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Last evening I attended a discussion, organized by the Mouvement Écologique (Luxembourg’s biggest organization for sustainable development), about the possible direction that Luxembourg should take when it comes to its future. Invited speakers were Professor Reinhard Loske and Professor Harald Welzer, and the moderation was done by the never-fatigued Blanche Weber. In this post I will discuss what Luxembourg’s politicians should think about when they discuss policy options that influence Luxembourg’s future.

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  • An animated chart of global marine fish stocks from The Economist HERE. Basically, while in 1950 roughly 90% of the fish stocks were in their natural state, in 2009 90% are either fully exploited, over-exploited or collapsed. From the FAO report The State of World Fisheries and Aquaculture 2014: “Global fish production continues to outpace world population growth, and aquaculture remains one of the fastest-growing food producing sectors. In 2012, aquaculture set another all-time production high and now provides almost half of all fish for human food.” Though this seems to be good news, Katheline Schubert and Esther Regnier have a paper together on aquaculture where they show that aquaculture can, nevertheless, have negative consequences on fish stocks. Under some conditions, “Aquaculture worsens the pressure on the wild edible fish stock and leads to a decrease of total wild fish stocks in the long run.”
  • Writing at the Energy Institute at Haas, Meredith Fowlie suggests that moral suasion is no substitute for getting the price right. Her comment is based on a paper by Koichiro Ito and co-authors,  who find the following: “Firms and governments often use moral suasion and economic incentives to influence intrinsic and extrinsic motivations for various economic activities. To investigate the persistence of such interventions, we randomly assigned households to moral suasion and dynamic pricing that stimulate energy conservation during peak demand hours. Using household-level consumption data for 30-minute intervals, we find significant short-run effects of moral suasion, but the effects diminished quickly after repeated interventions. Economic incentives produced larger and persistent effects, which induced habit formation after the final interventions. While each policy produces substantial welfare gains, economic incentives provide particularly large gains when we consider persistence.” It would be interesting to also know whether moral suasion together with some peer pressure would not lead to more persistent results. Also, it is really surprising that price incentives would lead to long-run effects. While the authors forward habit formation as a possible argument, it would be interesting to know whether the price effects still linger on now (i.e. 1-2 year after).
  • Thursday: Jeudi 21 mai 12:30-13:30 Emma Hooper (GREQAM, Aix-Marseille School of Economics) will present Sustainable growth and financial markets in a natural resource rich country, at PSE in Paris (see Environmental Economics Calendar).

cultureThere is a new article of mine that I would like to announce, entitled “The endogenous formation of an environmental culture“, and I am happy to tell you that it is forthcoming in the journal the European Economic Review.

The article is summarized as follows:

This article presents a mechanism explaining the surge in environmental culture across the globe. Based upon empirical evidence, we develop an overlapping generations model with environmental quality and endogenous environmental culture. Environmental culture may be costlessly transmitted intergenerationally, or via costly education.

The model predicts that for low wealth levels, society is unable to free resources for environmental culture. In this case, society will only invest in environmental maintenance if environmental quality is sufficiently low. Once society has reached a certain level of economic development, then it may optimally invest a part of its wealth in developing an environmental culture. Environmental culture has not only a positive impact on environmental quality through lower levels of consumption, but it improves the environment through maintenance expenditure for wealth-environment combinations at which, in a restricted model without environmental culture, no maintenance would be undertaken. Environmental culture leads to a society with a higher indirect utility at steady state in comparison to the restricted model.

Our model leads us to the conclusion that, for societies trapped in a situation with low environmental quality, investments in culture may induce positive feedback loops, where more culture raises environmental quality which in turn raises environmental culture. We also discuss how environmental culture may lead to an Environmental Kuznets Curve.

So what is this all about?

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I’d like to thank the commentator for his/her thoughts on my nuclear energy post. Thoughtful, also your blog, thanks. I would just add a couple of remarks. The commentator suggested that nuclear energy should be part of our future because its damages are much less than the climate change damages that traditional energy sources (like oil, coal) may cause. He/she underlined this by hinting at the costs from (climate change-induced) disasters during the past couple of years.

There is some evidence now that there are already impacts of global warming, yes. But how many events of the past few years can actually be fully or partially attributed to global warming is impossible to say. No one really knows. And most likely no one will ever know. And one should not forget that a part of the damage was mankind’s own doing, e.g. New Orleans’ architecture, or population-push into flood-prone areas. So all I am saying is that one has to be careful trying to argue which share of natural disaster costs are attributable to actual climate change.

Also, I would think that it is not entirely clear that, between potential nuclear disasters and climate change, potential nuclear disasters is the lesser evil. Let’s go through some quick calculations. If you go through the list of nuclear accidents, see HERE, then let’s say during the whole existence of nuclear power plants (around 60 years), there were three huge ones (Kyshtym, Chernobyl and Fukushima). That makes a probability of 0.05 per year of a large scale accident, or one every twenty years. Assume that the increase in the number of nuclear plants obviously increases the overall probability of disasters, while technological advances decreases it. Let’s assume those two roughly balance out. If you believe they don’t since technological progress may be extremely efficient, then throw in earthquakes, terrorists attack, and still the odd human error, and you may be there. So let’s assume that the probability stays approximately constant. That will make another four events until 2100.

While Kyshtym led to an indefinitely long inhabitable zone of around 800 sqkm, the area contaminated by Chernobyl is 3000 sqkm, while the estimated area around Fukushima amounts to 400 sqkm “only” (fortunately due to the wind). Given that “only” approximately 15% of the radiation of Chernobyl was released, this could mean that the area estimate for Fukushima is roughly correct. That already adds up to 4200 sqkm. Multiply this by 1.33 (4 disasters until 2100 over the 3 that happened), add the number (5600) to the 4200, and we get roughly 10 000 sqkm. That is the area that we would expect to be indefinitely inhabitable for every 150 years that are coming. What is the value of that area? What is the cost of deplacing the people? And what is the subjective cost of the fear of nuclear disasters? Noone really knows and it is a really difficult task to come up with an estimate…

In addition, one always has to remember that there is the option to adapt to climate change to a certain degree. So basically all I am saying is that we need to be careful when we argue for a technology that has the potential to lead to an inhabitable area the size of Jamaica every 150 years. And that is only the inhabitable area – radiation problems from fallout that may travel for kilometers and kilometers is not even added here.

I think it is also a mistake to basically say that between two evils (climate change and potential nuclear disaster) we choose what may be the lesser one (potential nuclear disaster, although I tried to argue that this is not fully clear), because we have a third option available: social change, cultural change, a thoughtful and thought-through way of life. If one allows for a trade-off that figures this additional dimension into the equation of any policy maker, then it is not entirely clear whether the initial question – nuclear energy versus climate change, is actually appropriate.

“As long as there are slaughterhouses there will be battlefields.”
(Leo Tolstoy)

“Earthling    (n.)   one who inhabits the earth”

Here is a video, called Earthlings (hat tip to Mike Folschette) about how we treat non-human Earthlings:

http://earthlings.com/?page_id=32

The speaker is Joaquin Phoenix (I liked his performace as Johnny Cash in Walk the Line) with soundtracks by Moby. Basically, it is a visually extremely tough movie on our habits of treating animals. I have been thinking about this a bit, see HERE, with replies and comments by the guys over at http://www.env-econ.net HERE, and the relation to overconsumption HERE.

In general I believe that social distance, or our way of discounting across space and species, is the cause of this behavior. For example, if a horse breaks his ankle, then our `humane’ reaction is to shoot it. If a human breaks his ankle, then our `humane’ reaction is to take him to the hospital to get treated. Why do we shoot the horse: well, as a racehorse it will maybe never be able to perform as it used to, and treatment is very expensive. In contrast, why do we not shoot the human: well, that is really a strange question to even ask… Or isn’t it?

If I take you back only 75 years, then it is precisely this what the Germans did during the Holocaust. As Viktor Frankl writes in his tough book `Man’s search for meaning’, which I wrote about HERE, if the Germans’ prisoners could not continue working, then they were simply killed. This was done because they gave the Germans no `value added’, meaning that they cost more (in terms of food and shelter) than what they could produce. This kind of slavery was common already basically since mankind settled down, with sometimes more than 30% of the population (e.g. ancient Italy) being composed of slaves.

Thus, there is significant evidence not only of discounting across species, but within our own species, too. While we tend to try saving those precious or close to us for morale reasons, we tend to use cost-benefit analysis once we take decisions for an earthling that is not close to us. Or, for someone who doesn’t like the morale argument, then the discounting one should suffice: we discount away the benefits of those that we are not closely related to. Or differently, the greater the social distance of an earthling the less we value the benefits attached to that earthling.

In most parts of this planet, we (humans) tend to think that we socially and morally evolved, our society `improved’, in the sense that we do not anymore undertake these atrocities of the 2nd World War, slavery, or similar. The question obviously is whether this is true due to a lower social discounting, or whether there are other reasons behind this. And in addition, if this is due to the lower social discounting, then how can we affect this discount rate, i.e. decrease it? Also, why did it decrease?

Any thoughts on these questions are welcome, and I will treat these questions in a follow-up post in the next days.

Today, at my favorite environmental economics blog (oh yes it is…), I saw a picture of a robin’s nest. My guess is that the proud photographer didn’t really put the picture there because it is his best wildlife shot ever (sorry, John…), but because he genuinely cares about those birds that are hatching in his garden. However, my guess also is that John, at the same time, is not a vegetarian (right or wrong, John?). How are these two positions reconcilable?

Now, I want to immediate add that I have a hard time not eating sausages at BBQs, or saying no to meat if it is placed on the menu. It is just like saying no to the second beer after having drunk the first… However, when two birds fell out of their nest yesterday in my garden, I was trying to save them, even though I directly knew they were most likely too young to survive and too hurt to live another day. Again – how can this be that we seem to care about some animals, or some humans, and yet not care at all about others?

Again, I refer to the book `Man’s search for meaning‘. The author writes that in the most dangerous moments, one always tried to save oneself and maybe a close friend. But one very well knew that for every person saved another would die. While I do understand this to be the case for extreme situations like concentration camps or life-and-death situations, the same reasoning can clearly not be applied to everyday situations like the one above. Especially since no cow will have to die if noone eats meat…

My guess is that a large part of the reason for which still so many people actually eat meat is that most of the meat is highly processed these days. Imagine you’d have to kill yourself the cow whose meat you’d want eat. Would you do it? Certainly I wouldn’t. I know many who wouldn’t. In fact I even hypothesize that most wouldn’t.

Now, given that meat consumption should be decreased in order to meet the food needs in the future, and given that society may see the need to have a social change towards a more holistic system of moral values, it is important to remind meat consumers of what is going on behind the scenes. I start:

Then: Bon appétit!

I have just read “Man’s search for meaning“. It is about survival in the concentration camps during WW2, about how mankind deals with extreme situations and the intrinsic wish for survival. It is how meaning in life brings meaning to life.
This book is difficult to digest and speaks of atrocities that someone, who has not lived through the same, most likely can never fully grasp or comprehend. One passage drew my attention, where Viktor E. Frankl writes about how the prisoners dealt with the insufficiently small food rations: “There were two schools of thought. One was in favor of eating up the ration immediately. This had the twofold advantage of satisfying the worst hunger pangs for a very short time at least once a day and of safeguarding against possible theft or loss of the ration. The second group, which held with dividing the ration up, used different arguments.” This reminds me of why I support Bjørn Lomborg‘s insistence on reducing hunger and poverty now, rather than looking into, or working on, reducing the impacts of future climate change. But it also gives rise to some difficult questions:

If our current actions are to significantly change the environment of planet earth, and if mankind cannot fully adapt to this, then should the suffering of some of the current generation outweigh the potential suffering of many future generations? In a previous post I had written that some economic models (like Nordhaus’ RICE model) try to predict consumption for the next 100 years and come to the conclusion that it will increase across all continents. But there are clearly going to be significant local climatic changes whose impacts, which are driven by our current climate-changing actions, may outweigh even current suffering. Furthermore, those integrated assessment models only take consumption into account. While consumption increases happiness, it is certainly only one of the many aspects that does so.

Or should we not only focus on mankind but also take a holistic approach, with our welfare calculations taking animals and ecosystems into account – not because they provide services to mankind, but because they have rights of their own? If we were to do this, then we would have to seriously reconsider our lifestyles and consumption habits, our values and social norms.

In my opinion, it is important that people like Bjørn Lomborg emphasize the focus on the basic needs of the current generation. But it is also negligence if one ignores the needs of the future. I believe the most important aspect to know is that we actually do have the ability NOW to do both: we can easily minimize current suffering of the world’s starving poor, but we can at the same time also shape our values and lifestyles directed towards a holistic approach that incorporates all life on planet earth – not because this provides a benefit to mankind, but simply because of the intrinsic value that life holds by itself. While technical change certainly aids in decoupling economic growth from the environment, it is cultural change towards a holistic world view that may solve a good amount of our troubles at the same time. And this cultural change may just bring back the meaning in life that is needed to bring back meaning to life.

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