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.

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.

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.

North Sea Foundation vs Climategate: my 2 cents

Last Monday was World Biodiversity Day, and the focus was this time on marine biodiversity. This means a lot of press releases and other broohaha (and boohoo) about declining marine biodiversity. I can point to plenty of problems with marine biodiversity (for instance, that delicious fish species like eel and southern bluefin tuna are at the brink of extinction), but you can read all about that here. For now, I want to look at the following statement by the Dutch North Sea Foundation (my translation; links added by me):

The North Sea, The Netherlands’ largest nature area, is under pressure. In 2010 the Nature Balance announced that only 40% is left of the North Sea’s biodiversity. “So it is necessary that important areas and animal species are well-protected, so that the sea’s biodiversity can recover”, says Monique van de Water of the North Sea Foundation.

Rypke Zeilmaker of Climategate disagrees because, among others, the Nature Balance figures are based on reference levels for which no scientific foundation exists (translated rather liberally):

As reference level for porpoises the Nature Balance uses an unfounded historical figure of 50,000 porpoises along the Dutch North Sea Coast and 1000 in the Wadden Sea. They don’t say why.

As I said before, I follow the Climategate blog not because I’m a climate sceptic (I’m not), but between all the accusations and rhetoric you occasionally find interesting viewpoints. So I looked up the documents on which all this is based. Here are a few quotes.

Osinga et al, 2007; cited in Wortelboer 2010, which is cited by the Nature Balance:
With a density of 0.390 porpoises per square km and a Dutch North Sea with a surface area of 57,000 square km the total number of porpoises in the Dutch North Sea is estimated at about 22,230 individuals.

Wortelboer 2010:
Based on the data of later analyses by SCANS II we estimated the number of porpoises at 11,000. (…) The Dutch Mammal Society (2007) estimates the current number of porpoises in the Dutch North Sea at roughly 17,000 (15,000 – 19,000) based on airplane surveys and SCANS II. (…) The Dutch Mammal Society estimates the porpoise population in the Dutch North Sea in 1950 at 32,500 (25,000 – 40,000) individuals. This is lower than the reference level according to Baptist and Jagtman (1997).

I don’t have the Dutch Mammal Society report but here is what Baptist and Jagtman (1997) say:

There are no measurements of porpoise populations before 1960. From the number of stranded animals we can say that the species was very common. (…) From biological monitoring studies we can deduce that there is a population of at least 30,000 individuals in the southern North Sea. This population was until recently present in the British part of the North Sea, but not in the Dutch part. Based on current knowledge the reference population can be estimated at more than 100,000 porpoises in the southern North Sea, of which 50,000 in the Dutch part of the North Sea.

Overestimated? Possibly. Shaky? Undoubtedly, but unavoidably in this kind of studies. Poorly referenced? I believe so: I would have liked to know what is meant by “current knowledge”. Unfounded? That’s too harsh. Scientific fraud, as Zeilmaker claims? Certainly not. There are simply no data, but the policy makers want figures to work with. And the affair after which the Climategate blog is named shows that if you don’t like the North Sea Foundation, PBL, or any organisation involved in environmental policy or research, it is always possible to find some mistake, misquote, omitted reference or whatever, and to blow that out of proportion.

But there is still something that bothers me about the 40% figure used by the North Sea Foundation. The indicator they use is a sort of average of a lot of other indicators, all of which express how well the environment is doing with respect to some reference level that is supposed to represent a pristine, untouched environment. So if the porpoise population would have been 50,000 in the absence of man, and it is now, say, 25,000, then the indicator for porpoises is 50%. There are loads of such indicators, and the method of aggregating them to a single figure can be debated at length also, of course. But that holds for any indicator that aims to express a multidimensional issue in a single figure (more on ecological footprinting in a later post).

No, what bothers me is that they also do this for commercial fish species like herring, plaice, and cod. Didn’t we agree under the Convention for Biodiversity that fish stocks should be maintained at Maximum Sustainable Yield? As a rule of thumb, a species’ MSY stock size is mostly about half what it would be in the absence of fishing, although for some species it can be as low as 25%. So if we meet our CBD targets and maximize the harvests we can maintain sustainably, environmentalists still have plenty to complain as these stocks have a “nature quality index” of 50% or less. So yes, please do take the 40% with a grain of salt.