The Village on Poolbeg

James Nix, master’s in real estate, barrister, and unsuccessful candidate for the Green Party, has a piece in the Village: “Incinerating money: the economics of Poolbeg”.

The summary is interesting: An overwhelming success story of private sector dynamism in recycling is set to be undone by an oversized incinerator at Poolbeg – at massive cost to Dublin’s businesses. This was told to me in confidence, but it is good to see it confirmed in print. IWMA is not against incineration. Rather, they know they cannot compete. Nix champions the local companies who are fighting to maintain their grip on an undersupplied market.

Nix claims (as are others) that the Poolbeg incinerator is vertically integrated with waste collection. It is not. The incinerator will burn waste from any collector.

Michael Smith, Village editor, has a companion piece: “The Poolbeg incinerator: an essay in cynical lobbying”, in which he argues that Minister “Gormley has faced an insidious onslaught from multiple quarters” — a cabinet member victimised by the powers that be.

This was published yesterday. Smith write: “[t]he most blatantly inaccurate presumption was that emissions from the Poolbeg incinerator would be included under the EU Emissions Trading Scheme. This resulted in a significant underestimate of the costs of the facility.” This is disingenuous. After inclusion of CO2 emissions, incineration externalities are still far below the Eunomia estimates.

Smith also writes that “John Gormley is […] sitting on the foreshore licence” something that the Minister has repeatedly denied (see latest example).

Poolbeg and drinking water

While I am still waiting for someone to explain to me why you do not need a foreshore license if you own land, An Bord Pleanala has cleared the Compulsory Purchase Order and construction of the Poolbeg seems set to continue (according to the Irish Times).

UPDATE: JD DUG UP THE PERTINENT LEGISLATION

While a lot of effort was spent (in vain, it appears) to stop incineration in one particular constituency, there is a warning about the quality of drinking water. We said roughly the same thing over a year ago and the EPA issued warnings before that. Although there is an investment deficit, it is not likely that drinking water quality can be improved without institutional reform. There is no sign of that.

The case for a carbon tax

After the 10:10 campaign accidentally hit the self-destruct button just a week before their big day, it is useful to remind people that greenhouse gas emission reduction is still a worthy goal, beyond collecting taxes.

This will soon appear in La Stampa:

Florence is said to have the best climate in the world. Surely, tourists from around the world flock to the northern shores of the Mediterranean, as do growing numbers of pensioners. That will change in the future as more northerly destinations will become more attractive and northern Italy may get too hot for the average Brit and German.

The impact on the Italian tourism industry is but one of the many effects of climate change. Some of these impacts are positive. Less energy will be needed to heat homes in winter. Crops will grow better as there is more carbon dioxide in the atmosphere. However, for most people, the impacts of climate change are, on balance, negative. This is surely the case in the longer term.

People often portray climate change as the greatest problem of the 21st century. Twenty years of economic research pooh-poohs the idea that there is an impending catastrophe. Poverty and air pollution kill more people per year that climate change will in a century. But that does not take away that climate change is a real problem that does real damage.

Climate change primarily affects poor people in faraway places. Poor people often live in hot places. They are more exposed to the weather. They cannot afford to protect themselves against the vagaries of the weather. This means that climate policy is not for our benefit, nor for the benefit of our children and grandchildren. Climate policy is primarily for the benefit of the children and grandchildren of people in distant countries. We have a moral obligation, however, to avoid harming others or to compensate them if we do.

We should also wonder what is in the best interest of future generations. Greenhouse gas emission reduction would slow the spread of malaria. A malaria vaccine would eradicate the disease. Climate change may cut food production in Africa by one-third. If African farmers would use the latest farming methods, food production would increase ten-fold. Climate policy should therefore not come at the expense of development policy. But it does: A growing share of development aid is spent on climate change. This should stop.

Some of the impacts of climate change are really impacts of poverty in disguise. If we leave these aside, there is still plenty to worry about climate change, including its impact on ice sheets. And there are many things that we do not know or understand. The effect on biodiversity is one such area. We know climate change will have widespread negative effects, but we do know how bad it will be. We know that the negative impacts of a gradual warming in the 21st century would be modest, but there has been no serious study of the impacts of more rapid warming or of the impacts in the very long term. If emissions continue unabated, climate change after 2100 could well be much more dramatic than anything foreseen for this century. Nor do we know much about the indirect effects of climate change. Tropical countries tend to grow slower than economies in the temperate zone. If climate is a contributing factor to the inability to develop, as some scholars suspect, then the impacts of climate change are much larger than current estimates suggest. But we simply do not know.

Everything about climate change is uncertain. Uncertainty is no reason not to act. In fact, it is the other way around. What we do know, suggests that climate change is a real problem. There is a small chance that current concerns are overblown. There is no reason to believe that climate change will make us all rich. But there is also a small chance that climate change will wreck the livelihood of many people. A relatively modest investment in greenhouse gas emission reduction would take away the worst risks. If the climate optimists are right, we would have made energy a bit more expensive for no reason. If the climate pessimists are right, we would have avoided a catastrophe. A rational person would err on the side of the pessimists.

There is another way of looking at the same problem. If we burn all fossil fuels that are still in the ground, Earth could get very hot. We cannot let the planet get warmer and warmer and warmer still. That must get us into real trouble sooner or later There is only one way to stop the carbon dioxide concentration in the atmosphere, and hence the temperature, from rising: Emissions have to go to zero. That is a daunting task. We will need a century to do this. You will not make it to the end of the journey if you do not start. We may decide to start slowly and cautiously, but a small start is better than no start at all.

Similarly, solving the problem of climate change will require the cooperation of all substantial countries on the planet. It is easy to wait for others to move, but that guarantees failure. A responsible country reduces its emissions, regardless of what others are doing. Perhaps one should not step too far ahead of one’s main trading partners, but lagging behind creates more long-term problems than short-term gains.

[Final paragraph removed, as it is about Italy’s lacking climate policy]

FDI in Ireland

Goerg, Hanley and Strobl write about FDI policy at Vox EU. Here’s the summary:

A chief concern for countries aiming to attract investment is how it will trickle down to the local economy. This column presents evidence on the effect of government grants to foreign companies investing in Ireland between 1983 and 2002. It finds that the grants had little effect on generating supply links with local firms and argues that governments should instead work towards reducing partner search costs.

Regulating knowledge monopolies

I have a post on VoxEU (backed up by a paper) on the regulation of knowledge monopolies in general and the IPCC in particular.

Other countries have carefully prepared their positions for next week’s meeting in Busan. The Netherlands will call for substantial reform of the IPCC along the lines of the IAC and PBL reports. The United Kingdom will not call for Pachauri’s resignation as cordial relationships with India are deemed more important than effective leadership of the IPCC. I was met with a stunned silence when I recently asked two senior civil servants about the Busan position of Ireland, the Country That Leads The World in the Fight Against Climate Change.

We are used to thinking about market structures for goods and services, and there is a considerable body of theoretical and empirical work on how to keep market power in check. Policy advice is a service too, and relying on a single source of knowledge can have detrimental effects. The IPCC is one example, but there are examples closer to home too.

Meanwhile, Brian Lenihan wishes there was a single source of advice, and again. Cosy groupthink was one of the things that got the Irish economy into the current mess.