SE4All). Still, areas of tension and conflict in such an agenda demand further attention, particularly in relation to climate change, as we discuss later in this essay.

Compounding the difficulty of decisionmaking in such a complex space is that the concept of “energy access” is often defined in terms that are unacceptably modest. Discussions about energy and poverty commonly assume that the roughly two to three billion people who presently lack modern energy services will only demand or consume them in small amounts over the next several decades. This assumption leads to projections of future energy consumption that are not only potentially far too low but therefore imply, even if unintentionally, that those billions will remain deeply impoverished. Such limited ambition risks becoming self-fulfilling, because the way we view the scale of the challenge will strongly influence the types of policies, technologies, levels of investment, and investment vehicles that analysts and policymakers consider to be appropriate.
A first letter in response comes from  S. Vijay Iyer, Director of the Sustainable Energy Department at The World Bank. Iyer writes to further explain the five-tier definition of energy access used by the World Bank and its partners. He also raises the importance of political considerations:
I share the sense of justice that animates the authors’ contention that an electricity access goal of modest ambition would reflect a “poverty management” over a “development” approach. But their contention is misplaced. The level of ambition for SE4ALL goals in each country needs to be defined by governments, in consultation with civil society, entrepreneurs, developmental agencies, and the public. The GTF’s multi-tier framework for access seeks to facilitate this process so that each country can define its own electricity access targets.

The chasm between high ambition and unfeasible goals must be filled by pragmatically designed intermediate steps.
I think that it is safe to conclude that we'd agree with all of this, especially the need to recognize the practical dimensions of political realities. That said, we'd also argue that the "high ambition" part is non-negotiable as a valued outcome, regardless of the practical challenges of the day.
A second letter comes from Reid Detchon, Vice President, Energy and Climate for the United Nations Foundation. Detchon writes to place the high (estimated) costs of securing true, global energy access into a bit more context:
Morgan Bazilian and Roger Pielke Jr. get the essential point right: that meaningful access to modern energy services must go beyond lighting to other productive uses, such as water pumping for irrigation. Like many observers, however, they seem daunted by the scale of investment required, which they estimate at $1 trillion to achieve a minimal level of energy access and 17 times more to reach a level comparable to that in South Africa or Bulgaria.

Those numbers are very large compared to the amount that might plausibly be available through conventional development assistance, but that is the wrong lens to use. Electricity is a commodity that even very poor people are willing to pay for. Indeed, they are already paying more than $37 billion a year for dirty, expensive fuels (kerosene for lighting and biomass for cooking), according to an International Finance Corp. report. With the right financing, solar energy in rural areas is cheaper than these sources or diesel fuel for generators. The availability of energy is a spur to economic development that can quickly become self-sustaining.
To that -- thanks and amen.
A third letter comes from Dan Kammen, a professor at the University of California-Berkeley, writes to highlight the importance of micro-grids:
The central message of the paper by Morgan Bazilian and Roger Pielke Jr., at least to me, is to highlight the explosion of demand and the diverse modes of energy consumption that are possible and should be anticipated as energy access (and in particular electricity access) is expanded. This is an important observation that ties together many stories: (1) the value of energy access for both basic services and economically productive activities; (2) the need to analyze and to plan around unmet demand, so that a small taste of energy services does not lead to unrealized expectations and then dissatisfaction; (3) the complexity of building and planning an energy system capable of providing services reliably once the “access switch” has been turned on. . .

What is unresolved, and where readers of Bazilian and Pielke’s paper need to keep a watchful and innovative eye, is on the tools that energy planners use to build adaptive energy networks. Although “simply” plugging into the grid may be the ideal (or in the past has been the aspirational goal), the record of the past decades is that this has not been technically, economically, or politically easy. National grids have not expanded effectively in many nations, in terms of coverage or service reliability or cost, so new models are needed.
Kammen's comments are welcomed. One of the points of our paper was to highlight the importance of holding further debate and discussion about what it might take to actually secure true, global energy access. The role of grid technology in meeting that challenge is crucially important.
The fourth letter comes form Alan Miller, Principal Climate Change Specialist at the International Finance Corporation. This letter betrays more than it says, though what it says is revealing enough. Miller writes:
Morgan Bazilian and Roger Pielke Jr. provide a valid long-term perspective on the energy needs of the developing world, but the critical question is what practical difference does it make to think in the more ambitious, longer term way that they propose? We don’t do that for any of the other United Nations Millennium Development Goals such as those for health, education, and water. Why, then, should we do so for energy? What investment choices or policies would we approach differently?
I'd respectfully disagree with Miller about the presence of long-term thinking in many areas of policy, most notably of course his own area of specialty, climate change. Miller also brings out the old trope about how understanding the magnitude of a problem may work against effective action, so therefore we should perhaps remain ignorant:
[T]heir effort to emphasize the enormity of the long-term challenge could make the task seem so daunting that it will discourage the development agencies from taking the smaller steps that must be taken now to put the developing nations on the path that will ultimately lead to an adequate energy supply. Thinking about the trillions of dollars that will be needed over many decades rather than the billions of dollars that can make a difference now could be paralyzing. . . is there any point in worrying about what it will cost to provide everyone with an electric stove?
As a policy scholar, I teach my students that understanding the magnitude of the policy challenge being faced is an important first step toward designing both short- and long-term policies that can be effective. Ignorance, especially willful, is never a good idea. More generally, Miller risks reinforcing the all-too-real stereotype of the climate activist who cares deeply about counting carbon molecules, but not about counting up what energy access for real people may imply for the future. Climate policies won't succeed unless achieving true, global energy access is central, but that is another discussion.

We thank all four letter writers for taking the time to engage with our piece!

05 November 2013

JRC Guidelines for Scientific Integrity

A few weeks ago I had the pleasure of attending an excellent workshop on connecting science and policy at the Joint Research Centre (JRC) of the European Commission. There a colleague shared with me the JRC's guidelines for integrity in scientific support activities -- "Robust Science for Policy Making: A guideline towards integrity and veracity in scientific support and advice."

The document offers an excellent statement of values and principles which underlie the JRC's mission to serve and an "in-house science service" to the European Commission. The document is not otherwise available online, and with permission, I share it here in PDF.

If you or your organization is in the business of providing scientific advice to policy makers, how does your organization's position on scientific integrity stack up?

McAneney on Australian Bushfires

Over at The Conversation, John McAneney of Risk Frontiers, Macquarie University, has an eminently sensible article on Australian bushfires and climate change.  He shows the figure above which updates through present the time series of "normalized building damage" from bushfires which we first presented in this paper (Crompton et al. 2010).

Here is an excerpt from his piece:
There’s no trend in the graph. Bushfire losses can therefore be explained by the increasing exposure of dwellings to fire-prone bushlands. No other influences need be invoked. So even if climate change had played some small role in modulating recent bushfires, and we cannot rule this out, any such effects on risk to property are clearly swamped by the changes in exposure.
The result is unsurprising given that it has been a consistent conclusion from many other studies in different countries and across many different hazards, in fact some 30-odd different peer-reviewed studies to date. And the IPCC (2012) underscored this conclusion. . . 
Some would like to see these latest fires as the climate change tipping point, the harbinger of things to come. But extraordinary claims demand, as they say, extraordinary proof and from the evidence available, this does not seem to be here yet.

Perhaps one day we will have conclusive evidence of a link between climate change and bushfire losses, but even then the suite of policy actions that make sense will continue to focus on land use planning, not emissions reduction, for which there are better arguments for action than bushfires.

We need to get serious about land-use planning. It is not a very sexy topic, it may not constitute the “great moral … challenge of our time”, but reducing our vulnerability to natural disasters is important and stands to benefit all Australians, directly or indirectly, now. Regardless of what you might think about climate change.
Do read the whole thing, it is a smart piece.