Why I’ll be turning my lights off for Earth Hour tomorrow night

Tomorrow night in Sydney is ‘Earth Hour’: 60 minutes when tens of thousands of people and businesses turn out their lights for an hour to demonstrate their concern about climate change.

Something that has surprised me is the many negative responses that I’ve heard in response to this idea. The most puzzling to me is the response that I’ve seen a number of times: “This is such a stupid idea that I’m going to go home and turn on as many lights as possible just to show them!”.

Of course, it’s very easy to take pot shots at this idea. “What emissions will no lights for an hour save?”, “Sitting in the dark: that’s what the greenies want us to do permanently”, etc. At first blush, what will an hour without lights really achieve?

But these critics are really just unimaginative.

Here’s some reasons why I think Earth Hour is a great idea, and they’re not about emissions, they’re about connection:

Connection with community

I don’t know if it’s widespread, but I often feel a lack of community in Sydney. And I think a sense of community is wonderful. Events like this connect us. If tens of thousands of people turn off their lights and TVs and sit out on their verandahs, or go for a walk and talk to some of the other tens of thousands of people doing the same thing, I reckon that’s great. Just have a look at some of the events people are organising!

Connection with our own power

Climate change is often presented as a big problem with big solutions needed, to be provided by government and business. To a large extent it is. But there’s a lot that people can do about it themselves, in their households and as part of businesses and communities. When each of us does something personal about the issue, we’re reminded that this is something that we, personally, can influence. And I think that’s very positive and powerful. We don’t have to shake our heads and our fists at John Howard and George Bush, we can do a lot ourselves.

Connection with nature

Again, this might be an inner-city dweller neurosis, but I feel a disconnection with the real world living in the middle of Sydney. I get home, turn the lights on, turn the heater on in winter and have my own comfortable cocoon. We all rely on the environment for our health and wellbeing. But it’s easy to forget that. It will be nice to sit out on the balcony and look at the moon and listen to the breeze in the trees and watch the fruit bats fly past and think about the world. Maybe we’ll even be able to see the stars.

Connection with ourselves and each other

As much as I love Iron Chef, it will be nice to have some quiet time to think and talk to Cat. Maybe we’ll have a candlelit dinner at one of the restaurants which are turning their lights off for Earth Hour.

Business

It’s easy for households to switch off lights and appliances during earth hour. It’s much harder for some businesses, despite the fact that at 7.30 on a Saturday night, many businesses aren’t open. This exercise has been a useful learning exercise for many businesses (including my workplace) that you can’t assume that everything is switched off on a Saturday night. (Have a look at office buildings in the city at night and be dazzled by all the empty offices with all their lights still on).

They have had to put measures in place to achieve this and hopefully those measures will continue to bear fruit in terms of energy and emissions savings long after earth hour is over.

Good luck to the people who go home and bathe themselves in electric light as their own little protest against the stupidity of me and 50,000 other Sydney residents and businesses. I’ll be enjoying a refreshing change from my usual electricity-intensive routine and I'm looking forward to it!

Australian ecological economics conference in July

The Australia New Zealand Society for Ecological Economics is holding a conference on Queensland's Sunshine coast on 3 to 6 July this year, with the theme Re-inventing Sustainability: A climate for change.

The conference program is here. Some of the topics sounds pretty interesting:

• Resilience, thresholds and surprise in interdependent natural and social systems
• Experimental economics
• Modelling the relations between the environment and the economy
• Analysis and communication of uncertainty, risk, and extreme events
• Understanding complex adaptive systems
• Environmental accounting

If you're interested in presenting a paper, abstracts are due 15 April.

Ecological economics is a transidisciplinary field that looks at the connections between ecology and economics and views the economic system as a social system that operates within a broader physical / ecological system. Traditional economics certainly doesn't ignore the environment, but tends to view it as an element of the economy that provides inputs and services. If you want to know more about ecological economics, check out the International Society for Ecological Economics or the Ecological Economics Blog.

Other people's money

I’ve been thinking about the role of government in environmental policy. And in economic, social, health and education policy. When should governments provide services? When should they regulate activities? When should they just leave things alone?

There’s the environmental questions: Should they ban incandescent light gloves? Should they fund clean coal research? Should they restrict household water use? Should they impose a carbon tax or increase the price of water and let individuals decide whether to use incandescents or limit their water use and let energy companies decide whether they invest in clean coal or in renewable energy? And there’s others: To what extent should the government provide education and health and to what extent should the private sector do so? How should the government regulate smoking, alcohol and other drugs? Should the government get involved in the fast food / obesity debate?

I think economic ideas can help us think about some of these issues. One of the reasons that markets tend to work effectively is that they efficiently communicate information (Should I plant wheat or grape vines? Well, how much will they cost me to grow? How much will I get for them?) and they provide incentives for people to respond to that information (planting vines will be a lot of bother, but it should make me enough in a few years to buy that car I want).

The disdain that some have for governments providing services is that the information and incentives are less obvious. Should we invest more in mental health care or cancer care? Hm , hard to know. We can survey people and we can look at health stats but it’s hard to know where we’ll get more value for our money. And the people who make the decisions, while interested in the health outcomes, might also be interested in the publicity generated by opening a new cancer wing at a regional hospital.

Libertarian economist Milton Friedman talked about four ways you can spend money and I think it’s an interesting way to look at some of these issues:

There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government. And that’s close to 40% of our national income.

This observation is often used to suggest that things are always better left to markets than to government. But real life much more complicated than that.

There are other constraints on governments. Taxpayers are acutely aware of the taxes they’re paying and proposals to reduce them will be popular and proposals to increase them unpopular. So it’s not true to say that governments don’t care about how much they spend. They have incentives to care quite a bit. Voters are also very aware of the services they’re receiving, another accountability. But these accountabilities are generally less direct than in a market. If I don’t like the service or price of my doctor’s service, I can go elsewhere. But if I don’t like the service provided by public healthcare or the taxes I pay for it, I can only exercise my one vote among thousands every three or four years and there’s generally only one other real competitor.

But these problems also apply to the private sector. Economists call them agency problems. Have a think about a superannuation fund or a managed share fund, for example. When they choose to invest, they’re spending other people’s money on other people. They, not you, are making the decisions about what companies to invest in to benefit you. Where’s the incentive to make the best decision? Well, incentives are there, but again they’re indirect. After a few years of bad performance, people may start to switch funds. But this incentive is also distorted. They have an incentive not to perform much worse than anyone else – in other words, an incentive to make conservative investment decisions.

Have a think about a law firm acting for you in a court case and advising you about whether to accept a compromise. What should they advise you? Again, they’re decision in how to advise you involves their assessment of how someone else’s money should be spent. And possibly creeping into that assessment is a confidence of a positive outcome that might not be there if they were spending their own money or if your money wasn’t being spent on their fees.

Or think about the Board of Directors of a company deciding whether to award themselves a substantial pay rise. Here, they’re making a decision about how to spend other people’s (shareholders’) money on things that will benefit the company. Will a big pay rise for directors benefit the company? Of course, you’ll attract the best talent, the people who will boost the company’s performance, right? Again, people spending other people’s money on other people. And again, there’s incentives to do the right thing, but they’re indirect and conflict with the direct incentive to benefit themselves. (The incentives are that if they go too far, they’ll be removed by angry shareholders, and if they channel too much money that could be better spent on other things, the company will suffer, leading to pressure on them to resign and/or damaging the value of their own shares and options in the company).

Or think about any manager in any large company. They’re spending the company’s money on themselves, their staff and their projects with the aim of benefiting the company. Again you can make the claim that they won’t be as careful as if it was their own money. Once again, there are incentives to spend it wisely: they want to generate good results and be seen to be doing a good job. But there are also conflicting incentives to spend it on themselves, their staff, a team retreat in the Hunter Valley, etc.

Looking at who is spending whose money on whom is a useful way of looking at things and generally you’ll get the best decisions if people can spend their own money on themselves. But it doesn’t simply follow that the private sector does everything better than the public sector. A lot of private sector decisions involve how to spend other people’s money on other people too.

Taken to its logical extent, this argument would suggest that all goods and services should be provided by sole traders. The baker is disciplined because she depends on her customers for her livelihood. So she’ll spend her money in ways that best benefits her customers and hence her business. But the bakery staff-member who buys the flour is spending his boss’s money on his boss’s customers: he doesn’t care too much about either. But in reality, there are other incentives on the staff member to get flour that’s good value for money. And if the baker wants to expand her business, she has to put some trust in other people.

Large companies exist because the problems of people spending other people’s money is more than compensated for by economies of scale. And that’s one of the reasons that governments do things too. We could each build our own little private roads going only where we want them to go: spending our own money on ourselves. But maybe we get better value by governments doing it, even if they do sometimes decide that a marginal seat needs a brand new one to be opened at a photo opportunity just before an election.

New Australian green living site

Check out futuremakers.com.au, a great new site for anyone looking for tips for a green lifestyle.

The site, created by WWF (and with a lot of work from Grant Young from the Synapse Chronicles blog), is a place where people can share their ideas for living sustainably. There's some good tips there for individuals and businesses.

It looks great and I like that you can add your own ideas. And you can keep updated with the Future Blog.

I've also noticed an Australian green living blog, called GreenFoot, which somehow I haven't seen before, although it's been around for a while. It's another really good resource: readable, interesting and a lot prettier than my blogspot effort.

And speaking of Australian environmental blogs, I really need to update my blogroll in that category. Please let me know if there's any you'd recommend.

The environmentally destructive tax rort for cars

Did you know that Australians get bigger tax cuts the more they drive their cars?

Canberra economic journalist Peter Martin reprinted on his blog this media release he received from accounting firm Deloittes, urging people to consider driving their car as much as possible in the next month to reduce their tax bill:

( Drive your benefits further – before it’s too late!

As the end of the FBT year approaches, so does the last chance for significant FBT savings on your salary packaged car.

Deloitte Indirect Tax Principal Frank Klasic said that salary packaged cars remain the most popular fringe benefit provided to employees.

“Although many employees successfully package their cars, there are still many who do not minimise the FBT associated with their car fringe benefit,” Mr Klasic said.

“The easiest way for employees to maximise their FBT savings is to plan ahead before the FBT year ends on 31 March.”

According to Mr Klasic, many employees may be on the cusp of the next kilometre threshold used to calculate FBT using the statutory formula method. Where this is the case, increasing the kilometres driven can also significantly increase your savings.

For example, an employee who has a car valued at $35,000 and drove 24,000km during the FBT year would have an FBT liability of $6,720. Increasing the number of kilometres driven to more than 25,000km would reduce that employee’s FBT liability to just $3,696 – a saving of more than $3,000.

“Employees should be aware that all kilometres driven between now and 31 March will be included when calculating the associated FBT,” Mr Klasic said…

I assume the intent of these parts of Australian tax law is this: If car travel is a legitimate business expense, then it is reasonable for some allowance to be made for the cost of car travel when assessing tax. That’s reasonable as far as it goes, but there’s a couple of problems. First, what we’re talking about here, as I understand it, is businesses providing personal (private) cars to employees as part of their salary package* – not just employees deducting the operating costs of cars for business trips or the use of company cars owned by the company – so whether there really needs to be tax breaks for that in the first place must be questionable. Put another way, if you need to use your car for work, then fine, deduct the cost of that use from your tax. Similarly, if you use a company car for work, then your employer can deduct the cost from its tax bill. But do we really need tax breaks for businesses to provide their employees with their own private vehicles, which they may or may not use for work?

(*What actually happens is that employees arrange this all themselves: they buy a car, transfer it to a lease company and lease it back, and then deduct the costs of the lease from their pre-tax incomes).

The second, related, problem is that it’s hard to work out when a car is needed for business (in which case maybe it’s reasonable for an employee to provide one and for it not to be taxed) and when it’s really just being used for private purposes (in which case it shouldn’t be tax deductible). The Tax Office’s arbitrary solution is to assume that if you drive it far enough, you must have needed it for business – so the further you drive, the less tax you pay. The rate of tax you pay on your car loan repayments ranges from 26% if you drive less than 15,000 km in a year to just 7% if you drive more than 40,000km. However, Deloitte’s media release makes it pretty clear that this encourages driving more, not just for legitimate business, but also to reduce the amount of tax you have to pay, particular if you find yourself near the cusp of one of the tax brackets towards the end of the year.

There’s lots of talk about new measures to discourage the use of fossil fuels and debates about carbon taxes, carbon trading, mandatory renewable targets and so on. But a good start would be simply removing the economically questionable and environmentally damaging tax breaks that exist for private cars.

Green ethanol – from coal?!

An interesting development from the US:

( The latest trend in the green world of ethanol is a surprising one: coal.

Minnesota's first coal-fired ethanol plant soon will begin operation in Heron Lake, and it won't be the last. The high price of natural gas is enticing new plant owners to embrace coal power. But while it may make economic sense, the choice of this fossil fuel to make a renewable one has some people shaking their heads.

The move comes as Minnesota steps up its efforts to embrace cleaner and greener sources of energy and reduce carbon emissions. Critics say it's a lousy idea to make renewable fuel in ways that generate more greenhouse gases than using gasoline.

"The country is investing in ethanol not only as a way to reduce our reliance on oil, but as a way to reduce our greenhouse emissions and our overall emissions," said David Morris, a renewable energy specialist at the Institute for Local Self-Reliance in Minneapolis. "I don't deny there is a savings for these ethanol plants using coal instead of natural gas. But at the same time, the country is providing an enormous incentive for making the ethanol in the first place," with a variety of subsidies.

Until now, all of Minnesota's 16 corn-based ethanol plants were powered by natural gas, at least initially. But the soaring and unpredictable price of natural gas has everyone looking at alternatives.

The most popular alternative for existing plants is generating heat with biomass, a green choice being used at plants in Little Falls, Winnebago and, soon, Benson.

But coal is making inroads among the newest ethanol plants, including one in Heron Lake, with another scheduled to begin construction this summer near Erskine in northwest Minnesota…

State regulators allow the owners of ethanol plants to choose their own power sources. Admittedly, coal "would not be our preferred alternative," said Myrna Halbach, ethanol sector manager for the Minnesota Pollution Control Agency.

"We're very much behind the governor's efforts on renewable fuels," she added. "But ultimately, that's a business decision they would make."

"The volatility of natural gas concerned (Heron Lake)," Halbach said. Using coal "gave them a way to control operational costs."

What’s the message from this? I think one lesson may be that we need to be careful about subsidies: if you subsidise ethanol, you’ll get more ethanol. But it doesn’t necessarily follow that you’ll get lower emissions. Rather than picking and subsidising particular technologies, a better solution may be to impose a carbon tax or similar measure that places a cost on emissions from all sources.

Another lesson is that we need to look carefully at the full life cycles of technologies:

( California Gov. Arnold Schwarzenegger and his state's Legislature have embraced a plan to rate all motor fuels by greenhouse gas emissions over their entire life cycles, from production to transportation to ignition.

Measured that way, ethanol made from plant residue would earn an excellent rating. Ethanol from corn would do moderately well. And corn ethanol made in a coal-fired plant? That would rate poorly — even lower than ordinary gasoline, according to Schwarzenegger's office.

An across-the-board carbon tax, as I understand it, would avoid the need for these calculations. You wouldn’t need to worry about whether ethanol plants were powered by coal or by natural gas, because they would already have paid their carbon tax on the fuel they used for power: it would already be embedded in the price of the product.

(via env-econ.net)

Solving climate change: the truth is out there

This is a little leftfield:

A former Canadian defence minister says be believes advanced technology from extraterrestrial civilizations offers the best hope to "save our planet" from the perils of climate change.

Paul Hellyer, 83, is calling for a public disclosure of alien technology obtained during alleged UFO crashes -- such as the mysterious 1947 incident in Roswell, New Mexico -- because he believes alien species can provide humanity with a viable alternative to fossil fuels. Mr. Hellyer has been a public UFO advocate since September 2005 when he spoke at a symposium in Toronto. But with concern over global warming at an all-time high, and Canadian political parties struggling to out-green one another, Mr. Hellyer said governments and the military have a responsibility to "come clean on what they know" now more than ever.

"Climate change is the No. 1 problem facing the world today," he said. "I'm not discouraging anyone from being green conscious, but I would like to see what (alien) technology there might be that could eliminate the burning of fossil fuels within a generation ... that could be a way to save our planet."...

Mr. Hellyer, a former Liberal cabinet minister, political turncoat and one-time leadership candidate for the Liberal and Conservative parties, said UFO researchers have amassed undeniable evidence that aliens have visited our planet. Due to the distance such spacecrafts would have to travel, UFOs must be equipped with some kind of advanced fuel source or propulsion system, he said.

(via env-econ.net)

In news more terrestrial, network Ten has a show this Sunday night at 8.30pm called Cool Aid: The national carbon test, a 2 hour "world premiere television event" that "delves into the lives of everyday Australians and audits the environmental footprint of five different household types around the country" - together with celebrity interviews and live performances. Sounds a bit wacky but will be interesting to see how Ten grapples with bringing climate change awareness to a mass-TV audience.

When UFO hunters are using climate change to bring attention to their agenda and commercial networks are running two-hour Sunday night celebrity specials on the issue, you know it's become a minstream concern.

Have a great weekend.

Weekly blog roundup

Energy saving light globes

Federal Environment Minister Malcolm Turnbull wants to change the standards for lights to phase out the old-school electricity-chewing incandescent globes by 2010. This seems to me a sensible move that will make a modest impact at a modest cost. Joshua Gans is underwhelmed by the idea but Grant Young thinks it’s a good start.

Meanwhile, the libertarians at Catallaxy are incensed by this abolition of our freedom to waste electricity. I have sympathy with their ‘don’t ban things, persuade people to change instead’ philosophy, but I don’t think phasing incandescents out over 4 years is really such a big deal (from a personal freedom, or any other, perspective). If people are really worried about it, they have three years to stockpile incandescent lights (maybe in the underground bunkers that some of Catallaxy’s commenters no doubt have ready for when the leftist global warming conspiracy gives the UN an excuse to take over the world and abolish all personal freedoms).

Water

Harry Clarke crunches the numbers for suburban backyard rain water tanks and concludes that they just don’t make any economic sense.

Rising rents

Every second article in the Herald seems to be about rents going through the roof. Joshua Gans argues that proposed rent subsidies won’t help anyone except landlords.

Carbon offsets

Grant Young asks a very sensible question:

I wonder - if Richard Branson is splashing all this money around to reduce climate change, why doesn’t his airline have an “offset this flight” button when you book a flight?

People that want it can get it easily when they’re booking the flight. People that don’t simply uncheck the box.

What a great idea. Make it easy for people to offset their emissions at the point of sale, let them know how much it would cost, and no doubt many will take it up. Perhaps just as importantly, even if people choose not to offset, providing this will educate people about air travel emissions, what offsets are and how much the ‘carbon cost’ of their flight is.

Have a great weekend.

Does emissions trading spur innovation or hinder it?

Same day, two different perspectives.

Gar Lipow at the Gristmill blog examines a number of trading schemes that have previously been hailed as successes and comes to the conclusion that they’re not all they’re cracked up to be:

Compare the success of the often-touted sulfur dioxide trading system the U.S., instituted in 1990, with the speed and quantity of reductions under rule-based systems during the same period. U.S. SO2 emissions dropped by 31% between 1990 and 2001. Over the same period of time, under old fashioned rule-based regulation, Germany reduced its emissions by 87%, Italy by 62%, and Western Europe as a whole by 57%.

In both absolute and per capita terms, Western Europe and the individual nations within it have less acid rain-producing pollution than the United States. This was not true when they began their regulatory programs in 1982.

…emission trading has a record of producing slower results than conventional regulation, with at least one example of complete failure to meet a goal. But doesn't the increased flexibility at least encourage innovation? The empirical record says no…

Meanwhile, an article (pdf) just published by Environmental Defense (a US-based environmental NGO) looks at these same schemes, as well as early results from the EU carbon emissions trading scheme, and comes to the opposite conclusion. (via Conservation Finance)

I haven’t compared the two articles in any detail, so I’ll leave it to you to be the judge!

“Why be carbon neutral when you can be carbon optimal?”

So asks Tim Harford in The Undercover Economist, which is a very readable and entertaining introduction to how economists view the world. (I did, however, find it dogmatic and rather preachy in tone.)

Last week I looked at some of the issues around the ethics and effectiveness of carbon offsets; today I’d like to look a bit at the economics.

Harford tells the following tale about carbon offsets:

"How did you travel here today?"

"I'm sorry?"

I'm puzzled. Here I am, going to a panel discussion organized by an environmental
charity, and a very earnest young member of staff is grilling me before I even get past the door of the lecture hall.

"How did you travel here today? We need to know for our carbon offest program."

"What's a carbon offset program?"

"We want all our meetings to be carbon-neutral. We ask everyone who attends to let us know how far they came and on what mode of transportation, and then we work out how much carbon dioxide was emitted and plant trees to offset the emissions."

The Undercover Economist is about to blow his cover.

"I see. In that case, I came here in an anthracite powered steamer from Australia."

"Sorry...how do you spell anthracite?"

"It's just a kind of coal - very dirty, lots of sulfur. OW!"

The Undercover Economist's wife gives him a sharp dig in the ribs.

"Ignore him. We both cycled here."

"Oh."

Apart from being a good example of how irritating an Undercover Economist can be, this true story should, I hope, provide a few questions. Why would an environmental charity organize a carbon neutral meeting? The obvious answer is "so that it can engage in debate without contributing to climate change." And that is true, but misleading.

The Undercover Economist in me was looking at things from the point of view of efficiency. If planting trees is a good way to deal with climate change, why not forget about the meetings and plant as many as possible? (In which case, everybody should say they came by steamship.) If the awareness-raising debate is the important thing, why not forget about the trees and organize extra debates?

In other words, why be "carbon-neutral" when you can be "carbon-optimal,"… Instead of working out whether to improve the environment directly (by planting trees), or indirectly (by promoting discussion), the charity was spending considerable energy keeping itself precisely "neutral"... And it was doing so in a very public way.

A kind view would be that the charity was setting a "good example," if acting nonsensically can ever be a good example. An unkind view would be that it was indulging in moral posturing.

Describing carbon offsetting as “acting nonsensically” and then saying that that’s “a kind view” is pretty harsh. But is it fair?

I don’t think so.

Harford’s point is, on its face, a reasonable one: either you get more emissions reductions per dollar by planting trees or you get more emissions reductions per dollar by holding debates. Work out which is gives more bang for your buck and spend all your money on that.

It’s all so simple in the world of the Undercover Economist isn’t it?

Meanwhile, back in the real world, things aren’t quite so simple: there’s uncertainty and limited information.

I can almost imagine The Undercover Economic Consultancy Inc (not a real company – I hope) advising a homeowner in the tornado belt in the US against taking out tornado insurance: “No, no, it’s not optimal. You see, what you need to do is work out whether a tornado is going to hit your house this year. If not, then paying insurance is just a waste of money. If it is, then the optimal decision is simply not to live there.”

The point, of course, is that no-one knows whether a tornado is going to hit their house. Similarly, the environmental group doesn’t know how many tonnes of greenhouse gases their debates are going to encourage people to save.

Now maybe The Undercover Economic Consultancy Inc could try and work it out. They could survey all the attendees and ask them what changes they’ll make in their lives, then try and calculate the effect of that on their greenhouse emissions. But, as Harford tells us about elsewhere in the book, that would run into problems that economists talk about in terms of stated versus revealed preferences (ie, will people actually do what they say they’re going to do?) They could ask how many are going to lobby their local politicians for change, then they could employ some public choice analysis to work out what political change that will bring and the greenhouse implications of that. Maybe they could study literature on social movements and work out whether small meetings like this could contribute to some kind of overall momentum for change. I suspect you’d get a pretty fuzzy answer and it would cost you a lot more than simply offsetting the emissions.

The point is, no-one knows. And when you don’t know, it is perfectly optimal to hedge your bets. By offsetting the estimate extra carbon emissions that the meeting creates, the environmental group is at least making sure they don’t contribute to the problem, while at the same time I’m sure they’re confident that the debate will have some, albeit unmeasurable, positive impact.

The thing is, far from producing suboptimal decisions, hedging measures like offsetting help us to make better decisions. The decision of whether to buy a house in an area at risk from tornadoes is difficult. Indeed it’s difficult to know what the risk is. But insurance providers can help us decide. Because they assess and pool risks over thousands of households and businesses, they put a monetary figure on the cost of the risk. That helps us make better decisions. Is living here rather than in another town 50 kilometres away worth the extra $2,000 a year I have to pay in tornado insurance? That’s an easier decision to make.

Likewise, carbon offsets are an attempt to internalise the social cost we place on others through our use of carbon. If we’re interested in living our lives by some kind of ethic where we try and minimise our negative impacts on others, then offsets help us do that and they provide the information we need to make better economic decisions. Say I want to travel from Sydney to Tasmania and then drive around the island for a few days. Should I fly and then hire a car when I’m there or should I put my car on the boat and sail? Carbon offsets allow me to put a rough price on the carbon emissions of either of the options and that helps me decide.

I’d like to go further and see a carbon tax. Then some measure of the social cost of emissions would be embedded in the price of everything. If the cost of flights suddenly went up and the cost of boat trips went down, well, that would encourage a shift in the mix of activities we undertake that would be closer to what’s socially optimal.

Doesn’t sound nonsensical to me.

Carbon offsets: good, bad or ugly?

Yesterday I talked about CheatNeutral: a spoof website that offers people the ability to compensate for their infidelity by investing in projects that will help other people stay faithful. Their message is that that makes about as much sense as offsetting carbon emissions.

The fundamental difference of course is that greenhouse gas emissions have the same effect no matter where or how they’re emitted (actually, there are some exceptions – eg, carbon dioxide emitted at high altitudes by planes seems to have more of an effect – but by and large this is true). It makes no difference to the climate whether I emit a tonne of carbon dioxide by driving my car in Sydney or if you emit a tonne of carbon dioxide by having a bonfire in Canada.

Anyway, let’s look at the three criticisms I discussed yesterday that are levelled at the idea of greenhouse offsets.

Carbon offsets are not necessarily effective.
If you drive somewhere, you instantly pump a measurable amount of greenhouse gases into the atmosphere. If you pay a company to invest in a renewable project or plant some trees, how do you really know how much that reduces emissions by?

This is a very valid concern, but it’s not in my mind an argument against offsetting altogether. It just means you need to be careful how you do it. You need methods to measure, verify and audit reductions and methods to deal with uncertainty.

Let’s take an example. Say I want to offset some of my emissions by providing funds to a company that will plant trees to sequester (another great word!) carbon dioxide. Sequester is the cool way to say ‘suck out of the atmosphere’. But there are some issues with this:

• I’m pumping gases into the atmosphere now but the trees will suck it out over a number of years.

• What happens if the trees are destroyed in a bushfire or by disease and the carbon dioxide they’ve sequestered is released back into the atmosphere?

• The rate at which they sequester carbon dioxide is uncertain: it depends, for example, on the weather over the coming years.
  

These are certainly real issues but there are ways to deal with them. We can account very conservatively: if we know that the trees will suck up between 1 and 2 tonnes of CO2 a year but we can’t be more precise than that, well, we only count it as 1 tonne per year. We can further reduce the emissions we count by the risk of fire, etc. And, we can insure the plantation, so that if it does burn down we can replant it immediately and perhaps also buy some offsets from other projects to make up for the lost time. We can have the offsets independently verified and audited.

And there are various ways we can deal with the timing issues. A simple way, for example, is to count / sell only the emissions that are reduced that year. So, we plant our trees and year one, we estimate they sequester 1-2 tonnes of CO2, so that year we sell 1 tonne’s worth of offsets. Year 2, we estimate they sequester a little more – 1.2 – 2 tonnes, so we sell 1.2 tonnes worth, and so on. Another way is to count up the estimated reductions over the life of the tree and sell them all up-front - but discount their value on the basis that they will only come online gradually and so do not fully compensate for emissions that are all happening in year one.

The devil is in the detail and we need to be vigilant to ensure we get what we pay for, but this is hardly unique to carbon offsets or a reason to reject them as being able to make a valid contribution to dealing with the problem.

Carbon offsets are immoral because they allow people to pay someone else to deal with the problem, rather than taking responsibility for the problem themselves.

I accept that this is a concern for some people; it’s not really a concern for me. I’m interested in seeing that the problem is dealt with. I don’t really care if Bill Gates takes two hour showers and flies around the world in a private jet which he then washes in French champagne and dries with irrigated-Egyptian-cotton bath towels that he then throws away, if he decides to make up for that by funding a solar power plant that will allow a dirty coal power plant to be closed down. I know many readers will feel differently though.

Flowing on from 1 and 2, carbon offsets interfere with other effective measures to combat climate change because they allow people to distance themselves from the problem and so they reduce the pressure on individuals, governments, businesses and communities to take measures that actually will have a real impact.

This is the criticism that resonates most with me. If it’s true that offsets are not sufficiently scrutinised so that they don’t truly offset the emissions they claim to, but we think they are and so we leave it to offsets to deal with the problem – well, that is a problem.

But I don’t really think that offsets do have this effect. I’ve heard similar kinds of arguments about efficient hybrid vehicles like the Prius: they won’t have any positive effect because people will then think that all they have to do to be good green citizens is buy a hybrid. In fact, I think the research shows that people who are buying hybrids and offsets are people who take environmental issues including climate change seriously, and are taking a whole lot of measures in their lives to try and make things better. Rather than encouraging people to switch off and leave it to offsets to deal with the problem, I’m prepared to believe that offset schemes engage people and actually encourage them to take steps to reduce their personal emissions as well.

But enough from me – what do you think?

The 'low carb economy'

Steve Burrell in the Age says that “both sides of politics, and much of the business community, now agree that Australia must move to a "low carb"economy… like an economic version of [a low carb diet,] it's tough getting used to, but you are supposed to be better for it in the end.”

It’s a nice metaphor, so let’s extend it.

Our Prime Minister, John Howard, is surely advocating the economic equivalent of the Atkins Diet (eat as much fat and meat as you want but no carbs): all you can eat nuclear and ‘clean coal’.

At the other end, the Greens are advocating a version of Jenny Craig (we’ll provide all the food, you just stick to our program): high mandatory renewable energy targets and an end to coal exports.

The economist in me likes the flexibility of Weight Watchers: every food has a point value and you can earn extra points through exercise. You can choose to eat what you like as long as you’re under your points limit each day. That’s like an emissions trading scheme: you get a certain number of points to emit and you can spend them how you wish. So you can choose to eat low point foods (use renewable energy), eat less (improve energy efficiency) or exercise more (offset your emissions).

I like it!

Carbon offsetting: neutral shmeutral?

As you may have heard, the Oxford American Dictionary declared “carbon neutral” the word of the year in 2006 (shouldn’t that be ‘phrase of the year?’). It pipped other words / phrases such as “dwarf planet” (poor Pluto) and “elbow bump” (a greeting in which two people touch elbows, recommended by the World Health Organization as an alternative to the handshake in order to reduce the spread of germs) for the for the title.

The idea of carbon offsetting is that rather than (or, preferably, as well as) reducing your own greenhouse gas emissions, you fund projects that will reduce greenhouse gas emissions elsewhere. The most common projects are tree-planting or renewable energy projects. Trees suck up carbon dioxide as they grow, while renewable energy projects provide energy to communities at much lower emission levels than they would otherwise get from traditional energy sources. So rather than foregoing a trip to Europe because of all the emissions that would produce, you take the flight but pay a carbon offset company to act as a broker and direct your money to projects that will reduce an equivalent amount of emissions somewhere else. Thus your flight is 'carbon neutral'.

It’s one measure that individuals can take – as individuals – to help reduce the problem and, in an environment where governments seem reluctant to do anything, it is proving popular. If you can take realistic measures to reduce your own emissions: drive less (or not at all) and walk, cycle or use public transport instead, reduce your energy and water consumption at home (hang your clothes out to dry instead of using a dryer, open windows instead of turning on the air conditioner, etc etc), buy green energy for the electricity you use; then you can offset your remaining emissions (there are various online calculators to estimate your emissions) and sleep somewhat contentedly in the knowledge that at least you’re not making a net contribution to the problem. Apparently, the carbon offset industry was worth around A$150 million last year.

But there are plenty of criticisms of the scheme from various quarters and angles. Tim Harford in his book The Undercover Economist criticises the notion as uneconomic and I’ll discuss that another time. But most of the criticisms come from the green side of the fence and are along one of the following lines:

1. Carbon offsets are not necessarily effective. If you drive somewhere, you instantly pump a measurable amount of greenhouse gases into the atmosphere. If you pay a company to invest in a renewable project or plant some trees, how do you really know how much that reduces emissions by?
   
2. Carbon offsets are immoral because they allow people to pay someone else to deal with the problem, rather than taking responsibility for the problem themselves.
3. Flowing on from 1 and 2, carbon offsets interfere with other effective measures to combat climate change because they allow people to distance themselves from the problem and so they reduce the pressure on individuals, governments, businesses and communities to take measures that actually will have a real impact.

Via the Gristmill blog, CheatNeutral nicely illustrates some of these criticisms.

CheatNeutral is a site that allows people to offset the negative impacts of cheating on their partners, by paying other people not to cheat on theirs.

What is Cheat Offsetting?

When you cheat on your partner you add to the heartbreak, pain and jealousy in the atmosphere.

Cheatneutral offsets your cheating by funding someone else to be faithful and NOT cheat. This neutralises the pain and unhappy emotion and leaves you with a clear conscience.

Can I offset all my cheating?
First you should look at ways of reducing your cheating. Once you've done this you can use Cheatneutral to offset the remaining, unavoidable cheating.

Yes, it’s satirical. But it makes some serious points:

Five ways that Cheatneutral is like carbon offsetting:

Cheatneutral tries to make it seem acceptable to cheat on your partner. In the same way, carbon offsetting tries to make it acceptable to carry on emitting excess
carbon.

Cheatneutral doesn't really do much to reduce the amount of cheating in the world. Carbon offsetting does very little to reduce global carbon emissions.

It seems impossible to measure how much harm cheating on someone does. With carbon offsetting, there is currently no practically feasible way of measuring how much carbon offset projects actually save.

Having Cheatneutral's services available could actually encourages you o cheat more. [sic] If the carbon offsetters persuade you that it's possible to offset your emissions, you'll carry on emitting excess carbon through your lifestyle rather than think about reducing your emissions.

Cheatneutral is fundamentally the wrong way to go about solving problems with your relationships. Carbon offsetting is fundamentally the wrong way to go about tackling climate change.

Two ways which Cheatneutral is not like carbon offsetting:

We don't make any money out of Cheatneutral. Offset companies in the voluntary carbon market take a cut of every transaction and make a profit.

Cheatneutral is a joke we thought up in the pub. Carbon offsetting presents itself as a credible solution to climate change, described by the government's chief scientist Sir David King as “the most severe problem that we are facing today, more serious even than the threat of terrorism...”

So is trying to offset greenhouse gas emissions like trying to offsetting infidelity? I’ll give you some of my thoughts in a later post.

Did the Cross City tunnel put the cart before the horse?

Large cities throughout the world have problems with congestion in the city centre, resulting in lost time, lower productivity, higher costs to individuals and businesses, and more air pollution.

There are two ways to address this problem: you can introduce measures to discourage driving in the city or you can provide or improve alternatives to driving in the city. Preferably, you’d do both. Measures to discourage driving could be indirect, such as parking restrictions or fees or bus lanes (which means fewer car lanes). Direct discouragement, in the form of a fee for driving in the city centre (the most well-known is probably the London congestion charge) is more effective. Providing alternatives includes better public transport, infrastructure for cycling or, as Sydney has done, a tunnel under the city so that people can cross from one side to the other without going through the congested city streets.

Australian readers would be aware of the financial problems that the Cross-City Tunnel has had since its inception last year. Today’s Sydney Morning Herald reports that the tunnel, which cost more than $900 million to build, is now worth little more than a third of that.

The main reason for this is that the current usage of the tunnel - 30,000 vehicles per day – is less than a third of the forecast usage of 97,000 vehicles per day.

The tunnel and its associated toll always seemed to me to be the wrong way around. I've always thought there should be a toll for not using the tunnel – for driving through the city instead.
Tunnel users get charge a toll of $3.50 ($7.00 for trucks) for avoiding city traffic. Now, clearly tunnel users get a benefit from avoiding the city congestion, but by taking the tunnel rather than driving through the city, they’re also avoiding contributing to the congestion in the city. So both city drivers and tunnel users benefit from the tunnel, but it’s only the tunnel users who pay for that benefit. If you really want to encourage drivers to avoid the city, why make it free to drive through the city but expensive to use the alternative?

The Sydney CBD is a relatively small area with only a few entry points. If the State government is serious about reducing congestion and making an adequate return from its tunnel, why not introduce a congestion charge that makes it as expensive to use the city streets as to use the tunnel?

Parking fees – fighting climate change?

Today’s Sydney Morning Herald reports that a number of local councils in Sydney are considering – or have introduced – graded parking fees based on a car’s fuel consumption:

INNER-CITY councils will be urged to charge residents with petrol guzzling cars more for their parking permits - a scheme that netted a council almost $175,000 last financial year.

The Mayor of North Sydney, Genia McCaffery, introduced the scheme in 2005 and said yesterday she would use her role as the president of the Local Government Association to encourage other councils to go greener.

"Certainly this year we are looking pretty closely at climate change and what policies can we adopt as councils to educate communities," she said yesterday. "We'll be talking to our councils and saying this is one of a range of policies you can look at."

North Sydney Council uses the Federal Government's Green Vehicle Guide to judge if a vehicle has a very low, low, medium or high impact on the environment. Each car type attracts a fee ranging from $24 to $88 for the first resident parking permit. A resident parking permit for a second or third vehicle can cost up to $200 for a high-impact car.

Over at the Environmental Economics blog, Tim Haab decries a similar scheme proposed in the UK as inefficient and unfair:

It makes the solution too complicated and it doesn't target the real problem: DRIVING. Suppose Ian and Graham (good English names, don't you think?) live next door to each other and both own Hummers. But, Ian drives his Hummer 20 miles to work each day, while Graham drives his 5 miles. Who is causing more damage? Who should pay more?

Under the current proposal Ian and Graham would each pay the same amount. But that doesn't seem fair--I'm crossing my arms and stomping my foot with a "hmmmph!"--and it definitely isn't economically efficient. So what's the solution? Easy, charge people a fixed amount per litre of petrol consumed…

Well I'm not sure it is that easy and I don’t agree that these proposed measures are a bad thing. First and most obviously, councils can’t impose taxes on petrol, so parking permits are one of the few tools through which they can target the issue.

Second, driving doesn’t just produce greenhouse emissions, it also produces particulate air pollution. Where is air pollution a problem? In the centre of cities. In rural areas, it disperses without creating many problems. The enormous concentration of cars in cities means that this pollution can cause health issues in cities. A national petrol tax doesn’t discriminate between emissions in cities and the country (so to the extent you’re worried about local urban air pollution, a national fuel tax isn’t fair or economically efficient either). And so it's not surprising that it’s "inner-city councils" who are considering additional measures. The Green Vehicle Guide, which North Sydney Council uses to compare vehicles, incorporates greenhouse emissions and air pollution.

Third, and this is a point that economists always seem to me to miss (or ignore), measures like this can have an effect on people’s behaviour that goes beyond their immediate financial impact. Economists seem to assume that drivers see that owning a ‘petrol-guzzling car’ now costs an extra $40 a year to park and then decide whether it’s worth that extra $40 a year to have a petrol-guzzler. If $40 a year wouldn’t make a difference anyone’s purchasing decisions, then, according to the analysis, the extra charge hasn’t done anything. What they miss is that when a local council, which represents the local community, sends out a letter that tells everyone they’re going to charge more for parking permits for petrol-guzzlers because they’re concerned about climate change, that tells people "The community thinks fuel-efficient cars are cool and thinks big petrol-guzzlers are uncool" and, because people feel a connection to their community, that affects their purchasing decisions, probably more so than the $40 charge itself. Measures like this put the issue of driving and its effect on climate change on the agenda – it grabs people’s attention. Of course, councils could just send out a letter that says that gas guzzlers are uncool – but backing that with a $40 fee focuses your attention that little bit more.

So, are these measures a positive step? I’d say yes. I’m sure there are more efficient measures you can come up with but I’d also suggest that these measures are an improvement on the status quo.

What a week

I'm back from a most enjoyable and relaxing few days in Hobart and Eaglehawk Neck in Tassie, with my girlfriend Cat and her family. It's a beautiful part of the world. We packed a lot in, with some great walks - Mt Wellington in Hobart and a couple on the Tasman Peninsula, some interesting tours (my favourite was the old Cascade brewery; now I know what hops are) and great restaurants. The weather was crazy though - very much three seasons in one day (no summer!).

Elsewhere, it's been a big week for Australian and global environmental policy, with a new federal environment Minister, a big water plan from the federal government, talk about Queensland recycling drinking water, environmentalist Tim Flannery being named Australian of the Year, George W actually mentioning climate change in his State of the Union address and a lot of buzz over the upcoming release of the latest report from the Intergovernmental Panel on Climate Change (IPCC).

And in an interesting example of how climate change has become big news and how much of what passes as news isn't really news at all, CSIRO republished data they'd produced in 2004 in a more concise and rebadged document, and so the "frightening" "latest scientific report into the problem" has been front-page news across the country for the past 24 hours. I remember when it came out in 2004 - when it really was new and frightening - and it didn't make such a big splash then.

For some news and views on these issues:

• John Quiggin and Gary Sauer-Thompson's takes on the water plan are worth a look.
• Groovy Green talks about Bush's SOTU.

McNaught Comet - spectacular spectacular!

A bit off-topic, but for anyone in the southern hemisphere, make sure you don't miss the McNaught Comet. We're down in Tassie and caught it last night in Hobart. Big, bright and spectacular with a huge tail (apparently some 30 million km long!). You should be able to see it near the horizon some time after sunset - apparently brightest about an hour after sunset.

Café standards for cars: Espresso Excels and latte Lexuses

If you read much about energy issues in the US, you’ll see common references to CAFE standards for cars. What are they? Are they a good thing? And should we have them in Australia?

What are they?

CAFE stands for Corporate Average Fuel Economy and is the sales-weighted average fuel economy of a manufacturer’s fleet of passenger cars or light trucks, manufactured for sale in the US in any given year. It’s measured in miles per gallon.

The standards were first set in 1975, in response to the 1973-74 Arab oil embargo and the goal at the time was to double new car fuel economy by model year 1985. The standard for passenger car’s today (average economy of 27.5 mpg) is still the same as it was in 1985, although the standard for light trucks has been increasing.

There are substantial penalties for failing to comply with the standards. Manufacturers who exceed their requirements earn credits which they can bank to offset any shortfall in standards in future years – or past years (up to 3 years). They cannot trade credits with other manufacturers.

Are they a good thing?

It is difficult to find non-partisan assessments of CAFÉ standards, but one seemingly relatively unbiased assessment is Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards (pdf), the report of a review undertaken by the Board on Energy and Environmental Systems, Transportation Research Board, and National Research Council.

They made the following findings:

• The CAFÉ standards have substantially improved fuel efficiency and reduced fuel use, resulting in current national annual petrol consumption 14% lower than if the standards had not been introduced. That’s a big figure.

• That improvement has come at a cost, however. The standards have led to slightly higher vehicle prices and slightly lower profits for car manufacturers.

(To get an idea of how much: In a separate report, the Congressional Budget Office estimated the cost of increasing the efficiency standard to a level that would result in a 10% reduction in national gasoline use by cars. They estimated those costs at about $230 per vehicle. This includes the "dead weight loss" of reduced profits to manufacturers and reduced value to customers that would arise because the increase in vehicle price would mean that, at the margins, some people would not buy a car. It also incorporates the savings in fuel over the life of the car that buyers would enjoy - not quite enough to offset the increase in price. Note that the estimate is based on the assumption that manufacturers wouldn’t make any change to efficiency without the standard being tightened – I’m not sure if that assumption holds these days as fuel efficiency seems at last to be something that customers value. Relaxing that assumption implies a lower cost for achieving the same fuel reduction).

• In addition, (and I understand that this remains a controversial finding) the standards have led to an increase in traffic fatalities. This is apparently because the cheapest way to improve fuel efficiency is to reduce the weight of a vehicle and lighter vehicles have higher fatalities in collisions with heavier vehicles. My understanding from fairly brief background reading is that this has been exacerbated by the fact that heavy vehicles (such as 4-wheel-drives aka SUVs) are exempt from the standards, so these vehicles have not become any lighter, while lighter vehicles have become substantially lighter. You could expect that a reduction in the weight of all vehicles would not have an effect this negative and measures that reduced the weight of heavier vehicles could be expected to reduce fatalities. Obviously, this is a complicated issue with a lot of factors involved.

• The exemption for heavier vehicles has undermined the effectiveness of the scheme.

• Allowing manufacturers to trade credits would allow fuel efficiency improvements to be made at a lower cost and provide an incentive for manufacturers who already meet or exceed the standards to make further improvements.

• Higher fuel taxes may be a more efficient way to improve fuel efficiency and reduce fuel consumption.

A key advantage of fuel taxes is that they influence not only fuel efficiency but also drivers’ behaviour, so they have a much broader effect on reducing fuel consumption. And because they apply not just to new cars, they can start influencing fuel consumption immediately. Given that cars are replaced only every few years, it can take several years for fuel efficiency standards to start having much effect on national fuel consumption.

Should they be introduced in Australia?

Most of the arguments about whether they’re a good thing in the US apply equally in Australia. No doubt they would increase fuel efficiency (by definition) and reduce fuel consumption. However, it is likely that they would increase the costs of cars to consumers and presumably raise traffic safety concerns.

However, there are a couple of differences between Australia and the US which mean that manufacturer-level fuel economy standards may not be as beneficial in Australia as in the US:

The big one is fuel taxes. Australia’s petrol taxes, while low by international standards, are considerably higher than in the US. This means that fuel-guzzling is not as attractive in Australia as the US and so fuel economy standards will not make as much of a difference to fuel consumption here. Higher fuel prices already provide some incentive to consumers to buy more efficient vehicles. CAFÉ standards, it should also be noted, are an important ‘second-best’ solution in a country such as the US where fuel taxes are politically unpopular. Getting at the solution more directly, by higher fuel taxes, would reduce fuel consumption more quickly and probably at a lower cost to drivers.

The other difference between Australia and the US is Australia’s consumer clout – or lack of it. The US is a massive market for cars. It can be expected that manufacturers would invest in changes to their vehicles in response to standards there. That is less likely in response to Australian standards. That doesn’t mean that standards in Australia wouldn’t do anything: primarily they would change the mix of cars that manufacturers sell here. But they would be unlikely to lead to manufacturers investing in making their existing models more fuel-efficient. But then again, US, Asian and European markets already provide that incentive so it’s probably not a big deal.

Who’s to blame for the ‘housing crisis’?

I’m a bit confused.

There’s been a lot of talk recently, in the Sydney Morning Herald for example, about that perennial favourite of economic topics, home affordability. And someone always mentions property taxes.

According to the Herald last week:

IT IS well known that the Federal Government played a large role in fuelling Sydney's housing boom with its halving of the capital gains tax…

In 2000 the Government sparked a frenzy of investment in property after it halved the tax paid on capital gains, while keeping the negative gearing loophole open. Earlier it had introduced a superannuation surcharge for high-income earners, which also increased the relative appeal of property.

As investors rushed into the property market, they fuelled an explosion in building activity [and] home prices… the halving of capital gains tax and the loophole of negative gearing was the main reason for the speculative boom in investment properties.

According to the Herald today:

The Federal Government has urged the states to cut "excessive" stamp duties on conveyancing… to make housing affordability easier for first home buyers… Commenting on a report released yesterday that showed housing affordability had fallen to at least a 22-year low, acting Treasurer Peter Dutton said that in 2005/06 the states collected $10.8 billion in stamp duties…

"Property taxes, such as stamp duty and land tax, now make up, on average, 32.5 per cent of the total revenue raised by the states from their own imposed taxes… Stamp duties on a median priced property in Perth add, on average, $20,500 to the cost of the purchase, he said…

I call on all the state Labor governments to cut stamp duty on conveyancing now and make housing a whole lot more affordable for first home buyers."

So which is it: do tax breaks on property encourage more investment in housing, which increases the price or do high taxes on property increase the cost of housing, which increases the price? Surely it can’t be both - or am I missing something here?

Weekly Blog Roundup

As I suggested last week, I’m planning to have a weekly roundup of interesting blog posts from the week on environmental and economic issues – concentrating particularly on Australian issues and on issues that are both environmental and economic.

So here’s some of my favourites from this week:

Water restrictions

Economist Harry Clarke outlines some of the benefits of water restrictions but argues that increasing prices would give the same benefits without the arbitrary side-affects. (This is something I talked about a couple of weeks ago). Harry also deals with the concern of charging high prices for water to people on low incomes and offers some solutions.

Phone books

Earlier in the week, Amy Stodghill talked about the apparent waste of providing chunky paper phone books to every household and business in the US. I asked Telstra / Sensis about the position in Australia. The discussion has struck a chord, with Grant Young and Andrea at Buy Organic adding their thoughts and Sven Cahling talking about the situation in Sweden (for anyone who can speak Swedish!).

Green power

Economist Joshua Gans asks some questions about Green Power, such as ‘Will buying green power actually lead to more green power production?’

Have a great weekend!