Pick Your Poison

What if you had to choose between saving large swaths of humanity from a "nasty, brutish, and short" existence and protecting the biosphere from the possibility of irrevocable harm? That's our present choice, says Freeman Dyson:

Beyond the specific points of factual dispute, Dyson has said that it all boils down to “a deeper disagreement about values” between those who think “nature knows best” and that “any gross human disruption of the natural environment is evil,” and “humanists,” like himself, who contend that protecting the existing biosphere is not as important as fighting more repugnant evils like war, poverty and unemployment.

No he's not talking about aid payments from the MDCs to the LDCs, but rather simply allowing LDCs to continue using dirty-but-cheap fossil fuels like coal to lift themselves out of poverty. If you'd prefer, you may think of this as trading off certain bad outcomes for people existing in the present and near future in exchange for preventing possible bad outcomes for people who might exist in the relatively-far future. (of course the magnitude of the two might not be equivalent.)

Via Wilkinson, who also lifts this quote:

To Dyson, “the move of the populations of China and India from poverty to middle-class prosperity should be the great historic achievement of the century. Without coal it cannot happen.” That said, Dyson sees coal as the interim kindling of progress. In “roughly 50 years,” he predicts, solar energy will become cheap and abundant, and “there are many good reasons for preferring it to coal.”

Of course, reasonable people can disagree about which is more important. But the point is that reasonable people cannot disagree that there are tradeoffs, and that policy choices in one area affect outcomes in others.

(Not that I should have to, but just to nip any partisan sniping in the bud: the above is true for all political orientations, and neither is more righteous in my view: there are good reasons to want to end present-day suffering, and there are good reasons for wanting to end future-day suffering. The point is to consider the tradeoffs.)

No Magic Bullet

Complex issues, it seems, often lack simple solutions. Consider the EU's determination to mandate the use of biofuel in place of fossil fuel. It turns out that this effort won't necessarily reduce greenhouse gas emissions and may in fact have negative environmental and social consequences.

"In March last year, EU leaders agreed that 10 percent of transport fuels should come from biofuels by 2020, a goal the commission is now turning into concrete legislation. But even before making the legislation public, several expert reports have highlighted the possible negative consequences of the target. Last Friday, a group of 17 NGOs - including Oxfam and Friends of the Earth - sent a letter to EU energy commissioner Andris Piebalgs, asking him to introduce much tougher standards for biofuel production or give up mandatory transport biofuel targets altogether.

They argued that the existing draft legislation does not provide protection for important ecosystems, such as savannas or permanent grasslands "that may be threatened by expanding agriculture to meet the EU's biofuel target." "Destruction of these carbon sinks would lead to large emissions of carbon into the atmosphere, thereby reducing or neutralising the benefits from growing biofuels. Neither does the draft text provide any safeguards to protect water and soil resources," they said in a statement.

They also noted that "large scale biofuel production can cause negative indirect or knock-on impacts such as increasing food and feed prices and increasing water scarcity which would lead to negative impacts on the world's poor."

The limited positive impact and potential negative externalities are in turn accentuated by this: Consequently, at crude oil prices of about USD 60 per barrel, public support [SUBSIDIES] is required in the order of USD 0.15-0.55 per litre...in most OECD countries to make biofuel production based on agricultural crops profitable. With crude oil prices having recently reached levels around USD 90 per barrel, net gasoline and diesel prices have increased to above USD 0.70 per litre, but as crop prices have increased sharply at the same time, the basic economics of biofuel production have not changed significantly.

And this: "It is estimated that the costs per ton of CO2 that is saved through the production and use of biofuels are in the order of USD 500 (about EUR 350), and even higher in many cases. This compares to prices for emission rights in the European Emission Trading Scheme (ETS) peaking at around EUR 30 per ton in March 2006, and currently hovering around EUR 24 per ton for 2008 futures.

To summarize, biofuels have a limited impact on GHG emissions, create negative environmental consequences, require substantial public subsidies to be profitable, and are 10 times more costly than an available alternative, Emission Trading Schemes. And yet, the EU wants to mandate their use. Why?

How do We Extract Signal from Noise?

As we head toward the New Year, I offer some fundamental skepticism. In a very cheery examination of the current financial situation, Ambrose Evans-Pritchard seems almost to relish the collapse of the international financial system. He seems uncannily able to find bankers willing to make extreme statements, such as: "Things are very unstable and can move incredibly fast. I don't think the central banks are going to make a major policy error, but if they do, this could make 1929 look like a walk in the park." How's that for a little New Year cheer?

I feature Evans-Pritchard's recent work because it nicely highlights one of two questions I have been pondering for the last two weeks (I will post on the second question tomorrow). How do we humans extract meaningful signal from all the noise? We seem strongly attracted to worse-case scenarios; we compare the current situation to 1929 rather than to other financial episodes that did not produce a global cataclysm (1987, for example, or the bursting of the dot com bubble). The media feeds us quotes with no evidence about where the people quoted fall in the distribution of opinion and analysis. Are the quoted bankers representative of the median view, or is the writer drawing from the gloom-and-doom end of the spectrum? Do the people quoted have incentive (monetary or other) to portray events in a particular manner rather than present "objective analysis?" In short, how does one figure out the "truth" in a world in which the critical question is "what is going to happen?", when the information we have at hand is of uncertain quality and quite possibly biased, but the degree of bias is unknown (and unknowable)?

This seems to be a very hard problem, and yet one we face on a regular basis. For those not interested in the current financial crisis, then ask the same question of global warming. If you are unwilling to fall down the global warming warren hole (and having disappeared into that hole for a full week, I can hardly blame you if you are not), then ask the question of genetically modified organisms. If GMOs do not interest you, then what about economic development? All of these issues pose the same dilemma: we are asked to make decisions today to achieve some future consequence relying on knowledge first produced and then reported by groups of people who may or may not be motivated by the objective quest for truth and that therefore may or may not be biased in ways we cannot accurately measure.

In short, why do we believe what we believe, and should we? How do we extract the meaningful signal from all of the noise, and how do we know that we have extracted the meaningful signal? I don't have the answer, but we seem to believe that the political process is good at selecting the "correct signal." Why do we believe this? Should we?