Friday, March 27, 2015

Climate Sensitivity and Environmental Worries Are Trending Downward

From Patrick J. Michaels and Paul C. "Chip" Knappenberger of Cato.
"More evidence this week that high-end forecasts of coming climate change are unsupportable and Americans’ worry about environmental threats, including global warming, is declining. Maybe the general public isn’t as out of touch with the science as has been advertised?

First up is a new paper by Bjorn Stevens from Germany’s Max Plank Institute for Meteorology that finds the magnitude of the cooling effect from anthropogenic aerosol emissions during the late 19th and 20th century was less than currently believed, which eliminates the support for the high-end negative estimates (such as those included in the latest assessment of the U.N.’s Intergovernmental Panel on Climate Change, IPCC). Or, as Stevens puts it “that aerosol radiative forcing is less negative and more certain than is commonly believed.”

This is important, because climate models rely on the cooling effects from aerosol emissions to offset a large part of the warming effect from greenhouse gas emissions. If you think climate models produce too much warming now, you ought to see how hot they become when they don’t include aerosol emissions. The IPCC sums up the role of aerosols this way:
Despite the large uncertainty range, there is a high confidence that aerosols have offset a substantial portion of [greenhouse gas] global mean forcing.
The new Stevens’ result—that the magnitude of the aerosol forcing is less—means the amount of greenhouse gas-induced warming must also be less; which means that going forward we should expect less warming from future greenhouse gas emissions than climate models are projecting.

Researcher Nic Lewis, who has done a lot of good recent work on climate sensitivity, was quick to realize the implications of the Stevens’ results. In a blog post over at Climate Audit, Lewis takes us through his calculations as to what the new aerosols cooling estimates mean for observational determinations of the earth’s climate sensitivity.

What he finds is simply astounding.

Instead of the IPCC’s estimate that the equilibrium climate sensitivity likely lies between  1.5°C and 4.5°C, Lewis finds the likely range to be 1.2°C to 1.8°C (with a best estimate of 1.45°C). Recall that the average equilibrium climate sensitivity from the climate models used by the IPCC to make future projections of climate change and its impacts is 3.2°C—some 120% greater than Lewis’ best estimate. But perhaps even more important than the best estimate is the estimate of the upper end of the range, which drops from the IPCC’s 4.5°C down to 1.8°C.

This basically eliminates the possibly of catastrophic climate change—that is, climate change that proceeds at a rate that exceeds our ability to keep up. Such a result will also necessarily drive down estimates of social cost of carbon thereby undermining a key argument use by federal agencies to support increasingly burdensome regulations which seek to reduce greenhouse gas emissions.

If this Stevens/Lewis result holds up, it is the death blow to global warming hysteria.

Which brings us to the last results of Gallup’s annual poll gauging the level of environmental concern among Americans—something the polling agency has been keeping track of since the late 1980s. 
Here’s Gallup’s summary of this year’s results:
Americans’ concern about several major environmental threats has eased after increasing last year. As in the past, Americans express the greatest worry about pollution of drinking water, and the least about global warming or climate change.
And Gallup’s full write-up includes this gem:
Importantly, even as global warming has received greater attention as an environmental problem from politicians and the media in recent years, Americans’ worry about it is no higher now than when Gallup first asked about it in 1989.

Says something about the effectiveness of the climate alarm campaign.

The full set of questions and results are available here. You ought to have a look!"

Would you choose to be you today or John D. Rockefeller a century ago?

See Richer than Rockefeller? by David Henderson EconLog.
"This is the longest time I've gone without posting, other than when I'm on vacation at my cottage in Canada in August. I was traveling and my computer was being repaired after I got back. 
I gave a talk at UNC Wilmington on Monday night. The talk was titled "Seven Myths about Free Markets." One of the myths is that with free markets, the rich get richer and the poor get poorer. I pointed out that it's half right: the reality is that with free markets, the rich get richer and the poor get richer.

I then walked them through, Don Boudreaux and Brad DeLong style, the number of labor hours a worker would have to work to buy various things now vs. 1975 (Boudreaux and his Sears catalog) and vs. 1895 (Brad DeLong and his 1895 Montgomery Ward catalog.)

I then asked them who the richest man in America was a century ago. One person yelled out "Andrew Carnegie." "Too long ago," I said. A few other people yelled out "Rockefeller." "Right," I said.

Then I said:

Think about what you have that Rockefeller didn't. He couldn't watch TV, play video games, surf the Internet, or send e-mail. During the summer, he didn't have air conditioning. For most of his life, he couldn't travel by airplane. He didn't even have a 1G cell phone. [Here I held up my cell phone.] And here's the big one. If he got sick, he couldn't use many medicines, including penicillin. [This is adapted from Greg Mankiw's economics textbook.]
To drive that last point home, I noted that while Calvin Coolidge was president, his son, after developing a blister while playing tennis, died, and that would be extremely unlikely to happen today because now virtually every American has access to antibiotics. Then I said:

So imagine that you could choose to be you today or John D. Rockefeller a century ago. Raise your hand if you would prefer to be Rockefeller.
In an audience of about 350 people, about 35 raised their hands. Then I said:
Raise your hand if you would prefer to be you today.
Over 200 people raised their hands. There were probably about 60 or 70 non-voters. I told them that when we got to Q&A, I might ask people who voted to be Rockefeller what their reasoning was. 
We got to Q&A and I remembered to ask. I first asked a young black man at the front of the room why he had voted to "be Rockefeller." He said that if he were, he would get the respect of his family and of people around him.

I then asked a young white man further back and he said that he would have the best of everything. Just to clarify, I said, "You mean that you would have the best of everything then even though most of it is lousy compared to today, right?" "Yes," he said, laughing.

I found these responses interesting, which is why I'm sharing them. In the comments I get on Econlog when I write about inequality, there are always a few people who emphasize that relative situation is more important than absolute situation, and here were two people who agreed."

Thursday, March 26, 2015

ethanol has about one-third less energy than an equal volume of gasoline

See Root Cause of Ethanol ‘Blend Wall’? Consumers Don’t Like Rip Offs by Marlo Lewis of Excerpt:
"Although ethanol is cheaper by the gallon than regular gasoline, ethanol has about one-third less energy than an equal volume of gasoline. On an energy-adjusted (bang-for-buck) basis, regular gasoline is almost always the better buy than ethanol. Consequently, the higher the ethanol blend, the worse mileage your car gets, and the more money you spend to drive a given distance.

FuelEconomy.Gov, a Web site jointly administered by EPA and the Department of Energy (DOE), calculates how much a typical motorist spends in a year to fill up a flex-fuel vehicle with either E85 or regular gasoline. The exact bottom line changes as gasoline and ethanol prices change. The big picture, though, is always the same: Ethanol is a net money loser for the consumer.

At today’s prices, depending on make and model, it costs an extra $900, $1,200, $1,600, or even $2,400 annually to run a flex-fuel vehicle on E85 rather than regular gasoline. Those hefty price differences — not oil company machinations or EPA indecision — are the principal barrier to market penetration of E85 and other high-ethanol blends.

Even if everybody owned a flex-fuel vehicle, and every service station installed E85 blender pumps, few willing customers would buy the fuel. Lower energy content, inferior fuel economy, and higher consumer cost are the root cause of the blend wall. The same factors also explain why the ”choice” to buy ethanol must be mandated. After all, if ethanol were a great deal for consumers, why would we need a law to make us buy it?"

we are spending thousands of dollars worth of water to grow hundreds of dollars worth of almonds and that is truly nuts

See The Misallocation of Water at Marginal Revolution. Farmers get subsidized prices for water.

"One of the most remarkable discoveries of economics is that under the right conditions competitive markets allocate production across firms in just that way that minimizes the total costs of production. (You can find a discussion of this remarkable property in Modern Principles. See also this MRU video.)

One of the necessary conditions for this result is that firms must face the same input and output prices. If one firm is subsidized and another taxed, for example, then resources will be misallocated and total costs will increase. In a pioneering paper, Klenow and Hsieh measure misallocation across firms in China, India and the United States and they find that micro misallocations can have large, macroeconomic effects. In particular, if capital and labor were allocated as well in China and India as they are in the United States then output in those countries would double.

We can get some intuition for the costs of resource misallocation by looking at water in California. As you may have noticed at the grocery store, almonds are in demand right now whether raw or in almond milk. Asian demand for almonds is also up. As a result, in the last 10 years almond production in California has doubled. That’s great, except for the fact that almond production uses a huge amount of water and water in CA is severely mispriced and thus misallocated.

In my previous post, I pointed out that agriculture uses 80% of the water in California but accounts for less than 2% of the economy. So how much water does almond production alone use? More water is used in almond production than is used by all the residents and businesses of San Francisco and Los Angeles combined. Here’s a chart from Mother Jones:

(Aside: Some of this water is naturally recycled so net use is likely somewhat lower but a lot of water in California is now being pumped from the aquifer and that water isn’t being replenished.)
At the same time as farmers are watering their almonds, San Diego is investing in an energy-intensive billion-dollar desalination plant which will produce water at a much higher cost than the price the farmer are paying.  That is a massive and costly misallocation of water.

In short, we are spending thousands of dollars worth of water to grow hundreds of dollars worth of almonds and that is truly nuts."

Tuesday, March 24, 2015

Satellites show no warming during the past 17 years while climate models expected warming

See Score a Victory for Cruz over Brown in Most Recent Climate Change Scuffle by Paul C. "Chip" Knappenberger of Cato. Excerpts:
"Cruz, on the other hand, told a more restrained story—that data doesn’t support many alarmist claims and that satellites show no warming during the past 17 years while climate models expected warming—one which comports better with the science that he portrayed."

"Consider this new study by a team led by Geophysical Fluid Dynamic Laboratory’s (GFDL) Thomas Delworth that examined the association between the global warming hiatus and drought in western North America (including California). Turns out, according to these scientists, both stemmed from a similar cause—a change in the patterns of winds across the tropical Pacific Ocean. Further, they suggest this pattern was not overly consistent with expectations from human-caused climate change. Here is an excerpt from that paper:
The strong connection between the intensification of Pacific trades and the drying in western North America observed over the past decade suggests that this drying cannot be connected in a straightforward fashion to greenhouse gas increases. In most coupled [climate model] simulations anthropogenic forcing produces a long-term weakening of the Walker circulation and tropical Pacific trade winds, but with substantial intrinsically-generated variability on decadal scales (Vecchi et al. 2006). Therefore, unless it can be shown that the strengthened trade winds are a result of either natural or human-induced radiative forcing changes, the model results suggest that the observed drying over the western U.S. over the last decade may be primarily due to natural variability, and therefore not necessarily a harbinger of a secular drying trend (Hoerling et al. 2010; Seager and Naik 2012). These results highlight how vulnerable western North America is to severe decadal swings in hydroclimate arising from internal variations of the climate system."

Reich on the Alleged Horrors of An Economic Cornucopia (technology)

From Cafe Hayek.
"Here’s a letter to the editor of Alternet:
In what is a prime candidate for the most economically mistaken essay ever penned, Robert Reich calls a future in which technology makes ever-more high-quality goods and services widely available at virtually zero cost “horrifying” (“In Our Horrifying Future, Very Few People Will Have Work or Make Money,” March 17).
Where to start?  Perhaps with the fact that the history of such Luddite fear-mongering is as long (at least 200 years) as its batting record is low (.000%).  Or maybe with the illogical worry about the unemployment created by an imaginary device that Dr. Reich uses to scare your readers - a device “capable of producing everything you could possibly desire, a modern day Aladdin’s lamp.”  In fact, in a future filled with such devices unemployment wouldn’t be a problem because no one would have to work in order to acquire the means to consume lavishly.  (Indeed, in such a future there would technically be no unemployment because no one would want to work.)
But Dr. Reich’s most wrongheaded claim is this one: “when more and more can be done by fewer and fewer people, the profits go to an ever-smaller circle of executives and owners-investors.”  This claim is exactly backwards.  By far the greatest part of the gains from entrepreneurial-driven advances in technology are, as they have always been, widely dispersed to the masses in the form of more and better consumption options available at lower and lower prices.  Examples include the factory production of textiles that clothed the masses, the mechanization of agriculture that saved the masses from famine, the assembly line that brought the likes of automobiles, kitchen appliances, telephony, and air travel to even the modern-world’s ‘poor,’ and the technology revolution that enables those yearning to read Dr. Reich’s economically uninformed commentary to satisfy their demands 24/7/365 by using their smartphones while sipping lattes and attending protests against the predations of the one percent.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030
Reich himself, in listing some modern devices (that he uses as evidence of the coming calamity of abundance), unwittingly gives examples against his proposition that all of the gains of labor-saving technological advances are captured by ‘the few.’

Indeed, even if one focuses exclusively and literally on the profits from entrepreneur-driven technological advances (rather than, more broadly, on the gains from such advances), they, too, are not destined to go to fewer and fewer people.  Higher profits spark competition which, in turn, drives profits down to ‘normal’ rates.  It’s this very process of competition that causes the gains from technological advances to be shared with the masses: the entrepreneurs might all like to keep their profits without sharing them, but competition obliges them to share those profits with the public, in the form of lower prices and improved product quality.  And with technology advancing as fast as Reich fears (and I applaud), the ability of entrepreneurs to compete against each other will only intensify.  If technology makes the production of the likes of clothes and cups of coffee cheap, easy, and fast, so, too, does technology make the production of other machines for use in competing in the production and sale of consumer goods cheap, easy, and fast.

UPDATE: Regular Cafe patron W.E. Heasley sent the following note to me by e-mail:
Is it not poetic justice that Reich managed to post his argument on a platform that uses little manpower, plenty of technology, and is distributed on mass? Shouldn’t Robert have had his essay hand delivered to each and everyone interested?"

Monday, March 23, 2015

The chronic shortage of inexpensive housing is really a blaring signal for government to get out of the way

See Liberal Policies vs. Affordable Housing by Steve Chapman of Reason.
"Julian Castro is a smiling bundle of energy whose past includes being mayor of San Antonio and whose future may include a spot on a national Democratic ticket—say, as a nicely balanced running mate for a presidential nominee who is a white female from New York. Right now, though, he is secretary of Housing and Urban Development, or what he calls "the Department of Opportunity."

As that label suggests, Castro is a staunch believer in the value of government involvement in the housing market. He came to Chicago recently to tout the many ways in which Washington can allegedly be a positive force on behalf of affordable housing and thriving communities.

In theory, that is not impossible. But in practice, it seldom works out well. In medicine, the term "iatrogenic" refers to diseases that are caused by doctors or medications. The housing problems that governments decry are often problems that governments create. Liberals devise remedies for ills that are most prevalent where liberals hold power.

Among Castro's priorities is the "affordable housing crisis." He laments that 7.7 million low-income Americans who get no government help either spend more than half their income on rent or occupy substandard housing. One of his curatives is a federal program that "allows public housing agencies to leverage public and private debt and equity in order to reinvest in the public housing stock."

Maybe that will do some good. But when it comes to fostering a larger supply of less expensive housing, as Ronald Reagan would have put it, government is not the solution. Government is the problem.

This is especially true at the local level. One reason red states attract so many migrants from blue states is that they have an abundant supply of relatively inexpensive residential buildings.

You can get a lot more house for your money in Houston or Phoenix than in San Francisco or Boston. A big reason is that it's a lot easier to construct homes and subdivisions in states that engage in less regulation of development—which, being less enamored of regulation, tend to vote Republican.

This pattern is not a matter of speculation. Economist Jed Kolko sorted dozens of cities by how they voted for president in 2012 and found that "none of the 10 reddest markets had a median asking price per square foot above $130 in September of 2014. But nine of the bluest markets did."

The peculiarity is not hard to explain. Residents of liberal places, almost by definition, are more inclined to support tight curbs on development.

Last year, San Franciscans approved a ballot measure requiring voter approval of any new building on a 7-mile stretch of waterfront if it exceeds current (and generally low) height limits—which is a perfect way to block an expansion of residential housing in a large chunk of the city.

They confirmed the observation of Matt Yglesias, who wrote in Slate in 2013 that since the city lacks vacant land, "you either build up or you just don't build. And the preference, apparently, is to not build." That's why San Francisco has the highest housing costs in America. New York is almost as bad, and for similar reasons.

But they are hardly unique. Research by economists Edward Glaeser of Harvard and Joseph Gyourko of the University of Pennsylvania indicated that "homes are expensive in high-cost areas primarily because of government regulation" that imposes "artificial limits on construction."

Not that big cities teeming with Democrats are the only sinners. In many suburbs in red states, Gyourko told me, zoning rules make it easy to build single-family detached houses on small lots. What's not easy is to put up townhouses and apartment buildings—whose construction costs, on a per-dwelling basis, are much lower. Blocking high-density units serves, deliberately or not, to keep out lower-income people by making these areas unaffordable.

The feds are also partly to blame. The biggest federal housing "program" is the tax deductibility of mortgage interest, which effectively has the perverse effect of pushing up home prices in the places that are most expensive already. Ending that subsidy would lower real estate costs in affluent cities, to the advantage of those who have been squeezed out.

The chronic shortage of inexpensive housing is taken by Castro and other liberals to mean that government bodies have to do more. It's really a blaring signal for them to get out of the way."