The environment – Page 169 – a sibilant intake of breath

On road pricing

Over the next couple of decades, many people expect road pricing to evolve from its present state – focused on highway tolls and city centre congestion charges – to a model in which all road use is taxed. In such a system, all movement of automobiles would be tracked and taxed on a per-kilometre basis, subject to secondary considerations like vehicle fuel efficiency and level of road congestion. Singapore, London, Oslo, and Dubai have all introduced charges intended to reduce congestion and pollution in their city centres. Expanding such systems to cover all roads would involve some considerable benefits, though there are also problems that would likely arise.

Benefits

National systems of road pricing would have a number of benefits:

The high cost of building and maintaining roads could be more accurately directed at those who use them.
Externalities relating to CO2 emissions from automobile use can likewise be dealt with.
By charging more to drive on congested roads, people can be encouraged to avoid traffic jams. This helps people who need to use the road avoid wasting time. It also saves on the amount of fuel being wasted by hundreds of idling engines.
Some of the funds raised could be directed towards the improvement of public transport options.
The use of more efficient vehicles could be encouraged through variable pricing.
The use of vehicles that do less damage to road surfaces (that is to say, those other than heavy trucks with bad shock absorbing systems) could likewise be encouraged.

The benefits are thus split into two big categories: those concerning a fairer allocation of costs to those benefitting from publicly provided roads, and those serving to internalize the previously ignored social and environmental costs of driving. If one considers the geopolitical costs of oil dependence, the latter looks even more justified than if one concentrates on particulate emissions and climate change only.

Problems

Naturally, there are a number of significant problems associated with such systems. One is equity. Road pricing may impose high burdens upon individuals with low incomes. For instance, those who cannot afford to live near where they work. Solutions to this could include the provision of some set level of free usage, over and above which people start getting charged. Better options include encouraging the development of efficient and popular public transport systems, as well as reduced charges for light and energy efficient vehicles. Zero-emission vehicles (such as electric cars charged on nuclear or renewable power) could likewise be taxed at a lower rate.

More serious are the privacy implications. I think it would be naive to imagine that the tracking information generated by such systems will not be retained by the state and used, for good or ill, without a great deal of public accountability. This is part of the much broader problem of how to manage data control and privacy protection in an age where surveillance is increasingly ubiquitous and data storage is ever cheaper. In recent years, there have been many cases of government employees found using access to such databases in improper ways. Doubtless, the vast majority of such inappropriate use is never discovered. Further to that, there is good reason to believe that access to such databases will be gained by outsiders through flaws in internal security protocols. The creation of systems for oversight would therefore be essential, and it seems wise to have a general policy of deleting stored data after a set amount of time has elapsed, with exceptions granted only through an explicit process of approval subject to external scrutiny.

An appeal for bike subsidies

One suggestion I would make to improve this system would be to include an optional component for cyclists. Those willing to cycle around with a transponder would be credited at a modest rate for distance traveled. This would be in recognition of the non-market advantages of cycling, such as the value of physical fitness as a component in preventative medicine. In 1998, Health Canada estimated the total cost of cardiovascular diseases on the health sector of the Canadian economy to be $18,472.9 million (11.6% of the total cost of all illnesses). Cardiovascular disease is also responsible for 36% of deaths. As such, a subsidy of a few cents a kilometre makes economic sense, as well as potentially generating some good publicity for a system that is likely to be highly unpopular with commuters.

There are also network benefits to be had from increasing the number of cyclists. The emergence of suburbs was made possible by automobiles, at the same time as such urban trends made them increasingly necessary. A more positive version of such feedback effects can be brought about for cycling: as higher numbers justify a more cycle friendly infrastructure which, in turn, encourages more people to cycle. In particular, the creation of designated bike lanes and routes, the provision of cycle parking facilities, and integration of bike carrying capabilities into public transport seem sensible.

Alaskan fishing photos

Here is an interesting series of photos about fishing in Alaska. There are huge waves, giant crabs, and a feisty cat. Having read so much about fisheries in the last few years, it is nice to have some visuals to accompany my thinking. Here are my favourites:

PS. Be advised that a few of the advertisements on the original page may not be work appropriate.

Protecting parks

While it is excellent to have national parks established, the difficulty with making them meaningful lies in the enforcement of rules on entry and activity within the defined territory. Even American national parks are having trouble with poachers. The problem is certain to be more acute in less affluent areas, where the impulse to protect nature is more immediately threatened by poverty. Just 14 rangers patrol the 4,200 square kilometres of the Nouabale-Ndoki national park in Congo. Technology can play a part in park management: from satellite tracking and motion sensors to networks of internet connected metal detectors looking for guns and machetes.

Ultimately, technical fixes will probably not be adequate protection in the most vulnerable areas. The reasons for this are primarily economic. There is more money to be had in exploiting the content of parks than in protecting it, and there is no incentive for local people to refrain from damaging activities and be vigilant in preventing others from doing so. As with climate change, the biggest challenge lies in creating institutional and financial structures that encourage environmentally responsible behaviour. Growing recognition of that among policy-makers and the NGO community may eventually lead to much more effective enforcement mechanisms.

This article discusses the TrailGuard metal detectors in much more detail. They sound very clever, even if they are unlikely to solve any problems in and of themselves.

Fish paper published

After two years of being reworked, assessed, shortened, updated, and assessed again, the eternal fish paper has been published. They didn’t print my acknowledgments, so I shall list them here:

Many thanks to Dr. Ian Townsend-Gault, who has helped a great deal throughout the entire process. In particular, his assistance with the international legal components of the paper is much appreciated. I also want to thank Dr. Daniel Pauly, Dr. Jacqueline Alder, and Dr. Rashid Sumaila of the UBC Fisheries Centre and Sea Around Us Project. They are the ones who helped me find and understand much of the scientific material that supports the paper. Finally, I want to thank the editors of the MIT International Review for their comments, as well as for formatting the final version so nicely. The efforts of Solomon Hsiang are particularly appreciated.

Anyone who wants the version with more than 100 footnotes should email me. Like Foreign Affairs, this journal has a policy of not including them.

Cameron Hepburn on climate economics

Dr. Cameron Hepburn gave an informative presentation in the Merton MCR this evening on the economics of climate change. While it was largely a reflection of the emerging conventional wisdom, it was very professionally done and kept the audience in the packed Merton MCR asking questions right until it became necessary to disband for dinner. Dr. Hepburn, incidentally, is my friend Jennifer Helgeson’s supervisor.

My notes are on the wiki.

PS. When I imagined Oxford before coming here, the kind of rooms I imagined were more like the Merton MCR than most of the places I have actually seen. That probably derives from having my expectations defined by The Golden Compass and The Line of Beauty.

An urban world

In recognition of how half the global population now lives in cities, this week’s issue of The Economist has a survey on urbanization. Much of it makes for fascinating reading. For instance, they allege that the Kibera slum in Nairobi exists more for reasons of corruption than of poverty. The provision of private services and the need for constant bribery make its continued existence profitable, just as the pool of cheap labour it provides plays an important economic role.

As always, they come up with some interesting statistics, as well. Vancouver is ranked as the most livable city in the world, and one is reminded that Tokyo has a larger population than all of Canada. Delhi has the world’s dirtiest air, as measured by particulates, followed by Cairo and Calcutta. More than 70% of all urban dwellers in sub-Saharran Africa live in slums. In Ethiopia, Malawi, and Uganda that figure is over 90%.

The United Nations envisions human population growth as a phenomenon that will eventually slow, leaving the world with a population of about eleven billion. By then, more than 60% of people will be living in cities, dependent upon agricultural productivity elsewhere to be able to sustain themselves. Hopefully, climate change and other ecological phenomena will not make that overly challenging.

Buying compliance?

Unusually, this week’s roster of environment related presentations at Oxford included something on the Stockholm Convention. Specifically, Dr. Veerle Heyvaert from the LSE spoke to the Socio-Legal Dimensions of Environmental Law and Regulation seminar series about ‘buying compliance’ within the Stockholm framework.

The central part of her presentation addressed the relationship between the two major kinds of state involved in Stockholm. Essentially, there are rich developed states that had already sharply restricted or banned most persistent organic pollutants (POPs) covered by Stockholm before negotiations even began. Then, there are developing states that either still used some of the pesticides restricted or produced large amounts of unwanted by-products such as dioxins or furans. The differences between the two are largely centered around ongoing behaviour, financial resources, and institutional capabilities.

Dr. Heyvaert suggested that the major contribution of the rich states is to help pay for the costs of POP abatement in the poor states. She expressed concern that while the latter is seen as binding, the former is somehow seen as voluntary or charitable. While the Stockholm Convention lacks any official mechanism to ensure compliance, it seems more likely that pressure will be put on poor states to stop emitting than on rich states to help pay for it.

Clearly, there are issues of equity involved. From the perspective of international law, however, it seems to me that there is a more fundamental issue at hand. Cases like the Trail Smelter Arbitration of 1937 have helped to make explicit the norm in international customary law that states do not have the right to pollute the territory of their neighbours. As such, states that have already cut back are not in violation, whereas those that continue to emit are. While this may be a neatly expressed legal situation, it doesn’t conform too well with the reality of who can pay and what actions individuals are likely to take. As such, mechanisms such as those in the Stockholm Convention that allow richer states to assist with the costs of cleaning up industrial and agricultural processes in poor states seem to make both equitable and legal sense.

The question is how to apply such arrangements to more demanding cases. Nobody with a choice is going to pump out large volumes of Mirex or Toxaphene. They are among the nastiest chemicals humans have ever dreamed up. As such, there is a limited incentive to free ride on a system that seeks to limit their production and usage, especially when there are effective channels for financial and technical assistance in doing so.

At the base of all this, there is the question of what goes into the equity calculation. You might choose to consider past emissions when deciding who pays what, or you might look only at present practice. You might consider overall wealth or not do so; require states to pay equal amounts, equal percentages of GDP, or use some other formula. What kind of balance you adopt is the stuff of political deal-making, which I suppose is where most international considerations of equity are ultimately addressed in a meaningful way.

The IPCC and the cost of mitigation

The second half of the IPCC’s Fourth Assessment Report has now been released (PDF). Much like the earlier Stern Review, it was intended to assess possibilities for mitigating climate change and the costs associated with them. As with the Stern Review, the conclusion is that the problem can be dealt with at a fairly modest cost. Certainly, the sums in question are much smaller than the costs that would arise if the worst possible consequences of global warming were realized: from large-scale migration, to problems with C3 crops, to widespread agricultural failures (see this article on the ongoing Australian drought). The Economist is calling it “a bargain.”

That the Stern findings and those of the IPCC broadly agree is not at all surprising. After all, the Stern Review was based almost entirely upon the scientific conclusions of previous IPCC reports. Even so, such agreement can only help to foster increased political consensus, both within and between states, that climate change should be and can be dealt with. More than ever, it seems as though we are witnessing the start of a serious progression towards a low-carbon society.

Dealing the the problem of climate change will require unprecedented foresight and cooperation. As such, it is not unreasonable to think that the emergence of the kind of international regime that would be necessary to address it will foster cooperation in other areas. Something like global fisheries management does not have the same level of importance as addressing climate change, but the tools that will need to be developed to sort out the latter may advance our ability to behave more appropriately in relation to the former.

Nash equilibria and the environment

While A Beautiful Mind had a good deal to recommend it as a film, the explanation of the Nash Equilibrium that was included leaves a good bit to be desired. The film explained that in a situation with multiple players, a most desirable objective, and many less desirable objectives, it is rational for each player to pursue the less desirable goals. This is because everyone going after the same thing will probably lead to nobody getting it. The strategy of pursuing the less desirable but more plentiful option therefore maximizes the chances of getting some level of payoff, even though it may not be the highest payoff possible in the game.

The essential characteristic of the Nash Equilibrium is similar to that of Pareto Optimality. Basically, both describe situations in which players do not want to change their behaviours unilaterally. Pareto optimality can be most easily be explained by considering a large group of people with items to trade voluntarily. Eventually, they will trade to the point where no more voluntary exchanges will occur. The arrangement may not generate the maximum possible level of utility that could be achieved with the goods in question; for instance, a person with a large stock of insulin would not transfer any to a diabetic who had nothing to trade for it.¹ In a Nash Equilibrium, no player would want to change the strategy they are employing, given that no other players are going to change their own strategies. For the equilibrium to exist, this must be true independently from any information they might receive about the strategies of the other players. For instance, learning that other players have certain thresholds beyond which they will behave quite differently might provide an incentive for any one player to alter their strategy.

While Pareto Optimality is mostly a thought experiment, the Nash Equilibrium is directly applicable to many situations in which there are problems of coordination. For example, it can be applied to climate change policy. Assuming that the policy of each state is set independently, there is no incentive for a single state to unilaterally cap emissions. The effect of one country doing so would be small, while the cost in that country would be high. Hence, inaction is a Nash Equilibrium. It is only through the development of a system that changes the strategies of many actors that a low-carbon outcome can be achieved.

The absence of a Nash Equilibrium can also be problematic, when addressing environmental problems. Imagine a conservation regime based around an international ban on the sale of tiger products. From the perspective of any one state, there is an incentive to violate the ban, provided everyone else will maintain their strategy of conservation. The lack of a Nash Equilibrium threatens to make the regime unstable.

While elements can be built directly into such games to encourage cooperation and discourage defection, they always seem likely to encounter these two kinds of problem. As such, it may be that the only way to establish stable environmental regimes that require sacrifice for the common good is to embed them in a larger super-game. Here, defection on one issue threatens the ability of the defecting state to achieve its aims in other areas. States that continue to emit large amounts of greenhouse gas or who undermine conservation regimes might find themselves unable to enter preferential trade arrangements and the like. In a general way, the perception of a state as being a responsible or irresponsible member of the international community imposes some such pressure. To do so more formally requires the prioritization of environmental issues by all governments involved, as well as a certain strength of will in following up such threats. Despite that, it seems more plausible that such a combined approach could yield desirable outcomes, as opposed to one that focuses on narrow issue areas.

[1] This assumes that the participants derive utility only from the objects being traded, and not from higher order phenomena such as the perception that the distribution that exists is desirable or fair. Agents that place some value upon the happiness of the other agents might generate outcomes quite different from the kind envisioned in neoclassical economics.

Wadham climate change discussion

Today’s Wadham Research Forum on climate change was very interesting, despite how all the ideas expressed were fairly familiar. The extent to which the points highlighted are the same as those in my thesis is both encouraging and dispiriting. It suggests that I have not missed the mark completely, but also that I may not have contributed anything terrible novel. Of course, there is a good chance that the key issues to be considered are obvious enough, and that it is the approaches taken that generate the value of a particular assessment.