Author Archive

The Troubling Murkiness of Sustainability

What does the phrase “sustainable development” mean to you? Your answer is particularly important, because our government is asking us to make many sacrifices to our personal freedoms in its name. We need to know if it is all worthwhile. Consider the following:

Where did this phrase originate? The United Nations World Commission on Environment and Development (also known as the Brundtland commission) first coined the phrase in a report published back in 1987, and it has since taken on a life of its own ever since.

The Environment Protection Agency (EPA) uses this definition: “Sustainability creates and maintains the conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic and other requirements of present and future generations.”

What is required for promoting sustainability? Setting aside the notion of “productive harmony” between humans and nature (whatever that means), finding the best way to fulfill the resource demands of both our present and future generations certainly sounds appealing.

Yet, based on the hue and cry for greater regulation over energy production and natural resource use in our economy, it appears that the voluntary interaction between people engaged in production and exchange in the private marketplace is an unsustainable system that has been found wanting.

Is there a better alternative than voluntary exchange? It is assumed by many that abandoning the marketplace and embracing a democratically designed regulatory process for allocating our nation’s resources will create a superior balance to this intergenerational tug-of-war over alternative resource uses.

However, in two earlier articles appearing in this blog, I give many reasons why we cannot presume that a centralized and involuntary approach toward managing our nation’s resources — even through a democratic process — will necessarily create a more sustainable outcome to the private marketplace.

Why? The same misalignment of incentives and imbalance of influence over resource use decisions that critics claim corrupt the market process are also quite prevalent in any democratic process that directs public resource use. But there are still other issues with relying on public policy to effectively deliver sustainable development.

What are the costs and benefits of sustainable development practices? Whenever the voluntary interactions between people are curtailed, they bear the lost benefits that could have been enjoyed by both parties had they been free to continue their activity. These costs are real and can only be revealed by those who willingly abandon this activity. Like the homeowner who relinquishes her house title to a buyer willing to pay the right price, the true value that is lost from this forgone activity is revealed only when a person receives sufficient payment to voluntarily stop the activity.

Even when market activities do not impose any burdens on third parties (like pollution), restricting human freedoms in the name of sustainability is usually justified by the claim that benefits need be preserved for future generations to enjoy. Yet, these benefits can only be accurately measured by those who voluntarily pay to preserve them for others to consume. Like the ratio of income that parents save for their children’s college education, the value of these future benefits is revealed only when each person voluntarily pays a price sufficient to acquire them for someone else.

This all implies that if our federal agencies claim to know the true costs that are borne by everyone who is forced to abandon their beneficial activities, or to know the true value of benefits that are funded by many people today but reserved for future generations to enjoy, then our democratic government suffers from a hubris that Friedrich von Hayek termed “the fatal conceit.”

Hayek understood that only the voluntary, decentralized interactions of millions of individuals in the marketplace can create the spontaneous and orderly outcomes that incorporate the greatest amount of cost and benefit information that could possibly be considered in order to create the best possible outcomes for the greatest number of people in society.

One of the reasons we value freedom so highly is that we instinctively know that nobody else can manage our own lives to produce as much joy as we can obtain by freely making our own decisions. Indeed, the concept of sustainable development has been applied with great rhetorical fervor to just about everything we find valuable in society — except the joy from exercising our personal liberty.

Which brings us back to our initial query: Is sustainable development — at least as it is being promised and delivered by our federal bureaucracy — worth the price that we are being asked to pay? How would you know?

Aug 20, 2014 | 1 comment | by

The Challenge of Becoming a Green Nation (Part 2)

In my previous blog post, I critically examined our nation’s predisposition to view public policy, if formulated by a democratic process, as being sufficient for promoting the public interest in managing our nation’s energy economy. Abandoning decentralized, voluntary market transactions and embracing centralized, regulated energy resource allocations does not ensure a superior pathway for satisfying our nation’s long-run energy needs. Specifically, I noted that:

  • Competition over scarce energy resources exists, whether they are allocated in the private or public sectors.
  • Self-interest guides citizen choices in both the private and public sectors.
  • Power and influence were unequally distributed in both the public and private sectors.

These realities imply that there is plenty of room for inefficient development of energy resources to arise from poor public policy design. Further, we also need to understand the many challenges of implementing regulatory policy over our nation’s energy resources.

Observation #4: Critical knowledge for efficient and sustainable energy resource allocation is scarce and it tends to be concentrated in the same markets that the federal agencies are tasked with regulating.

This means that government agencies need to hire industry experts from the very markets that they try to regulate. Also, regulators from these agencies tend to be heavily recruited by special interest groups operating in the markets that are being regulated. With such cross-pollination of talent, there exist many opportunities for unequal influence to occur in the design and implementation of public policy which may not necessarily reflect the public interest.

An illustrative case is the recent announcement that the second highest EPA administrator resigned from his federal appointment to head a non-profit group that seeks to influence the EPA’s federal energy policy design and implementation. Whether we agree or disagree with this organization’s goals and objectives, it still illustrates how public policy is not insulated from the same concentration of influences that supposedly contaminate private sector resource decisions.

Observation #5: All of the costs surrounding any resource allocation decision must be fully paid, whether in the private or public sector. In the public sector, however, the benefits of public policy often do not accrue to those who bear these costs.

Most people understand how oil spills or auto exhaust emissions can impose negative spill-over costs on third parties. This often drives the call for greater regulatory intervention. Yet, few people recognize that similar cost externalities are often created when the government control over resource allocation decisions replaces the private, voluntary transactions in the marketplace.

For example, it is well-documented that food prices have risen ever since federal policy forced oil refineries to add ethanol (mostly made from corn) into our nation’s gasoline supply, in part to reduce fossil fuel consumption rates. When U.S. agricultural markets shifted 14% of its corn production away from food products, this moved the United Nations to ask the U.S. to lower its ethanol requirements to ease the impact of rising food prices on developing nations.

Observation #6: All the potential impacts from a resource allocation decision cannot be anticipated, even by the experts in a regulated market. The private sector has much more flexibility to adapt to these unforeseen impacts than the public sector and to send accurate signals of relative value in competing proposals for developing a resource.

By definition, private sector decisions are always voluntary and public sector decisions are always compulsory. Pursuing public policy to allocate energy resources replaces the potential of markets to find innovative solutions and forces the government to pick winners and losers in competing energy policy proposals. It also creates distorted price signals about competing plans for developing our nation’s energy resources.

Consider what transpires when the government imposes eminent domain upon a private landowner to facilitate a given energy policy. While the land owner is constitutionally assured a fair market price for the lost benefits for using the appropriated resource, we must remember that this same owner always had the opportunity to sell the resource at its market price, but preferred to not sell it. This means a voluntary sale would require a much higher price.

This reality implies that if the government were to acquire the needed resources to facilitate a given public policy through a voluntary market process, it would be far more expensive than simply imposing eminent domain. This makes it much more likely that the public policy in question would have been found inefficient, had it been forced to compensate the owners of all the needed resources for the full value of their lost benefits.

Andrew Morris (J.D., Ph.D.) is a law and economics specialist who serves as Senior Fellow at the Property & Environment Research Center. In a recent study he notes that,

Eminent domain laws are inadequate for coping with this growth in infrastructure, for protecting landowners’ rights in the face of expanding utility easements, and for giving utilities inappropriate price signals.

The bottom line is this: for all the concern that developing energy resources in the private sector would fail to reflect the public interest, there is no guarantee that public policy — even when designed and implemented in a democracy — would better reflect the public interest. We must dispassionately and carefully examine both public and private sector approaches to make an informed decision.

Aug 13, 2014 | Leave a Comment | by

The Challenging Process of Becoming a Green Nation (Part 1)

People often feel a little pious when they actively support regulatory efforts that subsidize the use of alternative energy sources. And why not? When politicians and environmentalists claim such regulations help alleviate our nation’s dependence on fossil fuels, reduce our air pollution emissions and decrease our contribution to global warming, what could possibly be wrong with supporting greater government control over the energy resources of our national economy?

Well, there is much to consider in the process of creating public policy. Let’s explore how environmental or energy policy would be crafted in any nation that is a representative democracy.

We’ll start with the most important question concerning energy sustainability and global warming: Who decides if the current rate of fossil fuel consumption is too reckless for a morally responsible generation to enjoy? Who decides the optimal level of carbon dioxide production for us all to tolerate when producing the energy and goods that the citizens of a prosperous nation require?

We must remember that making a democratic government the arbiter over these important questions doesn’t remove the inherent struggle that exists between the many competing visions of how our nation’s energy resources should be used. Handing the over the reins to the government merely changes the process by which these important decisions are made.

Observation #1: Our energy resources have multiple, competing uses — even across future generation. Such competition will always exist, whether decisions over using these resources are made in the public or the private sectors.

The presumption justifying greater regulation is that citizens in the private marketplace pursue only their self-interest when allocating their income dollars across competing energy resource uses. If the voluntary actions between buyers and sellers in the private energy marketplace fail to reflect the “better angels of our nature,” what’s wrong with electing politicians to hire expert bureaucrats to regulate our scarce energy resources more effectively?

Well, we must be consistent in our assumptions about human nature. These same citizens will also pursue their self-interest when they cast their ballots in the public sphere. When choosing between candidates for office with competing platforms, voters will not suddenly grow the halo and wings of angels when closing the curtain behind them in the polling booth. They will vote their own self-interest.

Observation #2: Self-interest guides citizen choices in both public and private decision making processes.

But isn’t citizen influence over resource allocation decisions made in the public sector more equitably distributed than in the private sector? Wouldn’t the “one-person, one-vote” characteristic of a democracy help us more equitably select the right legislators, who will in turn appoint the right bureaucrat experts, who will then create policies that are more likely to reflect the public interest?

In short, the answer is no. While people and organizations with higher incomes will always have more sway over what all is produced and how it is all distributed in the private sector, they will also have more sway over how public policy is created, and how its benefits (and costs) are distributed. Why? Much political influence resides beyond each citizen’s allocation of one vote. Let’s take a look.

Political action groups (PACs) seek soft money donations to promote political party platforms. Beltway lobbyists seek to influence legislators and bureaucrats on behalf of well-funded for-profit and non-profit organizations. Highly organized and informed special interest groups seek public policy with localized benefits that are to be paid for by uninformed and unorganized taxpayers.

Indeed, OpenSecrets.org tracks lobbying expenses and PAC donations in the U.S. each year. In the Presidential election year of 2012, over 12,000 lobbyists helped their organizations spend $3.3 billion trying to influence legislators and bureaucrats in their design of public policy. Further, PACs raised over $1.4 billion that same year, with Democrats raising a slightly larger share of all funds than Republicans.

Observation #3: Power and influence are unequally distributed in both the public and private sectors of a democratic nation.

The reality is this: If self-interest dominates citizen voter choices over competing energy policies, and if their influence over the legislative process is unequally distributed across society, then it does NOT automatically follow that public policy will be more economically efficient or environmentally effective than the aggregation of all the independent, voluntary activities between consumers and producers in the private sector.

This implies that the process of both private and public sector decision making in resource allocation must be clearly understood and directly compared before we can determine which process for allocating our energy resources would be in the best interests of our nation. In my next article, we will explore the challenges of efficiently and effectively implementing public policy over our energy resources.

Aug 06, 2014 | Leave a Comment | by

Sniffing Out Bad Environmental Policies Is Much Like Culling Rotten Produce

When buying produce, we’ve found ways to discern which pieces are worthy to place in our basket. Each piece of fruit or stalk of vegetable must be of good quality to justify spending our hard-earned income on it. So we look, we sniff and we gently squeeze them in order to cull the unripe or rotten pieces and glean the good ones.

Perhaps we should use a similar approach when evaluating the competing environmental proposals proffered by various organizations. We should carefully sniff out the rotten assumptions and gently squeeze the reasoning of their justifications in order to glean which proposals might be worthy of our real sacrifice in national treasure and personal freedoms.

For example, consider the World Bank’s proposals for reducing man-made influences over global climate change. Like most other organizations, they stress the urgency for all nations to take immediate, coordinated actions to reduce carbon emissions. However, they stress that the needed sacrifices should not be shared equally among the nations.

Upon closer inspection, the World Bank’s policy recommendations reveal intellectually unripe assumptions that employ ethically rotten reasoning to justify them. For example, in the World Development Report 2010, the President of the World Bank stresses that,

Developed countries have produced most of the emissions of the past and have higher per-capita emissions. These countries should lead the way by significantly reducing their carbon footprints and stimulating research into green alternatives.

First, consider the intellectually unripe assumption that per-capita carbon emissions are an appropriate basis for determining relative global warming culpability across the nations, and to identify which nations should bear the brunt of costly remediation efforts.

Let’s remember that carbon emissions result from economic activity. All else equal, greater economic activity in a nation’s economy creates greater carbon emissions per capita, but also greater prosperity (output per capita) for its citizens enjoy.

Humanitarians should want the citizens of all nations to become prosperous, but to achieve their prosperity with the smallest environmental footprint possible. Therefore, would not an intellectually ripe indicator of culpability be carbon emissions per-dollar of economic output?

Using this perspective, we could identify the various institutional characteristics among the nations that tend to create a “greener” prosperity, which would then better inform the efforts of environmental policy makers. For example, I point out in an earlier blog post that countries pursuing prosperity through free markets rather than through centralized planning consistently produce fewer greenhouse gas emissions, per dollar of GDP.

Second, consider the ethically rotten policy implications that this intellectually unripe measure would likely create: In order for a nation with heavy carbon emissions per capita to reduce its culpability in global warming crimes against humanity, it must make relatively greater sacrifices. It must decrease its economic activity using current technologies and divert significant portions of its national treasure towards developing “green” technologies. Nations with lower per-capita emissions would not be called upon to sacrifice as much.

This means a country like China, which has an economy similar in size to the U.S. but generates 43% more total carbon emissions, would be expected to sacrifice less than the U.S. Why? With its 2 billion citizens (6 times the 325 million U.S. citizens), Chinese carbon emissions per capita are still far lower than the U.S.

This ethically rotten perspective ignores the fact that China has produced far more carbon emissions per dollar GDP than the U.S. As a result, Chinese citizens bear a much lower level of prosperity (output per person) than U.S. citizens, despite having imposed a far larger total environmental footprint than the U.S.

Using per-capita carbon emissions as an indicator of climate change culpability?  Hmm… I think I smell something rotten in Denmark.

Jul 28, 2014 | 3 comments | by

EPA, I Shall Call You Sybil

This week, President Obama is formally proposing a new EPA regulation to reduce greenhouse gas emissions by 30 percent from existing U.S. power plants by 2030. After many attempts at passing carbon cap and trade legislation through the Congress over the last decade have failed, the President is now taking unilateral action to directly regulate greenhouse gas emissions. How did we get here?

The EPA receives its power to regulate those economic activities that impose environmental impacts from air pollution through the Clean Air Act of 1990. In 2007, the U.S. Supreme Court ruled that the Environmental Protection Agency (EPA) had the ability to regulate greenhouse gas emissions, even though such emissions had not been considered air pollutants. However, this regulatory power was conditional on the EPA submitting an “endangerment finding,” in which a careful review of the existing science clearly indicates that greenhouse emissions directly endanger the health of Americans.

Marlo Lewis at the Competitive Enterprise Institute points out that section 202 of the Clean Air Act specifically requires the EPA to perform its own scientific assessment and to exercise its own independent judgment when finding evidence of endangering human health. This means the EPA cannot rely on the scientific assessment and judgment of outside organizations to find conclusive evidence of health endangerment to justify its regulatory powers.

The EPA entered its endangerment finding into the April, 2009 section of the Federal Register, which is the official log of all regulations proposed by federal agencies. However, this endangerment finding, and the EPA’s defense of this finding to its many critics, stretches the boundaries of logic.

Logical Inconsistency #1: Senator Jim Inhofe (R-Oklahoma) had a careful look at page 18,901 of the 2009 Federal Register. (BTW, does it bother anyone else that by April, the annual log book of proposed federal regulations had already reached over 18,000 pages?) Senator Inhofe is bothered by the fact that the EPA states:

To be clear, ambient concentrations of carbon dioxide and the other greenhouse gases, whether at current levels or at projected ambient levels under scenarios of high emissions growth over time, do not cause direct adverse health effects such as respiratory or toxic effects.

 The Senator sees this as a direct contradiction to the finding that greenhouse gas emissions endanger human health.

Logical Inconsistency #2:  Marlo Lewis points out that the U.S. Inspector General has issued a report that claims the EPA failed to perform its own scientific analysis to reach the conclusion that endangerment to human health existed. Page 23 of that report states that the EPA responded to this criticism by claiming that the documented analysis was “not a scientific assessment,” but merely a summary of findings by organizations, like the the recently discredited Intergovernmental Panel on Climate Change, or IPCC. This statement makes it appears the EPA simply relied upon other organizations for both the scientific assessment and the conclusion that greenhouse gas emissions directly threaten human health. Even the Inspector General feels that this endangerment finding fails to meet the requirements specified in the Clean Air Act.

Have greenhouse gas emissions been proven to be an endangerment to human health? I guess it depends on which EPA you are talking to… Sybil? Is that you?

Jul 09, 2014 | 4 comments | by

Species deniers: Now that is a horse of a different color…

We have all heard the activists and politicians who blame “climate deniers” for not supporting public policies that address the alleged man-made causes of climate disruption, despite all the “settled science” that justifies their push to limit our individual freedoms.

Please allow me draw your attention to an example where “settled science” is currently frustrating the efforts of wildlife activists who are trying to create effective public policy. And it involves their deep romance with the mustang herds that roam the vast American West.

First, some quick background: I stated in an earlier blog post regarding the Endangered Species Act (ESA) that even though a majority of scientists consider the existing biological taxonomy of wildlife as settled science, some scientists disagree as to what exactly defines a distinct species of animal or plant life.

What is wrong with ignoring the critics of “settled science” for deciding what constitutes a “species” when designing effective wildlife policy?

If two very similar types of animals were incorrectly considered separate species when in reality they were biologically identical, the potential elimination of one animal type while the other animal type continues to thrive is not likely to create a meaningful loss to the larger ecosystem.

If you fail to recognize that two similar looking animal types were truly two distinct species, then allowing one type to disappear as long as the other type is thriving may well damage our larger ecosystem. It is important to not make either mistake.

But what is wrong with assuming that choosing more definitions of species is better than choosing fewer when making policy?

As I discussed in yet another blog post, when a given animal species is considered endangered under the ESA, a private land owner or a lessee of federal lands could be required to endure significant economic losses to preserve the natural habitat of this endangered species. These very real and personal economic losses are never discussed when the federal agencies tabulate their costs for enforcing the ESA.

Well, wouldn’t a federal agency directed by a representative democracy make sure that any individual economic sacrifice be required only to prevent a real threat to our ecosystem?

Perhaps, but it is in any wildlife management agency’s best interest to sidle up with wildlife activists to define a “species” as narrowly as possible. This maximizes the opportunities to exercise control over private land owners and federal land lessees, which would then justify their growing mission and budget needs.

Surely you are being overly pessimistic!

Back to the lead story: A recent development regarding activists concerned about the dwindling herds of wild horses roaming the American West is clearly justifying my fears.

Most land owners or federal land lessees in the western states see wild horses as a nuisance animal, much like feral dogs that terrorize an urban neighborhood or feral hogs that destroy golf courses and farm lands. These folks even organize annual round-ups to limit the damages arising from these herds, paying the participants with the very horses they catch.

However, supporters of these wild horses see them as mustangs. They are romantic, living mementos of a defining era in American history (and I admit that I share that perspective). Yet, these mustang activists are seeking explicit protection of these wild horses under the ESA. I just cannot support that approach. It involves manipulating science for the sake of romance.

You see, the ESA empowers various federal agencies to severely restrict the individual liberties of private land owners and lessees of federal lands — but only if such restrictions are a necessary consequence of protecting and preserving an endangered species of wild animal or plant life. In other words, an entire native species must be at risk before this act can be invoked.

As I predicted, mustang activists are lobbying the federal government to deny settled science in defining what constitutes a native species. As AP reporter Scott Sonner notes:

Efforts to halt mustang roundups in Congress and the courts have been unsuccessful over the past decade, but two groups in a petition to the U.S. Fish and Wildlife service are focusing on genetics and research they say prove the (wild) horses are a native species. They say growing threats from development, livestock grazing and government gathers are jeopardizing the genetic viability of individual herds in 10 states from California to Montana.

Jeopardizing the “genetic viability” of a specific herd comprised of a species that exists abundantly elsewhere does not create the same threat to our ecosystem that jeopardizing an entire species would create. You see, the meaning of biological definitions really does matter for making good public policy.

Today, most of the scientific community considers both domesticated and wild horses as a single species, known as equus ferus. Mustangs are simply considered invasive, feral horses that were introduced to the American West by humans. Defining both wild and domesticated horses as a single species was legitimated by the International Commission on Zoological Nomenclature in 2003. In other words, this biological species definition is “settled science.”

Yet, mustang activists think the federal definition of “species” should ignore settled science and divide horses into two separate species: wild and domesticated. Their motive does not appear to be promoting scientific clarity over biological taxonomy. Instead, after failing to convince a representative democratic governments to create legislation strong enough to preserve our dwindling Mustang herds, these wildlife activists are willing to deny “settled science” for effective political maneuvering.

It seems that when it comes to that great American icon, the noble mustang, wildlife activists are happy to be “settled science” deniers too.

Jun 30, 2014 | 5 comments | by

The Global Warming Uncertainty: Is “Doing Something” More Ethical Than “Doing Nothing”?

However great your task or the challenge ahead, it’s better to do something rather than nothing. We may only be as small as a grain of sand on the beach, but we can make a lasting impact especially if we work together.

— Peter Hawkins

Although Dr. Hawkins was not addressing climatology with his quote, it accurately expresses a common philosophy employed by most environmentalists. Are the skeptics of mankind’s complicities in causing global warming (or climate disruption, or whatever is the term du jour) guilty of negligence in the face of potential global catastrophe? Are the “deniers” who disdain costly regulations over individual liberty guilty of the sin of “doing nothing” when it would be far more ethical “to do something”? Let’s take a look at recent climatological history.

As late as the 1970s, the world’s leading scientists predicted that the earth was headed for an ice age that would wreak havoc on civilization if we were not adequately prepared. Real Science and Popular Technology.net have collected numerous news articles (with their accompanying “scientific” graphs) that predicted a global catastrophe was imminent, lest we do something immediately to prepare for it. Here are just a few:

  • A New York Times article (1/5/78) sported the headline, “International team of Specialists Finds No End in Sight to 30-Year Cooling Trend in Northern Hemisphere.” While a minority of the climate scientists was not concerned, the majority urged that federal policy be instituted to make preparations. A majority of scientists couldn’t be wrong, could they?
  • A Newsweek article (4/28/75) cites April of 1973 as having produced “the most devastating outbreak (of tornadoes) ever recorded.” It also noted that NOAA’s satellite pictures confirm a “sudden, large increase in northern hemisphere snow cover in the winter of 1971-72.” Further, NOAA’s scientists found that the amount of sunshine reaching the ground in the continental U.S. “diminished by 1.3 percent between 1964 and 1972.” All these examples and more were used as clear and compelling evidence that global cooling was inevitable.
  • The journal Science (7/71) published an article fearing that typical consumer aerosols were contributing to observed global cooling, stating that they “reduce the surface temperature of Earth.” Curbing aerosol use was presumed to help stem the pending global freeze.
  • A CIA report (1974) concludes that the global cooling trend that started in the 1960s has been “confirmed” by science. For the first time, the CIA officially considered a pending climate threat with such a concern that it altered its international relations policies due to the destabilizing political impacts expected to arise from vast crop harvest failures and tremendous population relocations that were sure to follow.

Does this theme of climate alarmism sound familiar? Contemporary science had “concluded” that we were all doomed to a frigid life of local starvation and global political unrest if we did not take immediate and significant actions. Yet what would the world have look like today, had we felt compelled then to “do something — anything” at the time, based on the best available research promoted by an impressive consensus of scientists?

What if we had employed the actions promoted by concerned climate activists, such as covering the arctic ice cap with black soot, increasing its melting rate in order to maintain the sea levels? Or stockpiling millions of tons of American grains in silos at the expense of exporting it to foreign countries that could not produce enough grain to feed their own people? Or pumping tons of extra carbon dioxide in the atmosphere to counteract the coming freeze by inducing… global warming? Would it really have been more ethical for us to just “do something — anything” in the face of less than universal scientific consensus, in the holy name of saving our planet? I do not think this is what Dr. Hawkins meant when he encouraged us into “making a lasting impact.”

Jun 23, 2014 | 4 comments | by

Lies, Damn Lies and Statistics: The 2014 National Climate Assessment Report

The 2014 U.S. National Climate Assessment (NCA) report has been receiving much attention since President Obama heralded it in his speech back in May. The administration realizes that the push for ever greater climate change regulations requires convincing evidence of sufficient alarm to justify this authoritarian push. While this report delivers the alarm, it falls short on verifiable evidence. Indeed, a scientific rebuttal of many parts of the NCA report appears here.

However, an astute follower of our NCPA Energy and Environment blog, Tom Isaacson, has also reviewed the NCA report and has found it wanting. He points out that the evidence used in the report to verify the impact of mankind’s activity on global temperatures is badly misrepresented. And he uses the information cited in the NCA report as proof to back his claim. Page 8 of the NCA report contains this graphic:

global temp change

Isaacson points out that this graphic portrays two confidence bands produced by the accepted climate models to predict annual average global temperature changes over the years. The lower band (in green) represents the range of temperature changes that the models predict would have occurred naturally without any human factors. The upper band (in blue) represents the range of predicted temperature changes when both natural and human factors are combined. The solid black line indicates the actual observed temperature changes for each year, ending in 2005.

The NCA report notes that the annual temperature changes over the past half century have been almost entirely within the band of predicted changes arising from both human and natural impacts, but almost entirely outside the band of predicted changes arising from only natural impacts. This implies that not only are the accepted climate models accurate and trustworthy, but they also provide evidence supporting the conclusion that the actions of mankind are indeed responsible for global warming.

However, this is where Isaacson points out the “sleight of hand” used in the statistical analysis: the NCA analysis and graphic both use the wrong prediction bands to build credibility for the models and to support their conclusions. His proof: the NCA report bases their analysis and above graphic on an 2011 article written by Markus Huber and Reto Knutti (H&K) in the journal, Nature Geoscience. Their graphic appears below:

global temp change2

The lower prediction band (in blue) represents the predicted range of temperature changes that would have occurred naturally without any human factors. The middle band (in orange) represents the range of changes if only human factors are reflected. The upper band (in grey) represents the range of changes if both human and natural factors are combined. Now let us have a look up the sleeve of the NCA magicians…

Note how the grey prediction band from H&K graphic representing both human and natural factor impacts is narrower than the orange band representing only human factor impacts, which in turn is slightly narrower than the band representing natural factors alone. These relative band size relationships are clearly notretained in the NCA report graphic, which shows the prediction band for the combined human and natural factors as being much wider than for the natural factors alone.

In other words, it appears that the authors of the NCA report use an incorrect, wider confidence band to make the temperature predictions of the climate models to appear artificially accurate, thereby making the climate models appear to be more trustworthy. To illustrate, note that the spike in average global temperature change in 1998, and the dip in 2000, both fell completely outside the grey prediction band in the H&K chart, but fall completely inside the blue prediction band in the NCA report.

Further, Isaacson notes that the NCA report cuts off their chart in 2005, while the H&K chart continues on out to 2010. Indeed, the attenuated NCA chart fails to show that the low temperatures recorded in the H&K chart for 2007, 2008 and 2009 all lie below and outside the grey prediction band. This means that the model creates a prediction band that fails to include 5 of the last 12 years of the observed annual data — because the temperatures were lower than predicted.

I am sorry, but Tom and I both feel that being wrong 41 percent of the time over the last twelve years is certainly not a good enough track record to justify using these findings to impose many billions of dollars’ worth of climate change regulations onto a sputtering American economy.

Jun 16, 2014 | Leave a Comment | by

Profiling Environmentalism (Part 3)

In “Profiling Environmentalism,” Tanner Davis wrote in this blog that we should all support environmentalists that he labeled the Bright Greens: optimistic folks who exhibit a strong faith that technological innovations and entrepreneurship will help create prosperity with an ever cleaner ecological footprint.

In “Profiling Environmentalism 2,” I followed that these “Brights” understand how economic development is necessary for creating ecological innovations in technology. However, any virtuous cycles between economic progress and ecological innovations requires: 1) that demand for environmental quality increases with prosperity, and 2) that institutions in society must reward entrepreneurial activity that makes environmental quality effective and affordable.

I also noted that Bruce Yandle, et. al. reviewed the sizable literature relating a nation’s prosperity to its environmental quality. They state that while such a link has yet to be proven empirically, studies failed to control for how a nation’s political and economic institutions may affect the development of innovations that promote “green” productivity.

Could enviro-entrepreneurship and innovation be either encouraged or discouraged by a nation’s economic institutions? Would protecting private property rights, upholding the rule of law, and maintaining low levels of government intrusion by excessive regulations and taxation influence the pathway that a nation chooses to pursue its prosperity?

Fortunately, measures of these institutions are collected over 150 countries in the world, and then are aggregated into a country-specific metric called the Economic Freedom of the World (EFW) index. The EFW index, created by Jim Gwartney and Bob Lawson, is published annually by the Fraser Institute.

The freest countries in 2014 include Hong Kong, Singapore, New Zealand, and Switzerland. While Canada is #8 and Australia is #10, the U.S. is only #17. The least economically free countries include Venezuela, Myanmar, Republic of Congo and Zimbabwe.

When a nation’s economy works to feed, clothe, shelter and educate its citizens, this economic activity will impact the environment through air and water pollution, greenhouse gas emissions and depletion of its supplies of natural resources. We can track these measures for each country using the World Bank’s “World Development Indicators” dataset. But the question is: what economic institutions promote the “greenest” pursuit of prosperity and leave the smallest ecological footprint possible?

Figure 1 and Figure 2 represent data from all the nations for which EFW index values and the ecological variables were available. These countries are sorted into quartiles according to their EFW index value, from the least free to the freest countries. Clearly, the level of air and water pollution that is emitted per dollar of GDP produced is LOWER in those nations that pursue free enterprise prosperity with greater economic freedoms.

methane

organic

Likewise, Figure 3 shows that economically freer countries emit FEWER greenhouse gasses per dollar of GDP produced. Further, energy consumed by the vast majority of countries is produced by burning non-renewable resources like coal, natural gas and oil. This means those countries with a lower consumption rate per dollar GDP are practicing a more sustainable growth path towards prosperity. Figure 4 shows that the energy consumed to make a dollar of GDP is LOWER in nations with more economic freedom.

CO2 emitted

energy use

The smallest ecological impact per dollar of economic activity does not appear to arise from the planned economies of socialism or communism. Greater environmental quality and sustainable growth paths to prosperity appear to be more prevalent in countries where the invisible hand is free to “guide” individuals to produce and exchange their products and services in a decentralized market system — established and preserved with greater economic freedoms.

Let’s all be “Bright” about creating our future.

Jun 02, 2014 | Leave a Comment | by

Profiling Environmentalism (Part 2)

Tanner Davis wrote an intriguing article in this blog titled, “Profiling Environmentalism.” He proposed that environmentalists generally fall into three categories:

  • Light Greens: mildly optimistic folks who encourage individual consumers to take small (but in the aggregate helpful) actions to raise environmental quality.
  • Dark Greens: quite pessimistic folks who fear the inevitable environmental destruction as industrialization spreads throughout the global economy. To save the planet, these folks spurn technological advances and seek to abandon modern life.
  • Bright Greens: very optimistic folks, as described by Alex Steffen, who exhibit a strong faith in further technological innovations and examples of entrepreneurial zeal to create prosperity with an ever cleaner ecological footprint.

Davis favors these Bright Green folks, as they embrace the pursuit of human well-being through economic development and environmental well-being through smaller ecological footprints. I heartily agree.

In fact, the “Brights” may inherently understand that economic development is necessary for creating ecological innovations in technology. However, whether a virtuous cycle between economic progress and technological innovation will continue enhancing environmental quality depends on at least two important things:

  • The desire for environmental quality increases with prosperity (individual income), and
  • The institutions in society effectively reward entrepreneurial activity that makes environmental quality affordable for those who seek both prosperity and a “greener” world in which to live.

The idea of an Environmental Kuznet’s Curve (EKC), where higher levels of prosperity in a society initially causes environmental quality to decline, but then eventually causes it to increase again after some level of prosperity is achieved, has been bantered about the economics literature for some time. Many economists don’t believe that the inverted U-shape relationship between prosperity and environmental quality exists, as many different empirical studies have simply not been able to create conclusive results.

However, as Bruce Yandle, et. al. points out in a survey of EKC articles, a nation’s institutions can have significant impact on the rate and quality of technological innovations. This can alter the pathway to prosperity that a developing nation chooses to pursue, which may cause either environmental degradation or improvement. Yet no studies appear to effectively control for this possibility.

If true, then this may be why one developing country exhibits terrible environmental impacts while another country preserves environmental quality, despite their pursuing relatively similar growth paths toward economic prosperity. Perhaps if we could control for institutional differences between these countries, we could identify whether an environmental EKC exists, and whether there are “greener” pathways for all countries to achieve prosperity.

Stay tuned, faithful readers, for “Part 3″…

May 21, 2014 | 4 comments | by
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