Saturday, January 17, 2009

Confused thinking on the environment at Catallaxy

A post over at Catallaxy suggests that policies of preventing the exploitation of oil and gas reserves near national parks in the US harm the poor (mainly blacks) and are therefore unacceptable - there is even the suggestion in the original news story* that such policies are racist . It is at best a partial story and in conceptual terms highly misleading.  The general intent by Catallaxy is to poke fun at the middle class affluent in a way reminiscent of populist left-wing attacks on reason.

The decision to limit exploitation of oil and gas reserves (or any other marketed good) because of conservation concerns (or concerns over any non-marketed good) is one that revolves around a social cost benefit analysis of the respective options.  Oil and gas products are marketed whereas conservation values are not so it is more difficult to get a feel for the present value of the latter types of outputs.

More effort is involved in valuing conservation assets but various indirect procedures can be used (advice from experts and scientists, travel cost method, contingent valuation and so on).  A premium should, of course, be added to the conservation values - a quasi-option value  - since the decision not to proceed with development of the oil and gas deposits is reversible while the decision to proceed with these developments is much less readily reversed to reinstate conservation values.  In addition, technical progress in the future will yield new sources of energy but not new conservation assets and, if you believe the environmental luxury good hypothesis, people's values switch toward conservation as they become more affluent. Environmental red necks tend to be working class.  Both of these factors intensify the case for taking care with the destruction of already over-exploited natural environments.

All this is basic resource economics and provides a rational basis for being conservative about certain natural resource destructions.

The cost benefit comparison proposed involves ignoring distributional impacts and is largely efficiency-based.   This is essentially the 'second theorem of welfare economics' - maximise the value of society's outputs first and then (if necessary**) make transfers to accommodate the specific interests of particular disadvantaged groups such as the poor.  One can raise qualifications about the general applicability of this result but it works well in the current setting.

If it is mainly middle class affluent people who seek conservation outcomes then, on this account alone, they should pay for those outcomes and transfers should be made to those suffering the costs. But this has nothing to do with the case for making the conservation versus development issue using efficiency-oriented cost-benefit analysis.

The point is to value things at their social worth something a libertarian blog like Catallaxy should understand.  Economics is, in my view, a discipline which sensibly protects the environment.

It is foolish to sling-off at environmental activists because they are middle class or rich and because some of those bearing the costs of development restrictions have lower incomes. To a very large extent environmental equity and efficiency issues are separable and those committed to free markets should always target efficiency leaving the tax and transfer mechanism to address distributional issues.

* It is a generally ignorant account which suggests that poor inner city blacks will suffer most the effects of higher energy prices if the deposits are not developed.  This fails to recognise that energy prices are globally determined with the local developments being discussed having only a limited, short-duration impact on prices. Both rich and poor are impacted on by any higher prices.

** The poor do not need to be compensated for every policy that runs against their interests if they already receive huge transfers from those more wealthy in order to effect general redistributive concerns. In the present setting specific benefits to the wealthy of conservation might be consider a payback for redistributive taxes. This is an important since it is generally not necessary to provide specific compensations for every project.

Update: In a comment Tim Lambert points out that the source of the claim that protecting conservation areas is racism is CORE (Congress on Racial Equality) which receives funding from ExxonMobil.  CORE has been an active supporter of climate change denialism and opposed (for example) the listing of polar bears as endangered species on the grounds that such protection damaged poor black Americans

13 comments:

Anonymous said...

Harry,

Libertarians hate Greenies and regard environmental initiatives with contempt. They also hate unions, lefties, feminists, governments, politicians, the UN, most economists(especially you Harry), social crusaders, and anyone else who thinks contrary to their stated doctrines. They like hating people and they like ridiculing people even more. Look at Catallaxy, in my experience it is the top of the list forum for outright abuse.

Tim Lambert said...

The Congress of Racial Equality used to be a civil rights organization, but now get their money from oil companies rather than members. I imagine the claim that the opposition to drilling next to national parks was racist would be less credible if it came directly from oil companies.

hc said...

Tim,

Its interesting that ExxonMobil who gave $200,000 to CORE 2004-06 (see

http://www.exxonsecrets.org/html/orgfactsheet.php?id=111)

chose a strategy with emotional if not economic sense.

It is interesting too that groups such as Catallaxy fall for such nonsense.

I notice too that libertarian groups are uncritical promoters of the 'freedom of choice' strategies promoted so intensively by the tobacco companies.

Jc said...

What's you silly point about oil companies funding pressure groups, harry.

Didn't Lambert ever tell you that a leftist PR firm funded Realclimate.org?

That's right, he didn't. LOL.


According to the intellectual thug (Lambert) the CRE can't be a civil right moment because Exxon funds them?

Isn't he cute? LOL.

hc said...

Actually JC it wasn't my point - my point was that CORE's analysis lacks logic and that point is true irrespective of who funds it. But I think Tim's point is interesting - the money is being used to promote certain badly-motivated policies by groups who appeal to people's emotions not their logic.

hc said...

By the way JC, RealClimate reject the claim you make.

See:

http://www.realclimate.org/index.php/archives/2005/02/a-disclaimer/

jc said...

Harry:

They set them up, which they haven't disclaimed. Neither have they ever clearly explained the exact relationship they have with Fenton and associated firms to Fenton.

Schmidt is a political activist pretending he a scientist in Realclimate, so anything he says needs to be carefully checked as he usually practices the sin of omissions.



I have no issue who fund them, as I there shouldn't be an issue.


People that work for pressure groups and the funding sources are essentially like-minded on the issues they press for.

It's unlike the CIS would suddenly write pro union stuff if the union movement started to fund them.

Intellectual hacks like Lambert obviously push that line but of course it isn't true.

Dick Lindzen also disagrees with you Harry. He basically shows the relationship Schmidt and his political activist site have with Fenton Communications going back a long way.


Here's Lindzen in his own words:

http://arxiv.org/abs/0809.3762

Environmental Media Services (a project of
Fenton Communications, a large public relations firm serving left wing and environmental
causes; they are responsible for the alar scare as well as Cindy Sheehan’s anti-war campaign.)
created a website, realclimate.org, as an ‘authoritative’ source for the ‘truth’ about climate. This
time, real scientists who were also environmental activists, were recruited to organize this web
site and ‘discredit’ any science or scientist that questioned catastrophic anthropogenic global
warming. The web site serves primarily as a support group for believers in catastrophe,
constantly reassuring them that there is no reason to reduce their worrying.

jc said...

Harry:

Did you read the link you provided. It says they HAVE a relationship:

Here, from your link.

Readers of the Feb. 14th, 2005 Wall Street Journal may have gotten the impression that RealClimate is in some way affiliated with an environmental organisation. We wish to stress that although our domain is being hosted by Environmental Media Services, and our initial press release was organised for us by Fenton Communications,

This is Schmidt "disclaiming" what he isn't disclaiming, showing again what a dishonest dick he is.

He titles it as a disclaimer and then we see it's the exact opposite.

LOL. That's what Lambert does. Schmidt obviously taught him. FOTFL.

hc said...

That's silly JC and based on selective quotation and a very muddled interpretation. . The denial is tight. They don't get money from that organisation. CORE gets lots of money from EXXONMOBIL.

jc said...

No, it isn't silly, harry.

He disclaimer isn't disclaimer at all.

How many people are there at real climate who "help them" but aren't formally recognized as formal Real Climate employees or associates?

A disclaimer is quite simple, harry.

It simply says they have no direct, indirect or even cursory relationship at all.


I call Schimdt's claim total bullshit as he doesn't tell you what he's omitting which is how he operates.

He's thoroughly dishonest..

jc said...

One other thing harry;

On of the reason the Price of US LPG gas has fallen is that the potential quantity of gas from US shale? Should that be stopped then? Seeing you had this to say:

More effort is involved in valuing conservation assets but various indirect procedures can be used (advice from experts and scientists, travel cost method, contingent valuation and so on). A premium should, of course, be added to the conservation values - a quasi-option value - since the decision not to proceed with development of the oil and gas deposits is reversible while the decision to proceed with these developments is much less readily reversed to reinstate conservation values.


Oh , I see, let's keep using up all Arab oil as that doesn't count. That's only Arab oil and their conservation areas are nothing compared to what Redford wants to conserve.

If you can't price the option, harry. You don't have any option.

observa said...

Surely not this Exxon Harry?
http://newsweek.washingtonpost.com/postglobal/energywire/2009/01/exxon_chief_embraces_carbon_ta.html

observa said...

Woops! Try-
http://newsweek.washingtonpost.com/postglobal/energ
ywire/2009/01/exxon_chief_embraces_carbon_ta.html