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My father-in-law has brain cancer.  He is a good man. He is the type whose hands are (sadly too often) filled at the end of a stroll with trash he picked up on the way. He has helped others in need, whether friends (doing all too many renovation and repair projects) to strangers (a pencil portrait of my better 95+% as a child was someone-without-money’s payment for extensive dental work).  He is a good man. And, the prognosis isn’t great.

Not surprisingly, my better 95+%, my mother-in-law, my other in-laws, their friends are not especially joyous about facing this.

Yet, they face it with a sort of calm that is rarely seem in America when a family faces a major medical crisis.  To date, there has not been one iota of discussion about financial challenges. There is no stress of looking at check-book balances, no fearful whispers about mounting medical bills, no distress over potential financial bankruptcy, no extended phone calls with insurers battling to get a test covered or to see whether a physician in system.  In fact, the only discussions of money have been comments about how ridiculously low the bills are and why it really isn’t worth the time to seek reimbursement for supplementary insurance programs.

In this stressful time, my father-in-law and my mother-in-law are absoutely free of financial tensions from medical costs.

Sadly, perhaps, for my children’s future wealth, this isn’t due to great family wealth. (They are solidly middle class.)  Nor do they they unlock the key to some super-secret executive-based insurance program.

The reason for calm is simple: my father-in-law is French.

It isn’t because that French people are inherently calm and reasonable people, shy and reticent to get into an argument. (Sigh, actually the reverse. Here’s a good cheat sheet to prepare for an argument.)

No, the absence of fiscal tension results from basic public policy: universal coverage.

As with all French residents, my in-laws have health-insurance. When necessary, they simply go to get taken care of.  In this public-private system, they have costs to bear (such as that 20 Euro charge for visiting a doctor) for treatment but those costs will not overwhelm a family’s budget.

The French provide for universal coverage at a per capita cost far lower than America’s spotty and unequal medical system.

And, the French have much better health care results.

Considering my father-in-law’s situation has made me wonder: is one reason for those better results the lower tension due to the universal coverage?

Does universal coverage make it easier for my father-in-law and other ill people to focus their energy on getting better rather than pouring over (if Americans lucky enough to have it) health insurance paperwork?

Does the universal coverage and lack of financial pressure make it easier for my mother-in-law to focus on her husband’s health? And, does the near absence of insurance paperwork and bureaucracy make it less likely that she, herself, might get sick?

My blogging focus is on energy and environmental issues. Within that, I am intrigued (and frustrated) by our failures to analyze adequately costs and benefits. And, I am always searching for those win-win-win-win solution paths that address the complexity of the real world, identifying interactions and building on them. It seems that the ‘tension relief’ factor of (single payer, please…) universal coverage is absent from the US discussion. Tension Relief is, however, a factor worthy of note and consideration.

As a note, this is not a call for sympathy about my father-in-law. I hope, for his grandchildren, that he beats medical odds for a long time to come. When he does die, whether soon or many years from now, the world will be a lesser place. As written above, he is a good man who makes the world better through his actions. But, by his own words, he has had a good, long, and full life. He has seen all his children succeed beyond his dreams, he has seen them all married, and had the chance to play with his grandchildren. And, he lives in a system that allows him to face his medical challenges without fear for his, his wife’s, or his children’s financial futures.

What a difference a few weeks makes.

September 23-24, Newsweek was the “media partner” for the Council on Competitiveness’ National Energy Summit, mainly dominated by business leaders focused on developing meaningful responses and policies to tackle climate change. That session was a coming out, of sorts, for Newsweek‘s green business rankings, which purported to be the first comprehensive look at America’s top 500 Corporations and their environmental policies. This Summit had speakers like Secretary of Energy Steven Chu, the Presidential Science Advisor John Holdren, and many others providing meaningful and valuable perspective on what we can (and should) do to mitigate climate change. (There were, of course, also some fossil fools there.) Writ large, it was a powerful event of business and other leaders learning from each other about possibilities and necessities.

And, Newsweek provided many of the moderators (even if they were often seeming to shill for anti climate mitigation perspectives in their questions and comments) while handing out copies of their Green Rankings.

Now we see that Green Newsweek perhaps should be ranking itself low on that in the rankings as it cashes in some green as Newsweek is partnering this time with the American Petroleum Institute for an “Executive Forum” on “Climate and Energy Policy”. API is publishing full page ads in the Washington Post arguing against climate legislation with truthiness-laden assertions about energy prices.

TPM Muckraker put it like this:

API has been a key opponent of serious efforts to address climate change, spending over $3 million lobbying on the Waxman-Markey climate change bill this year. This summer, Gerard sent a memo to API member groups that laid out a plan to create astroturf rallies at which industry employees posing as ordinary citizens urged Congress to oppose global warming legislation. Newsweek itself covered that news, as an example of “how astroturfing is taking over local activism.”

TPM further notes, however, that Newsweek has a record of “going soft” on the oil industry, both in articles and in previous partnering for special forums.

In September, Newsweek ran a story by Newsweek International editor Rana Foroohar entitled “Big Oil Goes Green For Real,” which infuriated environmentalists by asserting that oil industry investments in alternative energy were no longer just green-washing, but rather were “the real deal.”

Well, looking at the upcoming “Newsweek Executive Forum”, should we wonder what “the real deal” really is?
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As part of the Republican theatrical obstructionism to moving forward with the Kerry-Boxer Clean Energy Jobs and American Power Act, involving staging a boycott of Committee hearings despite Senator Boxer appealing for bipartisan efforts to find solutions for serious problems. (All of this, of course, leading to a question:  Senator, what is your excuse for skipping work today?) The recalcitrant Republican Senators’ central argument is that the Environmental Protection Agency (EPA) has not done a thorough analysis specifically of Kerry-Boxer. And, within that, that the EPA analysis of the House legislation (Waxman-Markey American Clean Energy & Security (ACES) Act) is simply inadequate.

First, let’s face facts: does anyone think that James Inhofe is leading this Republican rebellion with an intent of serious engagement on moving forward with climate change mitigation legislation with better analysis in hand?  Once you’ve finished laughing, we can move forward.  Thus, the fact that the EPA provided simply a meta analysis of Kerry-Boxer, based on work on Waxman-Markey, has little real relevance to decision-making and the situation at hand.

Second, let us state a fact: The Republicans are absolutely right and absolutely wrong at the same time when it comes to EPA analysis of climate legislation.  They are right that the EPA analysis has serious flaws.  But, they are absolutely wrong about what those flaws are and what should be done about it.  Voinovich makes much noise about the imagined costs of acting to mitigate climate change but doesn’t begin to address the issue of the costs of inaction nor does he spend any time discussing the quite significant benefits (from improved health to improved productivity to improved student performance to …) that will come from taking serious action.

From Senator George Voinovich’s (R-OH) statement announcing the R boycott of their day job.

EPA did perform an analysis of the Waxman bill, but a detailed look at EPA’s work, reveals the use of assumptions, which, in some cases, defy practical and technological realities. … In addition, major provisions of the bill weren’t modeled at all, including various mandates and requirements that will diminish the effectiveness of the trading system and increase overall program costs…. EPA’s modeling is only as good as the assumptions built into it.  Unrealistic assumptions about technology and offset availability and the lack of a comprehensive analysis of the entire legislative proposal greatly limit our understanding of the potential costs of the program.

Senator Voinovich actually has had a hold on an appointment to the EPA, demanding that the EPA do an analysis of climate legislation to his satisfaction or else he will continue the hold.

While the hold is a sad example of a problem in our legislative process, Voinovich is absolutely write that EPA’s analysis is flawed … but for absolutely the wrong reasons.

As per the words above, Voinovich doesn’t cease to speak of the failure of the analysis to examine adequately “potential costs”, he never (ever) raises the issue of potential costs of inaction and the potential (no, the real) benefits of action.

The core problem for EPA analysis is that it is far too narrowly defined, focusing almost solely on only one segment of a four-part equation. The analysis is heavy on the costs of action in budgetary terms but with very limited discussion as to the benefits of action and, in essence, zero focus on the costs and (very limited) benefits of inaction.  The EPA (and CBO and others) inadequately, for example, calculates the benefits to the economy of reduced fuel prices due to reduced demand. (Basic capitalist equation: supply vs demand. Reducing demand is, functionally, the same as increasing supply for price equation purposes.) The EPA did not consider the health care implications of fossil fuel pollution and how moving forward with global warming mitigation will, as a necessary corollary, drive down the pollution that is so seriously costing American society. (According to a study recently released by the National Academy of Sciences, this is a $120 billion / year cost. Oh, by the way, that study limited its examination to the use of fossil fuels and did not count implications of its production.) They do not examine productivity improvements that will occur due to greener work environments (and improved educational performance due to greening schools). Nor is there a valuing of the strengthened dollar due to reduced oil imports. Nor …  The list of absent material is extensive enough to fill multiple books.  And, these analysis do not even begin to calculate perhaps the most significant financial value of moving forward with climate change mitigation legislation: the insurance value for reducing the potential of (near) worst-case catastrophic climate change.

And, well, there is the real challenge that these analyses focus on “gross domestic product”, which is truly an inadequate measure of a society’s health and strength. For example, an oil spill will actually increase GDP (at least in the near term) due to the clean-up activities.  Fossil-fuel pollution actually boosts (at least near and mid term) GDP due to the health care costs of treating asthma, mercury poisoning, cancers, and other resulting illnesses from that pollution.  Thus, there is a fundamental question: do these analyses provide a meaningful window on societal strength and well-being?

Thus, James Inhofe, George Voinovich, and other Republican Senators staging their theater event today are absolutely right: the EPA (and CBO and …) analysis of climate legislation is inadequate. More importantly, Inhofe, Voinovich, and others are absolutely wrong as to why. Rather than failing to examine the true costs of action, these analytical organizations are failing to provide a robust window as to the much higher true costs of inaction and the much higher true benefits of action.

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This is a guest post from DCoronata who argues that it was written in haste … yet that haste produced something worth considering.

Technology is not going to solve our environmental problems.

Yes we’ve made dramatic improvements in feeding the world, with current crop yields much higher than in previous generations.  But the environmental degradation and the overuse of fossil fuels has created a false panacea whereby we’ve thought that we can solve all of our problems with more technology, rather than using sustainable practices and more intelligent utilization of existing resources.

And for my main argument, I’ll talk about worldwide fishery depletion.

The biggest technological innovations in aquaculture and fishing has in the last half century led to a near total breakdown of all saltwater fisheries worldwide.  Rather than enhance stocks and provide for greater resource management, it has led to the exact opposite.

Technology hasn’t made life easier for the fish, it has made life easier for the fisherman.  Mile long seine nets, city-sized drag lines, sonar fish-finders and commercial harvesting boats the size of the Titanic have reduced our stocks to the point where many are approaching total collapse.  This creates a cascade effect, where people who have invested huge sums of money in infrastructure to harvest the more expensive table fish now find themselves with rusting boats, crews that spend more time unemployed than active, and banks anxiously awaiting mortgage payments.  So they go “downstream”, choosing to catch fish that were previously considered bait, to sell as cat and dog food.

Anything to make a living.

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Since diving into the deep end when it comes to energy issues, almost every day sees new fascinating concepts, approaches, and technologies. Fascinating … exciting … even hope inspiring at times. And, as well, as the passion builds, so many of these are truly Energy COOL.

Humanity has treated natural resources as boundless. And, we are facing the reality of limits. Peak Oil. The ‘end of frontier’. Global Warming. And, that most endless of resources, the freshwater that falls from the sky, water is not boundless.

One of Rome’s great contributions to humanity, the toilet has not truly gone a long way in the past several thousands of years. While ever-fancier options abound, the truth remains that, amid all of our uses of fresh water, one of the more wasteful is the use of perfectly good drinking water for flushing away our bodily wastes. There are a number of paths to cut into this, from the aggressive (from changed behavior (“if its yellow, let it mellow“) to using saw dust and an old bucket for a toilet) to introducing technology that has a shocking impact on some people’s sensibilities (waterless urinals or combining sinks with toilets) to the moderate and more socially acceptable replacing of an inefficient toilet with a more efficient new one. Thus, for quite literally millenia, humanity has long searched for that perfect flushing away of the detritus of our meals.

And, the search has a reason. Toilets represent just about 10 percent of the average household water use and in the range of 30 percent of the indoor use. The average person uses about 18 gallons, per day, day-in, day-out, for flushing toilets. That adds up — to some 6 billion gallons per day in the US alone. And, remember, that water has been cleaned and transported to the home to then be flushed. And, there are systems-of-systems implications: realize that, for example, about 20 percents of California’s electricity goes to cleaning and transporting water.

The very first rule: reduce. Every gallon less used means less electricity, less demands on the system, less impact on the environment …

For a number of years, I’ve noted double button toilets on trips. While not solving the issue of using drinking water for flushing toilets, they offer a quick path for providing a more responsible choice to that waste elimination. Sigh … I’d already changed my old 4 gallon toilets for 1.6 gallon ones and wasn’t about to go and spend $600 or so on installing toilets with the double-flush feature. Well, Brondell came around and introduced a product to scratch my itch for more responsible flushing. The Perfect Flush is a double-flush system that can be back fitted on nearly every home toilet out there. (If you have a flapperless/pressure assist toilet, the Perfect Flush isn’t for you.)

It took about 40 minutes, from reading the package to first ‘trail’ use, to transform the main 1.6 gallon toilet into a double-flush toilet. After a few uses, with some playing around, the ‘half-flush’ button delivers about 35% of normal flush and cleans out that ‘mellowing yellow’ while the ‘full flush’ handles more serious loads. The handle on the side of the toilet is now ‘decorative’, with the buttons on the top of the tank now controlling the flush. And, the majority of the time, the ‘half-flush’ is getting hit.

As with a “Prius” or solar panels or having an urban farm, the Perfect Flush satisfies on multiple levels. The button provides a conscious choice as to one’s water use and a reminder that we, each, can affect the total use of resources via even the smaller of actions and choices. It is
a tool for conversation and teaching the kids that options exist to more responsibly use resources.  And, in our household, we’ve installed the Perfect Flush in the toilet which guests are most likely to use.  We have yet to have a visitor come down saying “how do you flush the toilet” but have had several ask “That’s great. … How much water does it save … Where did you get it?”

For about $94, the Perfect Flush [UPDATE — recommended retail price reduced to $79] provides a quick path to cutting toilet bowl water usage. Reportedly, 9 of 10 toilet ‘calls’ don’t require a full flush.  Assuming a 50% reduction in your tank, installing a Perfect Flush offers a quick path to cut toilet water use by 45 percent. Installed nationwide, that translates to about a 15% cut in indoor water use and 5% in total water use.

To be honest, with efficient toilets in place and relatively inexpensive water bills, the fiscal return-on-investment for installing The Perfect Flush can be a hard case to make. (It looks to be, in my situation, with a highly efficient water household already, something like a 10 year payback. To make an assumption, this toilet is used perhaps 60 times per week (with family plus visitors) or about 3000 times per year. That translates to about 2500 gallons less / year or roughly $9 in savings at the local $3.69 per 1000 gallons.) On the other hand, if you have older toilets and/or higher rates, The Perfect Flush offers an interesting option for introducing some degree of water efficiency at a relatively low cost, with a faster payback, compared to replacing old toilets. And, in that case, there is not the waste issue of sending those old toilets to the dump.

And, there are other situations where this might make more sense.

• If you’re a renter (especially one paying utility bills) and the rental property has old toilets, you can install The Perfect Flush, cut down significantly on water use from the get go, and take it with you when you move on to your next property.
• If you have a high traffic toilet (that shared family toilet; an office toilet; a public toilet; …), then The Perfect Flush might be a fast path for real reductions in water use. (Whether with an old, inefficient toilet or a new efficient one.)

Over all, The Perfect Flush is a nice addition to the comfortable home abode. For me, an Energy COOL gadget lover, this is a ‘fun’ toy. And, while it doesn’t necessarily make perfect sense for my household on financial terms (e.g., not perfect cents), it is easy to see that it could make sense for many others as a tool to cut costs and to help make a drop in America’s water problems.

Disclosure: At request, Brondell provided a Perfect Flush for review purposes.

If our children truly understand the hole that their grandparents and parents have been digging for them, what would they do?

Here, Moms Against Global Warming suggest that this would drive our children to a rage that would make adolescent rage look benign.

Now, this is a powerful video with a caveat.

It ends linking with a call to Take Action On Climate Change.COM. Now, perhaps you will realize that the site is “takeactiononclimatechange.com” or, perhaps, you will think (as I did at first) that “to take action” you should go to “Climate Change DOT com”. (If you wish to go there, well, type it in as I’m not adding to its links.) Interesting results when going there. THe site looks great as a shell but every link through goes to a page of sponsored links. Every time that I went to a link, the first one listed was either a denier/skeptic site or a fossil fuel corporation site. Hitting “what is climate change”, the first site was Shell, second Chevron, fourth natural gas group, seventh BP, tenth is Ford. “Information on global warming” provides a “sponsored link” to an outright denier (“Is There Global Warming DOT com”). Shell & Chevron were in that top ten as well.

Hat tip to Brian at Scholars & Rogues who balanced this video with that of models stripping for the climate.

Professor Raymond T. Pierrehumbert, Louis Block Professor in the Geophysical Sciences at the University of Chicago Geosciences, has published An Open Letter to Steven Levitt, the nation’s Super Freakiest Economist. To put it simply, Pierrehumbert owns Levitt.

By now there have been many detailed dissections of everything that is wrong with the treatment of climate in Superfreakonomics , but what has been lost amidst all that extensive discussion is how really simple it would have been to get this stuff right. The problem wasn’t necessarily that you talked to the wrong experts or talked to too few of them. The problem was that you failed to do the most elementary thinking needed to see if what they were saying (or what you thought they were saying) in fact made any sense. If you were stupid, it wouldn’t be so bad to have messed up such elementary reasoning, but I don’t by any means think you are stupid. That makes the failure to do the thinking all the more disappointing.

Pierrehumbert then takes one specific point from the chapter to highlight this “failure to do the thinking”.  Pierrehumbert’s examination of the issue of whether solar cells’ low albedo (high absorption of solar energy & thus heat) makes it senseless to pursue solar power provides a tour de force examination of the basics of research (using the web) and how Levitt seems to have totally flubbed.

The point here is that really simple arithmetic, which you could not be bothered to do, would have been enough to tell you that the claim that the blackness of solar cells makes solar energy pointless is complete and utter nonsense. I don’t think you would have accepted such laziness and sloppiness in a term paper from one of your students, so why do you accept it from yourself? What does the failure to do such basic thinking with numbers say about the extent to which anything you write can be trusted? How do you think it reflects on the profession of economics when a member of that profession — somebody who that profession seems to esteem highly — publicly and noisily shows that he cannot be bothered to do simple arithmetic and elementary background reading. Not even for a subject of such paramount importance as global warming.

Rather than seeking to summarize or crib his work, let me simply emphasize that Pierrehumbert’s discussion is highly recommended reading — for the substance and style.

Now, Steve Levitt has chosen to respond to Pierrehumbert, at least indirectly (Levitt does not, at this time, have a comment at RealClimate in response to Pierrehunt’s critique), with a comment to a Chris Mooney post:

Except that Myhrvold’s main argument was about the energy required to *make* the solar panels, not the radiated heat. The critique totally misses the point. See here.

As with much of what Levitt is saying and writing at this time (especially, but not solely, related to climate science and climate economics’ issues), there is truth and truthiness here.

1. Truth: The primary discussion in Superfreakonomics of Myhrvold re solar power (187-188) is on the lag time of catching up with the embedded carbon footprint of solar due to construction buildup/payback times. This is truthiness, however, since it is not compared to plans for coal, what implications would be if coal were shut down due to solar developments, and doesn’t address same issue when it comes to nuclear power / etc …

2. More importantly, Levitt is being disingenuous (crazy like a fox?) since the opening paragraph to “too optimistic” (p 187), leading into that discussion of the embedded carbon, reads:

“A lot of the things that people say would be a good thing probably aren’t,” Myhrvold says. As an example, he points to solar power. “The problem with solar cells is that they’re black because they are designed to absorb light from the sun. But only about 12 percent gets turned into electricity and the rest is reradiate as heat — which contributes to global warming.”

Hmmm … this is the point that Pierrehumbert addresses.  It is hard to see how any fair reader would agree that he “totally misses the point”.

Levitt seems to to be refusing to engage Pierrehumbert’s devastating critique of that one paragraph by holding up a bright shiny object and saying “what about that other thing?”   My question to Levitt: Why not deal with the critique at hand rather than trying to move on to that next thing?

However, if you want to move on to that next thing, do you have a response to the devastating critique of “that other thing by Brad Johnson at Wonkroom (Myhrvold’s Folly)?

The Commonwealth of Virginia has long embraced a tradition of:

• Good governance (especially fiscal management)
• Support for good public education (including a top public university system)
• Protection of its historical legacy and landscape (such as Civil War battlefields and the Piedmont)
• Business-friendly policy.

Looking at the economic and political landscape, the time seems ripe for taking actions (moving forward with tangible deeds) over the next four years to provide for the common wealth of the Commonwealth of Virginia through a reinforcing of these four core elements of Virginia’s governmental policy.

Central to such an approach would be a recognition (and embracing) of the reality that it not the economy versus the environment, but economy and environment.  (For a draft speech on this, that could be used by any politician, at any political level, as a template for something that most Americans would embrace, see: E2 Solution for Energizing America Toward a Better Future.)    Using a term that is gaining moment, in short: Clean Energy Works. And, it would work well within Virginia’s heritage.

Amid tight financial times where states are slashing budgets and laying off workers with reduced tax revenues (and swollen unemployed ranks), why should the Commonwealth embark on some form of massive ‘clean energy’ investment effort.  In short,

Investing in energy efficiency and clean energy can save government entities (taxpayers) money, improve government worker productivity and improve educational performance, help protect the environment, and strengthen business (both in terms of opportunities and competitiveness).

Okay, that is a “why”, but what about a “how”? Let us provide just one example:

To promote the common wealth, the Commonwealth of Virginia should establish a major “Greening the Schools” initiative. This would have several elements:

• A Tiger Team of state (Commonwealth) experts to audit school properties (working with local school systems) and develop investment/retrofit plans for ‘greening’ schools (with a major focus on improving energy and other resource efficiency);
• The Commonwealth should seek a bond to pay for ‘greening schools’.
• A key Tiger Team requirement: establish the program for 15+% annual return on investment, for the savings to then be split between the Commonwealth and the local school systems.

What are the benefits of such a Greening the Schools program?

• Reduced utility bills for school systems throughout the Commonwealth, making resources available for other educational requirements (teachers?) or enabling reduced tax loads;
• Creating jobs throughout the state (those retrofits) while sparking business opportunities (those retrofits) and fostering citizen’s and business ability to have energy efficiency improvements done in the home/business due to increased local capacity for (and knowledge of the value of) such retrofits;
• Improved school performance (through more comfortable educational spaces (better lighting, better temperature control, fewer pollutants in the air), reduced illnesses/absences (both teachers and students), etc …)
• And …

This program, likely to merit a bond program of over $500 million, would enhancing the Commonwealth’s reputation for good governance, focused on win-win-win solutions, through adroit partnerships of the private and public sectors, with the ability to track results and performance.

Consider approaching the economic challenges faced by the Commonwealth of Virginia (and the rest of the nation) through the path of such win-win-win-win efforts.  This would be truly praiseworthy acts … in other words, deeds for the Common Wealth of the Commonwealth.

Sadly, the abysmally weak Superfreakonomics is getting worldwide attention and its authors plenty of opportunities to continue to mislead on climate issues. Here is a guest post from Josh at Enviroknow providing a critical (highly footnoted) analytical eye to the Super Freaky Economist‘s oped in USA Today.

After a stunningly non-confrontational chat with Jon Stewart [see Greenfyre re The Daily Show] the other night, the authors of Superfreakonomics have now taken to the USA Today Opinion blog to continue pushing their nonsense. While they deliberately cited increasing global temperatures — as well as legitimate concerns such as oil wars and ocean acidification — the fact remains: they have gone way too far off the beaten path to successfully walk this one back. As has been the case throughout this episode, they continue to grossly oversimplify and commit numerous logical fallacies in order to make their seemingly-compelling contrarian argument.

I’ve identified 22 flaws in this latest 920 word piece.

Follow me, after fold, for a look at these 22 flaws. [Editor’s note: This represents a flaw every 42 words. Flaws per word is an interesting metric for opinion pieces (and, well, anti-science syndrome suffering ‘studies’) that could merit future and further use.]

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There are many things being lost in the discussion of the cost-benefit equation when it comes to mitigating global warming.

When doing cost-benefit analyses, organizations like the Congressional Budget Office (CBO) and Environmental Protection Agency (EPA) are constrained to consider just one quadrant of what could be considered (in simplified form) the four-quadrant cost-benefit analysis structure:

1. Cost of action
2. Benefit of action
3. Cost of inaction
4. Benefit of inaction

Writ large, these governmental institutions focus solely on seeking an accounting of the first quadrant, in narrowly defined economic terms. Thus, for example, that reducing fossil fuel pollution will reduce the negative health impacts on the American public is not part of the analysis of climate and clean-energy legislation. (Note that the National Academy of sciences just released a study showing, in 2005 terms, that these health impacts cost the economy at least $120 billion per year.)

In essence, these “externalities” are priced into analyses.  Everything that does not get monetized essentially does get monetized, just at $0.  Thus, what are some of the things that are monetized with a $0 value in the economic analysis of climate legislation?

Americans’ health
• Value of beach front property
• Agricultural productivity
• Biodiversity
• New Orleans and other American ports potentially threatened by rising seas and stronger storms
• And, so on …

Others have identified this problem and provided roadmaps (warning, pdf) for changing the instructions so that analysis captures the real value (and cost) of action (or inaction).

There are other gap arenas in the analysis. If there is a some form of carbon pricing (whether via a Cap & Trade or some form of Carbon Fee (inappropriately called a “carbon tax”), then  “energy prices” in terms of unit costs will go up. This, of course, is a misrepresentation because the real question is the cost of energy services, not the unit price of energy.  With serious focus on efficiency, an element of both the Markey-Waxman bill that passed the House and the Kerry-Boxer bill under consideration in the Senate, total energy costs will fall.  (This is without even considering conservation driven by awareness and, yes, unit costs of energy.)

When analysis focuses on total energy costs for households, for example, this is finding that average households throughout most of the United States would see lower total energy costs due to improved building codes, more efficient appliances,  reduced tax burdens as their local/state government utility bills fall, etc …

This, however, fails to address a more complicated, but potentially more significant, element of the equation.

The impact of reduced demand (due to efficiency and conservation) is not being modeled or seriously discussed (as it wasn’t amid the announcement of new automotive fuel efficiency standards).

If the US drops its demand for oil by 5 million barrels / day (25% or about 6% of global demand) by 2020 (no matter what other countries do), how much lower will oil prices be due to that reduced demand against supply? If it were as low as $5 barrel? That would be savings to US economy of $75 million day if usage (at 15 million barrels / day) and over $27 billion per year. (And, that would be $27 billion of dollars staying the US rather than sent overseas to buy imported oil.) If that demand destruction reduces prices by $10? By $20 barrel?

In other words, the increased “taxes” (or, better term, carbon FEES) could very well be offset by the reduced commodity prices due to reduced demand. This is quite difficult to model with any great confidence and there is the serious question of ‘proving a negative’ (‘oil prices would be lower if the US had only continued to strengthen the CAFE standards rather than standing still for 20 years’ — boy, almost certainly true, quite difficult to “prove” to support policy-making). While difficult to “prove” in a model, there is more substance and confidence that can be ascribed to this than screams of job loss (coming from people who helped facilitate the export of US heavy industry to China over the past decade or so …)

A note: We should put aside those who come to the table with explicit agendas, blatantly skewing data to support their perspectives. Notably, this seems to be occur principally with opponents to action. Studies from such groups as NAM/ACCF, Charles River Associates, and the Black  Chamber of Commerce (see here)  simply do not stand up to even cursory examination for statistical flaws and biased inputs into their modeling. (Quite simply, providing textbook examples of GIGO analysis: Garbage-In, Garbage Out.)

Supporters of acting to mitigate Global Warming and avert catastrophic climate change often take ‘conservative’ approaches, seeking to maintain credibility with what they know are understated estimates of the benefits of action.  For example, Mckinsey & Company has done some of the most cited work related to the costs and benefits of energy efficiency and other actions to reduce US emission levels.  They show that the US could move quite aggressively, with an aggregate cost of under $50 per CO2 to meet targets for emissions reductions. Their analysis, however, does not count the benefits of reduced health costs due to lowered pollution nor does it calculate systems of systems benefits (such as if a city’s buildings all have cool roofs, the benefits are not just for each building, but the reduced heat island impact reduces the cooling energy demands for all buildings).  And, perhaps surprisingly for a business consulting form, they do not calculate the productivity improvements that come from greening work spaces (nor the educational benefits from greening educational institutions.)

Turning from analytical / consulting organization like McKinsey  to explicitly advocacy groups  finds similarly constrained analysis.  Greenpeace’s Energy [R]Evolution work also does not monetize the benefits for averting climate change.

Thus, those opposing action on climate change are showing no hesitancy in putting out truthiness-laden misrepresentations of the implications of acting to mitigate catastrophic climate change while those advocating action are, near uniformly, understating the case for action.