Category Archives: Environment

Energy Efficiency Doesn’t Work

By Cameron Murray, a professional economist with a background in property development, environmental economics research and economic regulation. Cross posted from MacroBusiness

The word efficiency carries a meaning immersed in all things positive – you never hear that being more efficient could possibly be detrimental. In fact, if you can bear the evangelical fervour, you may have read about achieving ‘Factor Four’ or ‘Factor Five’ gains in energy efficiency, as part of a ‘Natural Capital’ revolution comprising a ‘decoupling’ economic growth from a growth in the consumption of exhaustible resources – also known as ‘sustainability’. You may even have heard about the equation I=PAT or I = P x A x T, where environmental impact (I) is a function of population (P), affluence (A) and technology (T), and that becoming more efficient will enable a desired level of affluence with far less environmental cost.

Historical experience shows that these claims are untrue.

Guest Post: Will Tokyo Be Evacuated Due to Fukushima Radiation?

Hopefully it will never come to this …

Cash Flow Discounting Leads to “Astronomically” Large Mistakes Over the Long Term

Your humble blogger is a vocal opponent of placing undue faith in single metrics and methodologies, like placing a lot of weight in total cholesterol as a measure of heart disease risk. One of the most troubling examples is the totemic status of discounted cash flow based analyses. It’s a weird defect of human wiring that reducing a story about the future to a spreadsheet and then discounting the resulting cash flows (which means you are now layering a second story, about what you think reasonable investment returns will be over that time period) is treated as having a solidity and weight that simply is not there, a reality of its own that manages to take precedence over the murky future it is meant to help understand.

An article by physicist Marc Buchanan in Bloomberg gives a layperson’s summary of an important paper by Yale economist John Geanakoplos, and Doyne Farmer, a physicist at the Santa Fe Institute. It shows that the conventional use of discounted cash flow models over long time periods, as is often the case when discussing environmental impacts, is fatally flawed.

On Dangerous Disconnect Between Economics and Ecology

William Rees is one of the pioneers of ecological economics and is the originator and co-developer of ‘ecological footprint analysis’. This video contains some basic facts about current consumption levels in advanced economies that are attention-grabbing. I’d normally say “Enjoy” but this is not that sort of video.

Jon Rynn: A Fracking Mess – Natural Gas is Not the Fuel of the Future

By Jon Rynn, author of the book Manufacturing Green Prosperity: The power to rebuild the American middle class. He holds a Ph.D. in political science and is a Visiting Scholar at the CUNY Institute for Urban Systems. Cross posted from New Deal 2.0.

Between questionable science, health hazards, and exorbitant costs, there’s no fracking way that drilling for natural gas will solve our long-term energy issues.

Andrew Sheng Says Sustainability Means Caging Godzillas

Andrew Sheng, Chief Adviser to the China Banking Regulatory Commission, is wonderfully straightforward and realistic for an economist. He is willing to say, as he does in this video, things that are obvious yet somehow unacceptable to ‘fess up to in policy circles, like the planet simply cannot support 3 billion people in Asia living European lifestyles. He warns of the danger of creating the mother of all crises if governments cannot stem the tide of leveraged capital flows, and also discusses the role of China on the global stage.

On the Shortcomings in US Nuclear Emergency Plans

I normally leave the nuke/Fukushima aftermath beat to George Washington, but furzy mouse sent me a link to this very straightforward and well done video by Arnie Gunderson of Fairewinds.

This evokes weird parallels to what we learned in the wake of Hurricane Katrina: it was obvious more needed to be done to protect public safety, but no one was willing to do it. And in visit to New Orleans over the Christmas holidays, I learned the levees have not been made higher as the Army Corps of Engineers recommended. All that happened was the breaks in the levees were patched.

Gunderson gives a straightforward account of theory v. probable practice in a nuclear accident:

Philip Pilkington: Beyond growth – are we entering a new phase of economic maturity?

By Philip Pilkington, a journalist and anti-economist writing from amidst the devastated ruins of Dublin, Ireland

All successful revolutions are the kicking in of a rotten door – JK Galbraith

What’s the easiest way to embarrass an economist? Okay, that’s a bit of a trick question. After all, economics is a pretty embarrassing profession and there are a million questions you could put to an economist that would likely turn his or her cheeks red. You could, for example, approach your typical ‘academic of ill-repute’ and ask them if they saw the bursting of the US housing bubble coming or the unsustainable debt-overload that accompanied it – yep, that would probably do the trick.

One topic that does cause your average economist a lot of brain-bother, though, is the environment. After all, everyone and their cat cares about the environment these days, but such concern seems irreconcilable with the ‘infinite growth’ assumptions of most economists. It has long been pointed out by environmentalists, concerned citizens and the sane how, if we are to prevent global warming from melting the planet, we have to put some sort of a ceiling on economic growth and industrial development. This is a truly pressing concern – yet it appears that economists and policymakers simply cannot integrate it into their worldview.

But here’s an uplifting thought: what if History is doing our work for us? What if we are already entering a sort of ‘post-growth’ world?

On Short-Termism and the Institutionalization of Rentier Capitalism

Andrew Haldane and Richard Davies of the Bank of England have released a very useful new paper on short-termism in the investment arena. They contend that this problem real and getting worse. This may at first blush seem to be mere official confirmation of most people’s gut instinct. However, the authors take the critical step of developing some estimates of the severity of the phenomenon, since past efforts to do so are surprisingly scarce.

A short-term perspective is tantamount to applying an overly high discount rate to an investment project or similarly, requiring an excessively rapid payback. In corporate capital budgeting settings, the distortions are pronounced:

David Apgar: What Was So Unpredictable about Deepwater Horizon?

By David Apgar, the Director of ApgarPartners LLC, a new business that applies assumption-based metrics to the performance evaluation problems of development organizations, individual corporate executives, and emerging-markets investors, and author of Risk Intelligence (Harvard Business School Press 2006) and Relevance: Hitting Your Goals by Knowing What Matters (Jossey-Bass 2008). He blogs at WhatMatters.

It’s tempting to look for a little consolation on the anniversary of the oil spill from BP’s Deepwater Horizon rig in the idea that our worst industrial accidents are unpredictable and not the result of negligence. The only trouble is that the BP disaster in the Gulf of Mexico was predictable.

Gas From Fracking More Damaging to Climate Than Coal?

I’m pretty amazed that no one looked into the greenhouse gas impact of fracking until now. One of the big rationales for fracking, which is already controversial due to reports of damage to aquifers, is that it was abundant in North America and also produces comparatively little in the way of carbon emissions.

The problem, per a study soon to be published by Cornell University, is fracking results in the release of methane, one of the most potent greenhouse gases, apparently enough to undercut the claims that it is relatively “clean”.

Town Hall Discussion of Energy Solutions: Live Stream of Dylan Ratigan Here at 8 PM EDT

Dylan Rtigan is hosting an important conversation on energy solutions from a Town Hall panel live from Oklahoma State University at 8PM ET / 7PM CST tonight. The goal is to generate the political will to reduce our dependence on oil.

Panelists include:

· Boone Pickens, Oil Tycoon & Founder, BP Capital Management
· Ashwin Madia, VoteVets.org
· Bob Deans, Director of Federal Communications, Natural Resources Defense Council
· Former CIA Director James Woolsey

View it below:

Conditions Worsen at Fukushima Nuclear Site

This is not good. From the Washington Post:

Leaked water sampled from one unit Sunday was 100,000 times more radioactive than normal background levels — though the Tokyo Electric Power Co., which operates the plant, first calculated an even higher, erroneous, figure that it didn’t correct for several hours.

Guest Post: On the Government Cover-Up of Gulf Dolphin Deaths

Yves here. This post may strike readers as off topic, but it sits at the locus of several Naked Capitalism topics of interest: the Deepwater Horizon blowout and its aftermath, animals (particularly dolphins, which are more altruistic than people and quite likely as smart), Obama administration duplicity, and reading between the lines of media reports.

By a retired physician who worked several years in the medical communications and pharmaceutical industry who writes as Francois T

From a Reuters story yesterday, “Government tightens lid on dolphin death probe”:

The U.S. government is keeping a tight lid on its probe into scores of unexplained dolphin deaths along the Gulf Coast, possibly connected to last year’s BP oil spill, causing tension with some independent marine scientists.

Wildlife biologists contracted by the National Marine Fisheries Service to document spikes in dolphin mortality and to collect specimens and tissue samples for the agency were quietly ordered late last month to keep their findings confidential.

Is Nuclear Power Worth the Risk?

One of the interesting features during the Fukushima reactor crisis were the fistfights that broke out in comments between the defenders of nuclear power and the opponents. The boosters argued that the worst case scenario problems were overblown, both in terms of estimation of the odds of occurrence and the likely consequences. The critics contended that nuclear power was not economical ex massive subsidies, that there was no “safe” method of waste disposal, and that nuclear plants were always subject to corners-cutting, both in design and operation, so the ongoing hazards were greater than they appeared.

Reader Crocodile Chuck passed along a story from the Bulletin of Atomic Scientists, “The Lessons of Fukushima“, by anthropologist Hugh Gusterson. Here is the key section: