I’m an economist, I know nothing

One of the most difficult things about working in resource economics is being supposed to say something about stuff you actually haven’t a clue about. Does bottom trawling wreck the benthic ecosystem? How high are discard rates? Is the Plaice Box working? I don’t know, but to make an economic analysis I should.

It’s not like economics can’t deal with uncertainty. Sure, in the ideal situation we know everything: if A causes B, and we know the costs and benefits of A and B, we can do a cost-benefit analysis to tell whether A is a good idea. This is when the relation between A and B is deterministic. But mostly the relation between A and B is not.

The natural scientists could say “well, we don’t know for sure whether A leads to B, but what we can tell you is that the probability that A leads to B is 20%”. Most of the environmental economics textbooks call this risk, as opposed to uncertainty, which I will explain below. Risk is something we can deal with. For example, if B costs €100 then the expected value of the “B costs” of doing A is €20. You can also take into account that people don’t like risk, so perhaps they are willing to pay €25 to prevent B from happening if we do A. Note that this is €5 more than the expected value of the B costs; hence the costs of risk bearing are €5.

The natural scientists could also say “sorry, we have no idea. A could lead to B; it may also have no relation to B at all. We simply don’t know, and we can’t give you any probabilities either.” This is what the textbooks call uncertainty. Uncertainty is nastier to deal with (and, unfortunately, also more widespread) than risk. Under uncertainty all we could say is something like “if you do A, the worst that can happen is B; the best that can happen is no B.” There are strategies like maximin (choose the best of all worst outcomes), maximax (choose the best of all best outcomes), and minimax regret (choose the outcome that gives you, in the worst case, the least explaining to do), but that’s about all you can do.

The natural scientists could also say “it depends on who you ask. Some scientists say A probably leads to B, but others are not so sure. This is an ongoing debate in our field.” This is not so different from the previous case, and we could treat it similarly to uncertainty. Let’s call it a case of competing hypotheses.

The worst case, however, is where some scientists tell you “all the evidence suggests that A leads to B, and don’t let those evil impostors from the A institute tell you otherwise. They are paid by the A industry to deny our science.” No surprise that the A institute tells you that the idea that A could possibly lead to B is preposterous, and that anyone who claims that A leads to B is a leftist bureaucrat out to vilify the poor, hard-working entrepreneurs in the A industry, if not to establish an anti-A-ist communist state. Let’s call it a case of polarised hypotheses. Examples abound: genetically modified organisms, climate change, bottom trawling, MPAs.

The problem with polarised hypotheses is that the moment you choose to include a hypothesis in your uncertainty analysis you imply it is something to be taken seriously. I have no idea of climate science, and I don’t have the time to acquire all the knowledge that would enable me to distinguish the genuine scientists from the flat earthers. But I’m convinced that it is easy to take advantage of my ignorance, and that there are a lot of folks out there who try to do so. Is it a coincidence that one of the most prominent climate skeptics was once paid lavishly by the tobacco industry to deny the harmful effects of second-hand smoke? On the other hand, I’ve seen sufficient nonsense in the news (100 cod in the North Sea, all fish gone by 2048, dolphin meat in canned tuna) to be equally skeptical of the toxic combination of overzealous NGOs and lazy journalism.

So what do you do, as an ignorant economist who cannot fully judge the arguments? You check the messenger. Where does this person work? How much has he or she published, and in which journals? What is the disciplinary background of this person? (For example, one of the more prominent Dutch climate skeptics is an economist whose only peer-reviewed publications were in a journal specifically established to give climate skeptics the stage they can’t get elsewhere.) How much of what this person does is science and how much is advocacy? (I’m allergic to the kind of advocacy dressed as science that was behind, for example, the nonsensical claim that the planet’s ecosystem is worth $33 trillion every year. You can’t estimate this value, period.) I tend to pay much attention to contradictions: The Economist, for example, is an economically liberal newspaper that used to play down the threat of climate change, but nowadays it argues in favour of limiting greenhouse gas emissions. As far as I know Richard Tol, who is often quoted by climate skeptics, does not deny that greenhouse gas emissions are a problem. Funnily the skeptics never quote him on that; they only do so when he bashes wind power.

Yes, I know science is not made by majority votes, but that doesn’t mean that I should take into account every pseudoscientist with an opinion. And I know that reputation isn’t everything, and that many revolutionary insights were first ridiculed, but I can’t be a master of all. So I have little choice but to listen to the mainstream.

Going deep south

The day we arrived in Hanoi, Tu invited us at his home to get a taste of genuine Vietnamese biodiversity: swimming crab, carp, blood cockles, tiger shrimp, squid and some other species I don’t remember. Like many Asians, the Vietnamese like their seafood fresh: everything except the carp and the squid was alive (and moved). It was served around a big bowl of broth, with tomato, ginger, pineapple, and lemongrass, where everything was cooked and the broth slowly became a delicious fish soup: say hello to the Vietnamese hotpot.

As far as I could see, all of the seafood served came from aquaculture – not a big surprise in a country that ranks third in global aquaculture production. Tu works at the Vietnamese Research Institute for Aquaculture as a fisheries economist, and he does his PhD research at our group on how the shrimp farmers in the Mekong delta adapt to climate change. Expectations are that as sea levels rise, and average temperatures increase, shrimp farmers will increasingly have to deal with disease outbreaks and salt water intrusion (black tiger shrimp are a bit like Goldilocks, preferring their water not fresh, not salty, but brackish). How will these farmers deal with these problems? In other words, what kind of autonomous adaptation will they implement, and what kind of planned adaptation can or should the government implement?

I had discussed these issues at length with Tu over the last twelve months or so, but it is difficult to discuss these issues if you have never seen these farms in reality. So Monique and I reserved a few days to travel to Soc Trang, Bac Lieu, and perhaps Ca Mau, where most of the Mekong Delta’s shrimp come from. We were joined by Tu, Le Xuan Sinh (an aquaculture expert from Can Tho University) and Nguyen Trang (a master student at Wageningen University who does her thesis work in the Mekong Delta). Sinh suggested to drive along the coast road between Soc Trang town and Bac Lieu town the first day, and stay the night in Ca Mau town. The day after we went deep south: by car to Nam Can (the most southern town of Vietnam that can be reached by car), and then the boat all the way to Mui Ca Mau (the southern cape of mainland Vietnam).
No matter how much I had read about Vietnamese shrimp farming before I came, it still struck me how different the shrimp farms in different regions are, and how strongly these differences depend on their natural environment. The relatively fresh waters of Soc Trang allow for intensive shrimp farming, in many cases even with systems where the pond is perfectly separated from the water or canal. These are fairly capital-intensive systems, with neatly dug ponds, aeration devices, and much use of shrimp feed and other inputs. These farmers have the system quite under control.
How different are the farms you find deeper south, in the vast mangrove forests of Ca Mau province. The water is much more brackish here, so that the ponds are more strongly connected to the rivers and canals. Farmers let water in or out to control the salinity of the water, and in some cases to take in shrimp seed and fish. In the center of the pond you find planted mangrove trees that provide food and shelter to the shrimp, and that are usually sold after about 15 years for firewood or charcoal. The farmers use little feed because the shrimp can feed on algae growing on the mangrove trees.
Apparently our visit was quite an event for this farmer. He invited us for a meal of cooked crab and some sort of Vietnamese jenever. Even though it was 11am we bravely jugged the stuff down because it would have been impolite to refuse. So here you have another problem of doing field work in Vietnam: you need to be able to drink. Heavily. All the more reason to let the respondents come to some central place instead of going from door to door yourself.
Although it is hardly featured in tourist guidebooks, I consider Ca Mau one of the highlights of my trip to Vietnam. Of course for being invited to food and drink with some shrimp farmer, and for the thrilling boat trip through the mangrove forests to Mui Ca Mau, but also for the mangrove forests themselves. I just love mangrove forests. The sheer fact of having a forest in such a salty, tidal area, with stilt-roots sticking in the mud. And when you look closely, at any square meter of the mud between the trees, you see the forest is teeming with life. Different species of crabs crawl over the bottom. A snake slithers by. Mud skippers skid over the puddles of brown water at the edge of the forest.
So what have I learned from this trip? First of all, there is no one-size-fits-all solution for Vietnamese shrimp farms to deal with medium-term or long-term changes in their natural environment. Adopting a closed system, or cultivating white leg shrimp (a hardy species from South America) instead of black tiger shrimp, may work for the intensive farmers in Soc Trang but not for the extensive farmers in Ca Mau. Second, there is a looming problem in almost all shrimp farms: the waste coming from the pond. Farmers regularly clean the ponds, and then a muddy mixture of shrimp faeces and salt comes out. It may have been a good fertilizer if it weren’t for its salinity. So far no solution has been found for it yet, so all farms have a load of salty mud piling up. The farmers are not allowed to dump the mud in the river, but monitoring and enforcement is weak and the farmers have little alternative. Third, another problem is that the stock of wild shrimp is declining as more and more farmers catch wild shrimp seed in order to cultivate it in their ponds. Wild shrimp tend to be more disease resistant, but there is of course only so much that the local ecosystem can provide. Fourth, conducting a survey in areas like Ca Mau is going to be a daunting task: getting there over water, identifying and randomly selecting respondents, and last but not least staying sober.

(Almost) three days of (almost) night

This is as light as it gets where I was this week:

The location is Tromsø, Norway. I was there the last few days to discuss the effect of climate change on arctic fisheries. Interestingly, this effect is not necessarily negative – for the Norwegians, that is. Stocks like mackerel may move northwards, making more mackerel available to Norwegian fishers at the expense of more southern less northern fleets (like the Dutch). Other effects may be that arctic stocks become more productive, and as stocks get larger they can also be found in places where they weren’t before. So the University of Tromsø gathered together fisheries economists from Norway, Denmark and Iceland (adding a stray Dutch aspiring fisheries economist and a Mexican professor) to discuss what the economic effects may be, where these effects take place, and how economists can analyse these effects.

My highlights from this meeting:

  • Much of the research in this domain is descriptive: what is happening, and what may happen in the future? This concerns issues varying from what fishers do, where they will fish and how intensively, to the willingness of countries to cooperate in fisheries policy when stocks move northwards.
  • Prescriptive research – which routes should be kept open, where should marine protected areas be allocated – is scarce. I was one of the few participants presenting such research, and even that was about Vietnamese mangrove forests (not exactly arctic) and Dutch agri-environment schemes (not exactly marine or arctic). Juan Carlos Seijo had a very nice presentation about where to allocate a marine protected area in an ecosystem where the commercial fish originates from a particular (nursery) area. Not very surprisingly, one should protect the nursery area from fishing, but if you take into account what fishers do the effect of the allocation also depends on whether the nursery lies close to the fishing port or far away from it.
  • Norwegians are delightfully unapologetic about hunting and whaling. I can’t blame them: they have plenty of fish, minke whale and game, and as far as I can see they manage these stocks fairly well. Meanwhile, the Dutch get squeamish about whether we should cull deer (but hunting is cruel), let them starve (which is even crueler), or risk hitting them on the highway (would you like a deer in your windscreen?).
  • All the more surprising that the Dutch hunted whales, seals, and other cuddly arctic fauna on a large scale before the Norwegians did.
  • Norwegian is a very efficient language. “Hello how are you today?” is “hej”; “thank you very much” is “takk”. Why waste energy on redundant syllables?

Tromsø is a fascinating place. After Murmansk it is the largest city above the polar circle, and around this time of the year the sun does not rise – you get some twilight between 10am and 2pm, that’s it. The city is proud of its arctic hunters (like Wanny Woldstad) and explorers (like Roald Amundsen). But I admit I’m glad to have some sunlight again.

This time they don’t even pretend otherwise

I’m usually not a conspiracy type of guy but googling for images to visualize ‘carbon sink’ I came across this story:

…British artist Chris Drury thought his commentary on the connection between the coal industry and dead trees would merely generate some polite on-campus debate in Cheyenne.
By day three of construction, the mining industry was accusing the university of ingratitude towards one of its main benefactors – in what some have seen as a veiled threat to cut funding.

I usually detest the lame arguments on both sides of the climate debate (“you’re only a skeptic because you’re paid by the oil industry”, “you’re only a warmist to rake in more research money”), but what to think of these statements?

“They get millions of dollars in royalties from oil, gas and coal to run the university, and then they put up a monument attacking me, demonising the industry,” Marion Loomis, the director of the Wyoming Mining Association, told the Casper Star-Tribune. “I understand academic freedom, and we’re very supportive of it, but it’s still disappointing.”

Then two Republican members of the Wyoming state legislature joined in, calling the work an insult to coal. The subject of university funding also came up.

“While I would never tinker with the University of Wyoming budget – I’m a great supporter of the University of Wyoming – every now and then, you have to use these opportunities to educate some of the folks at the University of Wyoming about where their paychecks come from,” Tom Lubnau, one of the state legislators, told the Gillette News-Record.

I love the sculpture, by the way. More of the artist here.

Granted: bad arguments against ecological footprint

While writing my post on Ecological Footprint I came across a lot of sound arguments against it, but, to be fair, also a few less convincing ones. Here are two that hold more than a grain of truth, but simply will not convince the EF’s proponents.

“Land prices will stop you from sequestering carbon”
The argument goes like this: it’s unrealistic to assume all carbon emissions are mitigated by planting trees, because as more and more land is covered by ‘carbon farms’ (yes, not only the term exists, so does the practice), land will become so expensive that you will resort to other ways of climate change mitigation.

Of course you would expect land prices aree extremely high when the last square meter of agricultural land is converted to a carbon farm: after all, we only have one planet. But perhaps that is exactly what EF tries to tell us? Nevertheless, the argument points towards another problem with EF: it assumes sequestration is the only way to deal with GHG emissions, or at least the cheapest way. But although adaptation to climate change has long been a dirty word in the climate debate, it would be bad science and bad policy to dismiss it straight away – especially if sequestering carbon becomes prohibitively expensive. Given the choice between starvation and building better coastal defenses, my motto would certainly not be let em eat tree bark.

“You can overshoot temporarily without wrecking the planet”
EF counts any policy that increases stocks of carbon as unsustainable, but it is possible to accept a slight, temporary increase in carbon stocks without inflicting major damage to the climate system. Indeed, it might even be optimal to do so. If we could eradicate poverty by a temporary spurt in economic output to build up capital (read: build machines, infrastructure, establish institutions, etc), after which we close biophysical cycles again, bringing our impact on the planet within safe boundaries, the elevation to a higher but sustainable standard of living may more than offset the temporary damage inflicted on the environment.

But to me this sounds too much like the drunk who is caught by police while starting his car and tries defending himself with the excuse that he wasn’t planning on actually driving it. Are you really trying to tell me that flying to distant holiday destinations several times a year (just to name an example) is supposed to be temporary, and to help developing countries get richer? Don’t get me wrong here: I think everybody is free to take a long vacation on the other side of the globe if he or she likes, although we should do so facing prices that convey all relevant costs, and that includes our impact on the environment. But most people would assume that our current way of life is at least supposed to be maintained indefinitely, and otherwise to be expanded. The EF’s proponents argue that this is impossible. There may be a lot to be said against their position, but claiming it’s all meant to be temporary is not one of them.

James Lovelock on greens and skeptics

James Lovelock, the inventor of the Gaia hypothesis (that life on Earth functions as a complex system), has for years been an environmentalist’s pet scientist. Lately he made a few remarks that sounded skeptical to some, and now he’s turning into the skeptics’ pet. They should think again. Here’s what he says in The Guardian about skeptics:

They’ve got their own religion. They believe that the world was right before these damn people [the greens] came along and want to go back to where we were 20 years ago. That’s also silly in its own way. I don’t see how any true scientist could be either a believer or a denier. The term “sceptic” has been hijacked, too.

I could not agree more. I recently had a discussion with a friend who I understand to be skeptical about monetary valuation of nature. She answered “I’m not skeptical, I happen to have good arguments.” What have we come to now that “skepticism” has taken on the meaning “refusing to believe despite overwhelming evidence”?

Lovelock also makes some good remarks on environmentalism, shale gas, and climate change.

Worried about climate skeptics? It can be much, much worse

John Whitehead of the Env-Econ blog has the following about a new bill in North Carolina:

Business interests along the state’s coastline pushed lawmakers to include language in a law that would require future sea level estimates to be based only on data from past years. New evidence, especially on sea level rise that could be tied to global warming, would not be factored into the state’s development plans for the coast.

The proposal has been described by some as “criminal”, but the first that sprang to my mind was the infamous Indiana bill that set π equal to 3.2.