"Economists, time to team up with the ecologists!"

A very fine title for a paper and this one is newly published in Ecological Economics.

The abstract seems to be blaming economists for a lack of interdisciplinary work. Economists get accused of this from virtually every discipline from what I can make out.

I am all for such joint work. Apparently ... "the easiest candidates for interdisciplinary teamwork in bioeconomics are therefore researchers who acknowledge ethical relativism."

I am not sure if I qualify or not but it sounds like I should acknowledge it.

For those less familiar with what ethical relativism actually is Answers.com and dictionary.com write as follows:

Ethical Relativism is operating in a system of situational ethics. Thou shalt not steal, unless you get a chance to steal from a big corporation, the government or someone you don't like. You are faithful to your wife, except on business trips, when everybody cheats, right? Basically, it means being comfortable with shifting your ethics to meet the situation. I try to maintain my ethics in all situations, however though I believe in thou shalt not kill, ants, flies and roaches die if I find them in my house and if you break into my home and come up the stairs, you are a direct threat to my family's safety and I will blow you away with little to no warning. But since I know these are my ethics, family before thief, I do not consider that a case of situational ethics.
Also see "moral relativism".

or

In ethics, the belief that nothing is objectively right or wrong and that the definition of right or wrong depends on the prevailing view of a particular individual, culture, or historical period.

Do economists as a general rule reject ethical relativism? My guess is that we would be all for it. Sounds good to me.


Economists, time to team up with the ecologists!

Hilde Karine Wam

Department of Ecology and Natural Resource Management, Norwegian University of Life Sciences, Box 5003, 1432 Ås, Norway

Abstract

Bioeconomic modeling is an increasingly relevant meeting arena for economists and ecologists. A majority of the growing literature, however, is written by economists alone and not with ecologists in true interdisciplinary teamwork. Physical distance between research institutions is no longer a reasonable justification, and I argue that, in practice, neither do the more fundamental philosophical oppositions present any real hindrance to teamwork. I summarize these oppositions in order of increasing magnitude as: 1) the axiom, held by many ecologists, of ‘irreducible complexity of ecosystem functioning’, which is avoided simply because the ecological ‘whole’ (as opposed to its ‘parts’) is not an element of most realistic modeling scenarios; 2) the axiom, also held by many ecologists, of ‘the precautionary principle’, which mainly surfaces at the applied end of natural resource management, and thereby should not prevent economists and ecologists from jointly building the models necessary for the final decision making; and 3) the economists' axiom of ‘the tradability principle’, which is harder to overcome as it demands value-based practical compromises from both parties. Even this may be solved, however, provided the economists accept non-marketable components in the model (e.g. by using restriction terms based on ecology), and the ecologists accept a final model output measured in terms of monetary value. The easiest candidates for interdisciplinary teamwork in bioeconomics are therefore researchers who acknowledge ethical relativism. As bioeconomics presently functions mainly as an arena for economists, I say the responsibility for initiating interdisciplinary teamwork rests most heavily on their shoulders.

Keywords: Ecological economics; Intrinsic; Nature; Management; Philosophy; Wildlife

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"Aquifer economics" - deep waters drying up

An economist article allows me to use the term "aquifer economics". I am always on the look out for new varieties of "economics" and this could be a big one.

From a teaching perspective this is yet another good "tragedy of the commons" story especially when aquifers cross national boundaries.

Deep waters, slowly drying up [Economist]

CLEMENT weather and plentiful water mean that Punjab produces an eighth of India’s total food grains. But the water table has dropped by ten metres since 1973 and the rate of decline is accelerating on both the Indian and the Pakistani sides of the region. It is a similar story for the north-western Sahara aquifer system (NWSAS), shared by Algeria, Tunisia and Libya. Withdrawals increased ninefold between 1950 and 2008. Springs are drying up and soil salinity has increased.

Such depletion of aquifers is a classic tragedy of the commons. Farmers pump, oblivious of others’ actions or the impact of their own. Scarcity stokes this rather than braking it. Worse, much abstracted water is used in inefficient irrigation; compounding that, underpricing means it is often used for watering low-value crops. Powerful farming lobbies have little interest in changing the status quo.

Aquifers, like fish stocks, are most at risk when they cross national borders, making property rights weaker. Groundwater provides about a fifth of the planet’s water needs and half its drinking water. In arid countries such as Libya or Saudi Arabia, that figure is close to 100%. Almost 96% of the planet’s freshwater resources are stored as groundwater, half of which straddles borders. UNESCO, a United Nations body, estimates that 273 aquifers are shared by two or more countries.

The signing this summer of a treaty between Brazil, Argentina, Uruguay and Paraguay to protect the Guarani aquifer, after a six-year study of the region’s underwater resources, has thus come as a nice surprise. It may even be a trend. Mali, Niger and Nigeria are due to sign a provisional deal early next year to set up a body to run the Iullemeden aquifer, where withdrawals have exceeded recharge ever since 1995, endangering the Niger river in the dry season.

The two deals follow a UN resolution in 2008 on creating a legal regime for aquifers (it may become a full convention next year). Lifting sanctions on Libya has had an effect, too. The Libyans say they may stop growing wheat using water from the NWSAS and the Nubian sandstone aquifer system, the world’s largest fossil aquifer, which they share with Egypt, Chad and Sudan. An agreement in 1992 set up a body to run this but it has stayed largely dormant. Now sampling and monitoring have resumed, under the aegis of the International Atomic Energy Agency (which has a sideline in environmental monitoring).

Such scientific work is crucial because aquifers are still poorly understood. Until a UNESCO inventory in 2008, nobody knew even how many transboundary aquifers existed. Experts are still refining the count: the American-Mexico border may include 8, 10, 18 or 20 aquifers, depending on how you measure them. Defining sustainability vexes hydrologists too, particularly with ancient fossil aquifers that will inevitably run dry eventually. Estimates for the life of the Nubian sandstone aquifer range from a century to a millennium.

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Is the US really a "mythic pig preening itself"?

As the insults fly over climate change the Chinese hit well below the belt with the insult to the US likening the US criticisms of China to "a mythic pig preening itself."

It is hard to believe that the Chinese would have to resort to such aggressive language.

Just in case there are any readers are still a little perplexed or indeed would like to know more about the mythical pig please read on.

Zhu Bajie

Su likened the U.S. criticism to Zhubajie, a pig in a classic Chinese novel, which in a traditional saying preens itself in a mirror.

"It has no measures or actions to show for itself, and instead it criticizes China, which is actively taking measures and actions," Su said of the United States.

UK readers of a certain age may well remember the always excellent TV programme "Monkey" where the mythical pig appears regularly.

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"Reality used to be a friend of mine"

I have often thought that the relationship between academic economics and reality can appear tenuous not least when I am in sitting through another hard core theoretical economics seminar and the 23rd slide of complicated looking equations appears on the screen.

On a more trivial level I have always wanted to use "reality used to be a friend of mine" as a blog post title although I forget where this quote comes from now.

Harald Uhlig (Chicago) takes a look at this relationship in a non-technical way (phew). He looks at important issues not least whether economics is a "science" or an "art".

Economics and Reality

Harald Uhlig
University of Chicago - Department of Economics

September 2010

NBER Working Paper No. w16416

Abstract:
This paper is a non-technical and somewhat philosophical essay, that seeks to investigate the relationship between economics and reality. More precisely, it asks how reality in the form empirical evidence does or does not influence economic thinking and theory. In particular, which role do calibration, statistical inference, and structural change play? What is the current state of affairs, what are the successes and failures, what are the challenges? I shall tackle these questions moving from general to specific. For the general perspective, I examine the following four points of view. First, economics is a science. Second, economics is an art. Third, economics is a competition. Forth, economics politics. I then examine four specific cases for illustration and debate. First, is there a Phillips curve? Second, are prices sticky? Third, does contractionary monetary policy lead to a contraction in output? Forth, what causes business cycles? The general points as well as the specific cases each have their own implication for the central question at hand. Armed with this list of implications, I shall then attempt to draw a summary conclusion and provide an overall answer.

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New Book: "Foreign Firms, Investment, and Environmental Regulation in the People's Republic of China"

From the inbox:

An interesting new book has just been released by Phillip Stalley (Assistant Professor of Political Science at DePaul University in Chicago) looking at environmental regulations and industry location in China.

Without knowing the content I am unable to provide a full review but it should link in with a number of my recent papers looking at China and the environment. In my opinion China is where all the action is. I look forward to reading this book.















Some of my recent papers in this area include:

Cole, M.A., Elliott, R.J.R. and Zhang, J. (forthcoming). Growth, FDI and the Environment: Evidence from Chinese Cities. Journal of Regional Science.

Cole, M., Elliott, R.J.R. and Zhang, J. (2009), Corruption, Governance and FDI Location in China: A Province-level Analysis, Journal of Development Studies, Vol. 45, 9, 1494-1513.

Cole, M.A., Elliott, R.J.R. and Wu, S. (2008), Industrial Activity and the Environment in China: An Industry Level Analysis, China Economic Review, Vol. 19, 3, pp.393-408

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Trade, Environmental Regulations and Industrial Mobility

Here is a recent working paper from the nep-env working paper series. This just happens to one of my recent papers. Regulations matter for location.

The paper is forthcoming is the esteemed "Ecological Economics" (August 2010).

Trade, Environmental Regulations and Industrial Mobility:
An Industry-Level Study of Japan

Matthew A. Cole, Robert J.R. Elliott and Toshihiro Okubo

1 Department of Economics, University of Birmingham, UK
2 Research Institute for Economics and Business Administration, University of Kobe, Japan

Abstract
This paper contributes to the small but growing body of literature which tries to explain why, despite the predictions of some theoretical studies, empirical support for the pollution haven hypothesis remains limited. We break from the previous literature, which tends to concentrate on US trade patterns, and focus on Japan. In common with Ederington et al.’s (2005) US study, we show that pollution haven effects are stronger and more discernible when trade occurs with developing countries, in industries with the greatest environmental costs and when the geographical immobility of an industry is accounted for. We also go one step further and show that our findings relate not only to environmental regulations but also to industrial regulations more generally.

JEL: F18, L51, L60, Q56, R3
Keywords: Environmental regulations, trade, agglomeration, immobility, industry

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US -China Tianjin face off over climate change

Tianjin is a city I know well after a recent visit to Nankai University. It is a good venue for climate change talks especially given the air quality in Tianjin which was something to behold.

Let us hope that delegates can find the venue for the talks.

I gave a talk to future Chinese leaders on trade, development and climate change recently and it is very clear that whilst China is fully aware of its obligations to tackle climate change it still sees the onus being on developed countries to take the lead.

The 80:20 rule would satisfy the Chinese in my view. It will be difficult to move them off this percentage. The West may need to face up to that fact and just get on with making the 80%. To expect anything different would be foolish and waste everyone time (yet again). The problem with be the US (yet again).

When China say they will not budge it is worth listening.

Climate Talks Struggle As China, U.S. Face Off [PlanetArk]

The United States and EU said on Wednesday that U.N. climate talks were making less progress than hoped due to rifts over rising economies' emission goals, while China pushed back and put the onus on rich nations.

Negotiators from 177 governments are meeting this week in the northern Chinese city of Tianjin, trying to agree on the shape of the successor to the current phase of the Kyoto Protocol, the key U.N. treaty on fighting global warming, which expires in 2012.

Midway through the talks, however, initial hopes that they can deliver progress on trust-building goals have become snared in procedural skirmishing that boils down to feuding over how far rich and emerging nations should curb their greenhouse gas emissions and how they should check on each other's efforts.

Negotiators said the contention could damage prospects for negotiations late this year in Cancun, Mexico, which are intended to lay the foundations for a new, legally-binding climate pact.

"There is less agreement than one might have hoped to find at this stage," said Jonathan Pershing, the United States' lead U.S. negotiator in Tianjin.

"It's going to require a lot of work to get to some significant outcome by the end of this week, which then leads us into a significant outcome in Cancun," he told reporters.

Fraught climate negotiations last year failed to agree on a binding treaty and climaxed in a bitter meeting in Copenhagen, which produced a vague and non-binding accord that later recorded the emissions pledges of participant countries.

Fearing deadlock in efforts to reach a binding pact by late next year, governments have been pushing in Tianjin for broad agreement on less contentious objectives: a fund for climate action, a scheme to protect carbon-absorbing rainforests, and policies to share clean energy technology with poorer nations.

Pershing said he still hoped that the makings of a deal can come together at Cancun, and warned that failure in Mexico could damage the whole U.N. climate negotiations.

Big developing nations -- such as China, India and Brazil -- should take on firmer emissions reduction obligations as part of a new treaty that would abandon a simple division between rich and developing countries, said Pershing.

The current Kyoto Protocol only commits nearly 40 industrialized nations to meet binding targets.

A European Union official at the Tianjin talks said they had made headway on some issues, but also voiced worry for Cancun.

"We are very concerned with the procedural blockages and we find it simply inexplicable that they keep on popping up on the issues that are of vital importance for the final deal," Jurgen Lefevere of the European Commission climate action office told reporters. "There is still hope," he added later.

CHINA PUSHES BACK

China is the world's top greenhouse gas emitter from human activity, with the United States second. China and India have pledged emissions reduction steps under the Copenhagen accord, but want Kyoto to be extended to lock in commitments by rich countries and to ensure their own emissions are not subject to binding international caps.

China's greenhouse gas emissions will keep rising for years yet, but its top climate change negotiator Xie Zhenhua said it was unfair to press the country on when its emissions would peak while rich nations failed to slash theirs.

He also told reporters at the talks that his government would not budge from demanding the Kyoto Protocol be the basis of any new climate deal. The United States is not a party to the Protocol and would have to come under a separate deal.

"When the world's emissions peak depends on developed countries leading with dramatic cuts in their emissions, making space for developing countries," said Xie.

China and other emerging nations will accept international "consultation and analysis" of their emissions, but not anything equal to the standards expected of rich economies, said Xie.

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