The one-handed economist

Jasmijn writes*

It is commonly assumed that solutions to climate change are to be found in the realm of the natural environment. It is intuitive that decisionmakers and individuals focus on interventions such as the development of renewable energy sources, plant-based diets and the recycling of plastic in the process of adopting climate change mitigation strategies or more sustainable life styles. As a result, policies that have traditionally been labeled as part of the social equality and development discourse are rarely considered.

An example of a rather surprising but highly influential climate policy is the promotion of education for girls. This policy kills two birds with one stone and addresses three of the Sustainable Development Goals: quality education, gender equality and climate action. To put it into more economic terms, it appears that increasing education for girls might have positive externalities that we are unaware of. If these environmental benefits are quantified, funding could be provided by environmental governmental departments and NGOs and thereby supplement the resources already available through development aid. More resources available means a higher chance of a successful policy.

One of the most obvious advantageous characteristics of a society with more educated women is a reduced rate of population growth, because better education women tend to have less children. Classic authors such as Malthus (1798) [pdf] and Erlich (1968) have highlighted that our increasing human population will ultimately lead to the degradation of the natural environment. Hence, a stabilized rate of population growth will result in a quantifiable reduction of human pressure on the environment, for example by a reduction in carbon emissions, land use change rates and pollution.

Secondly, educated women will have skills that enable them to participate in the decision-making process and resource management. In the global South, women are largely responsible for the collection of raw materials such as fuelwood and play a central role agricultural production due to the persistence of traditional gender roles. Decisionmakers will miss out on gendered knowledge about these resources by excluding women from the decision-making process and thereby reduce the effectiveness of mitigation policies. Moreover, management strategies proposed by women might be more sustainable, as women’s needs are generally more closely related to the preservation of nature. For example, the conservation of forests is essential for the collection of fuel wood.

Nevertheless, the relationship between education, women’s representation in decision-making bodies and environmental sustainability is complex. Patriarchal norms are resilient in many societies and even if chances to participate increase by education, women’s voices may not be heard [pdf]. Additionally, one should keep in mind that women are not a homogenous group. Other factors such as class and race also come at play, and it is unclear how women’s education interacts with those variables. Therefore, it is challenging to quantify the role of increased women’s education in effective and sustainable resource governance.

Bottom line: Education of girls does not only affect social equality, but also has a positive impact on the state of the natural environment. Two important dimensions of these positive environmental externalities are a decrease in carbon emission due to reduction of population growth, and resource management that is more focused on conservation. However, social norms about gender are powerful, which might decrease the effectiveness and benefits of this policy.

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Jacinta writes*

Globe trotting has evolved from a luxury to an entitlement, largely enabled through a booming aviation market represented by uncharacteristically low prices. The industry was historically given the freedom to unfurl its wings, liberated by government subsidies through exemptions from VAT on tickets and fuel taxes [pdf], saving UK airlines approximately £10 billion annually.

This industry of substantial significance contributes to 8% of world GDP, 13% of the transport sectors GHG emissions and 2% of global GHG emissions. Masked by the benefits from net gains, the ‘only 2%’ argument has been tossed around a lot. Yet adhering to this train of thought would lead to a global paralysis, as many countries contribute to ‘only — or less than! — 2%’ of GHG emissions, such as the UK, Canada and Australia.

Carbon emissions aren’t the only cause for climatic concern. Due to the altitude at which emissions occur, aviation has more intense short lived impacts from contrails and cirrus clouds, resulting in high radiative forcing. Therefore, narrowing the timescale to a 5-year period, the aviation sector contributes more to global warming than all the cars on the road. This is a stark contrast to comparing only their GHG emissions (share of emissions within the transport sector: 13% aviation : 73% road). Couple this with the fast paced growth of the industry, and concern is brewing. According to the International Civil Aviation Organization (ICAO), by 2020, global aviation emissions are expected to exceed those of 2005 by 70%, with a further estimated growth of 300-700% by 2050. With this all in mind, questions arise over whether these short term impacts are careering us towards (and over) critical climate tipping points.

This complex issue is thus about more than carbon emissions, but action needs to occur, fast. The negative impacts from aviation are neither disputed nor (scientifically) underestimated, but it is one of the few industrial sectors with growing emissions. Technological efficiency has improved fuel efficiency by 70% over the years, but overall growth has outpaced emission reductions, and efficiency improvements will not come at the same rate as in the past. Although a must, promises of alternative fuels; claiming to enable continued growth without jeopardising climate change efforts, are considered fanciful. Therefore, further rapid expansion can not be compatible with the sustainability of the sector.

To date, the ICAO has been solely in charge of mitigation strategies. A challenging feat, being a globalised industry with differential treatment between developed and developing countries. However, results have been insufficient. Most recently, the ICAO 2016 proposal outlines offsetting future carbon emissions against a 2020 baseline, beginning with a voluntary opt-in participation by States. Critics have forecasted it will not be enough and that the “carbon neutral growth” goal will not be achieved:

Commentators voice the need for the use of market forces, taxation (whether that be a carbon and/or fuel tax) or stronger regulations, to enforce a stronger compliance to CO2 reduction and more stringent offsetting.

Bottom Line: Despite the technical advances reducing emissions per flight, the rapidly growing aviation sector shows no signs of slowing its contribution to climate change. Robust steps need to be taken to curb impacts.

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Jiske writes*

Bee Movie (2007), an animated children’s movie about the lives of bees, highlights bee’s unpaid work of producing honey for humans. Although it is a comedy and does not address the issue in quite a serious way, it is true that bees provide us with free services of plant pollination and honey production. Especially pollination is a vital ecosystem service. If bees were to go extinct, our food supplies would decrease rapidly in variety due to the loss of pollination and the effects of this on the food chain.

In “The Fable of the Bees: an Economic Investigation,” Steven Cheung introduced us to the market of beekeeping (Cheung 1973). He disputes earlier arguments that describe the processes of bees feeding on nectar and pollinating apple blossoms as an unaccounted for “public good” that will be underprovided. Cheung argues that there is a robust market in beekeeping with established financial relationships between farmers and beekeepers, including agreements on when to use pesticides to minimize harm to bees. Still, this paper was written in the ‘70s, and times have changed. Pesticide use, including glyphosate, has increased significantly over the past decades. Importantly, glyphosate use is known to harm honey bees, specifically affecting their gut bacteria.

So how do the benefits of using glyphosate as a weed killer weigh up against the negative effects it has on bees, and the related loss in pollination services and honey production? A logical way of addressing this is by conducting a cost-benefit analysis to compare the monetized benefits of bees services to the costs of using glyphosate under alternative scenarios. One alternative is a full stop to the use of pesticides, which would be benefit bees greatly, but lead to a significant cost due to reduced crop yield for farmers. Another is to substitute a different weed killer, but according to farmers, finding an alternative that is as cheap, and cost-effective as glyphosate is quite the challenge. The bees versus glyphosate controversy is one with essentially the same stakes on each side: food production for humans. No wonder that this issue hasn’t been solved yet.

Bottom line: Bees and pesticides both have positive purposes for food production, and we will have to find a way to ensure sufficient food production in the long term without losing bees as our critical pollinators.

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Coen writes*

In 2011 an earthquake shook the north east of Japan — an earthquake of such magnitude that the regular safety mechanisms in the Fukushima nuclear power plant needed to kick in. Some reactors shut down, but the tsunami caused by the earthquake damaged backup power generators, which lead to a cooling failure and an overheated reactor that released radioactive material. This nuclear disaster led Germany to immediately shut down eight of its nuclear power plants.

In Germany there is very negative view towards nuclear energy which had already led to multiple plans to phase out nuclear energy. In 1998 the German government had already planned the nuclear phase out, which was then reversed in 2009 by a new government that planned to keep nuclear power plants open until 2030-2035. Post-Fukushima, the government decided to end nuclear generation by 2022.

This new energy strategy puts a major focus on green energy. Germany needs to decrease their greenhouse gas emission by 40% by 2020 to mitigate climate change. Davis et al. [pdf] review the possibilities for the transition to a low carbon energy sector. They observe the energy transition could lead to problems since some energy systems are hard to move away from fossil fuels. These systems need a lot of energy, reliably delivered, which can be hard with renewable wind and solar energy subject to variation. Germany faces this problem and thus only generates small volumes of green energy.  Germany’s turn from nuclear to  lignite coal explains Germany’s failure to meet their CO2 reduction emission targets.

Nuclear energy could provide a stable source of energy, which lends Germany as a good subject for a cost benefit analysis. The analysis will compare the costs of closing nuclear power plants versus keeping them open. The analysis will consider several factors: health effects, CO2 emissions (cost of climate change), expenses for infrastructure development, political implications, and energy variability costs. In order to make the comparison between the scenarios of zero emissions with nuclear or without nuclear energy the energie transitie model can be used. The model could be used to identify changes in Germany’s CO2 output with a changing energy mix.

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Leo writes*

When I read this tweet by Dr. Paul Behrens (below), all my personal frustrations about travelling within Europe re-emerged. I frequently face the decision what mode of transport I should choose when travelling from my home in the very south of Germany to The Hague. Do I take the plane, seeing that it is fast and cheap, yet emits the most CO2 of all transport modes? Or do I take the train, which emits the least CO2, yet is relatively expensive and delays are not an exception but rather the norm?

How have we come to face such a dilemma? The answer is comprised by several factors. With regards to the European aviation sector, one finds that kerosene is exempt from excise duties within the EU [pdf] despite the fact that road and rail transport face excise duties. Interestingly, individual member states are allowed to impose a tax on aviation fuel used in domestic flights. However, the several bilateral agreements between member states to exempt kerosene from taxation shows they do not want to. Rather, they hand out an effective subsidy for the aviation sector which further fuels its growth and emissions. Furthermore, international flights out of Europe, contributing 60% to the rising carbon emissions of European aviation, are entirely unregulated and not subject to VAT on airline tickets [pdf]. Nevertheless, the effectiveness of general ticket taxes in providing necessary incentives for airlines to reduce emissions has been questioned [pdf]. The study suggests basing a ticket tax on specific measurements, including the distance to the destination, as well as on an airline’s average fuel lifecycle emissions. The latter allows the passenger to decide to either fly with an airline that has exclusively used fossil fuels and thus, face a higher tax rate or, choose an airline that has used a share of low carbon fuels.

If flying in Europe will become more expensive, how can it then be ensured that all citizens remain mobile and connected? Looking at the Chinese example of a functioning, affordable high-speed rail network, the answer seems clear. Currently on track to complete 30,000 km of high-speed railway lines by 2020, China has created an effective means of connectivity between major cities throughout the entire country. So, where does the EU stand on high-speed rail? A recent report by the European Court of Auditors arrived at a rather damning conclusion. Not only will the European Commission fail to achieve its target of tripling the number of km of high-speed rail lines by 2030, but the report states that in fact, “there is no European high-speed rail network”. The reason is multi-faceted. Among other factors, operational models differ among member states, resulting in high-speed trains using conventional tracks and conventional trains using high-speed tracks. Moreover, costly high-speed lines able to handle speeds of more than 300 km/h have been constructed where they are not utilized and generally, trains have been found to run on average at approximately 45 % of the lines’ design speed. Thus, even though high-speed trains exist in Europe, they deliver low-added value.

Bottom line: Findings show a general lack of a European wide vision. Neither for taxing the European aviation sector appropriately, nor for ensuring rapid progress in establishing a consistent European high-speed rail network. If the EU is serious about cutting emissions and advocating for rail to be a serious competitor to aviation, enhanced cross-border collaboration is required.

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Patrick writes*

German society and its political narrative have changed with humans relation to the environment. Politicians are using the “green” narrative to gain votes. Good can – and has – come of this; due to increasing social pressure, since the late 90’s early 2000’s there has been a huge rise in renewable energy generation in Germany, increasing from around 3-5% of total energy production in 1998 to about 38% in 2018. It is the one of the countries at the forefront of energy sustainability. On the other hand, however, the political aspect of this genuine societal movement towards more sustainable living can warp the materialization of solutions to our pollution in such a way that they may end up doing more harm than good.

Nuclear energy in Germany is a good example of this. Following the 2011 earthquake and tsunami that caused the reactor breakdown in Fukushima, there was heightened fear around nuclear energy globally. Just two weeks later, Germany’s green political party, ‘Die Grünen’, had a sudden spike in their amount of supporters. For the first time, the party had won seats in the state parliament. With this political success in 2011, they accelerated the process of decommissioning Germany’s running nuclear reactors. They started this process themselves in the late 90’s, when the Nuclear Exit Law passed, at a time when the fear of nuclear extinction was still very much felt and reducing the perceived nuclear risk was central to their agenda. They still keep a similar agenda, and continue their fight against nuclear power even though there are much bigger environmental threats looming. Therefore, along with Merkel’s announcement of the ‘Energiewende’ (Energy transition plan) in 2011 hailing in a new era for renewables, also came the news that all 17 nuclear reactors in Germany will be closed by 2022. As people that care about climate change we might ask ourselves; is all this environmentalism really beneficial?

Even though the renewable share of energy production is rising year over year, a simultaneous switch from nuclear energy over to fossil fuels is happening. Due to the inherent variability and unpredictability of renewable energy sources (intermittency), a grid powered solely by renewables cannot follow the daily ups and downs of energy demand within the day, and a certain share of the electricity still needs to come from sources that have the capacity to dispatch electricity on demand. In order to meet the market hourly demand they would usually get this electricity from a mix of sources; nuclear, fossil fuel and natural gas. Out of all energy sources, renewables have the lowest emissions per unit of energy produced (9-46 g CO2e/kWhe), followed by nuclear (16-66 g CO2e/kWhe) and finally by fossil fuels (443 -1050 g CO2e/kWhe). In all it’s haste to pass a deal that would please their voters, the government overlooked how they would power the country in the absence of nuclear power.

Germany has now increased the share of energy it generates from coal to around 40% of the total energy output (2016 numbers). Even though they have 38% of their energy coming from renewables, they had to nearly double their reliance on locally sourced lignite (brown coal), the fuel source with the highest emission per unit of energy, so much that throughout 2013 to 2015 emission levels rose by 1.8 % while the EU’s lowered by 1.3%. This trend will continue as more and more of the nuclear generators are decommissioned until 2022, since there are no other alternatives other than coal to replace nuclear in Germany. This whole plan of going green by reducing nuclear power seems to be backfiring in a spectacular way.

So why in hell are they doing it? To please their voter base. The Green party’s ideological attack on ‘toxic’ nuclear power has undermined its potential contribution to a low-emission energy transition. 

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Sean writes*

 A big part of the allure of electric cars is the idea that the consumer is doing something good for the environment by opting to drive electric rather than a traditional fossil-fuel powered car. In the context of Tesla, the world’s most famous electric car the decision to go electric while remaining fashionable is enough for many to pat themselves on the back and not delve into the specifics of their new toy. I’m here to tell you that the purchase of your shiny new electric car might not be all it’s cracked up to be, if you’re an environmental warrior chances are you know this, the problem is the general population does not.

For an electric car the negative impact on the environment starts with the production of its lithium ion battery. If you’re buying a Tesla in the US chances are your battery will be produced at what’s known as the Gigafactory. According to the linked website “Tesla’s mission is to accelerate the world’s transition to sustainable energy through increasingly affordable electric vehicles”. A Tesla’s battery chemistry is a mix of nickel, cobalt, and aluminium. This combination is touted for its energy density, however the mere quest to attain the elements required to make the battery i.e. cobalt mining in the DRC leads to negative environmental consequences.

By 2021 more than 10 million battery packs for cars will be able to be made due to increased production capacity. The bulk of production coming from countries who still heavily rely on the burning of coal for electricity: China, Thailand, Germany, and Poland. Some of Tesla’s batteries are produced in the aforementioned countries using dirty power and as a result carries greater negative externalities. Knowing where the electricity that fuels production comes from is crucial because it’s what much of the carbon footprint from the car comes down to. If you plan on being an environmentally conscious consumer of any electric vehicle make sure to do a bit of research as to where your model’s battery was made, even amongst one maker battery origin can vary.

On the road, your electric car is reducing your carbon footprint, but just like with your food the big question regarding the increase in consumption of electric cars will be “Where is your electric car coming from?” Failure to inquire about the production process behind the vehicle you choose will render the goal of its purchase somewhat meaningless and see the consumer become a victim of greenwashing.

Bottomline: How your E-Car was produced holds the answer to whether or not it helps the environment.

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Sebastiaan writes*

With just one click, I open the Deliveroo app and start scrolling through the options, my appetite reaching an all-time high. My cravings for the Ahi Poke Bowl with mango and avocado is dissipated by a sudden desire to be drowning in Paneer Butter Masala which is, in turn, forgotten by the sight of a Pizza Margarita only half a second later. The abundance of food choices is getting the better of me.

I have become a (somewhat voluntary) victim of a Dutch trend from recent decades: an increase in the diversity of eating. As a consequence of this development and trends in population and technology, the Dutch have pushed agricultural lands to increase yield. “Can we go on like this?” I ask while continuing my digital quest for the perfect dinner. The short answer turns out to be ‘no’ because everything comes at a price.

The continuing rise in food consumption has lead to the point that humans confiscated 25% of the biomass produced on the entire planet. This so-called Human Appropriated Net Primary Production (HANPP) is expected to keep rising until 44% in 2050. So far, conventional farming practices have primarily aimed to increase the HANPP by focussing on maximum yield. This aim means more competition for non-harvested species such as soil fauna and soil microbial life. Without this type of life, future yields will plummet and so will my choice on Deliveroo.

For years soil biodiversity has been decreasing in large parts of Europe that has been linked to rising agricultural intensification. Wageningen University and Research has compiled years of studies on this topic;  regional government agencies [pdf] increasingly report the adverse effects of conventional farming practices on soil biodiversity. The Global Soil Diversity Atlas identifies a few main destructive factors of farming, which include the excessive use of fertilizers and pesticides, monocultures, and ploughing. Although the national Dutch government already subsidies farmers who follow ‘green requirements’, biodiversity above and below-ground is declining at one of the sharpest rates of all European countries.

If the diversity in my dinner choice really is at the cost of the biodiversity in the soil, would I be willing to pay for this cost? And if Deliveroo allows me to add a euro or two on top of the price of my meal, would that make actually make a difference? And if we, miraculously, all share this cost, will the benefit be greater?

I start to lose my appetite as I overthink the consequences of each and every food choice that has appeared on my screen tonight. Slowly but surely I approach my fridge, with a belly that’s empty but a head full of thoughts. Beer turns out to be my only salvation for the night. I crack open a cold one and think to myself: “Today, I saved the Earth”.

Bottom line: The pressure on agricultural lands and ecosystems has increased with consumption in recent decades. Conventional farming practices are weakening ecosystems needed for future yields. Consumers, unfortunately, will have a hard time considering these costs because it’s difficult to understand all the impacts of one’s daily choices.

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Yeseong writes*

What is going on in Asia?
The stomach-churning photo of god-knows-how-many plastic bags is actually a photo taken after the autopsy of a dead short-finned pilot whale was done in Southern Thailand. 8kg of plastic came out of the whale’s stomach. This has yet again attracted considerable attention to the fact that Asia is home to five of the world’s top marine plastic polluters and it is currently the largest source of plastic pollution in the ocean. In fact, five of the leading Asian countries create more than half of the world’s plastic waste: China, Indonesia, the Philippines, Vietnam, and Thailand.

One of the biggest plastic use in Southeast Asia is closely related to their food culture: incessant pad thai take-outs, late night 7-eleven snacks and ice-cold bubble teas. Before that, they were using bamboo, pots, banana leaves, and tin cans for the same purposes. This is an evolving culture that started around the 1970s and fully developed by 1996, one that unfortunately involves polluting our oceans and killing the marine animals. 

What are the possible solutions?
There are more than a dozen successful examples of the attempts to reduce plastic consumption and ocean pollution. One that has turned out to be highly effective is the example of the Netherlands; they have successfully put a price tag on the use of plastic bags at stores and turned the situation to a win-win—the shops now get paid to sell the plastic bags and there is now more than 70 percent reduction in the use of these bags. Southeast Asian countries like Thailand are only getting started in their efforts to reduce the amount of plastic used. However, the complications in solving the issue are substantial. In Thailand, the biggest plastic users are not the industry nor the government; they are the citizens. Without changing their behavior or their incentives to use less, having any real outcome is not viable.

What Thailand has implemented looks similar to what others have been doing. First of all, they have decided to ban all imports of foreign plastic scrap in 2021 this amount has grown exponentially since China decided that they are not importing the West’s garbage anymore. They have also declared war on single-use plastic bags from shops, banning all single-use plastic glasses, very thin plastic bags and plastic straws in 2022. They are also hoping to reduce the amount of thicker plastic bags by 70% over the next 20 years.

Bottom Line: Thailand, one of the world’s worst polluters of plastic going into the ocean, has decided to wage war against everyday plastic use, but I don’t see how they are going to change people’s deep-rooted behavior by using extreme measures (banning everything) rather than a structured plan.

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).