We know that right shoes and left shoes are complements but we are still learning about what market products go well together. At Amazon, You can already buy my book (Green Cities) that will be published by Brookings Institution Press in early August. Here is what Amazon says goes well with my book;

Customers who bought this item also bought

* Extreme Killing: Understanding Serial and Mass Murder by James A. (Alan) Fox
* American Exceptionalism and Human Rights by Michael Ignatieff
* Abducted : How People Come to Believe They Were Kidnapped by Aliens by Susan A. Clancy
* Dyes from American Native Plants: A Practical Guide : A Practical Guide by Lynne Richards
* Drawn from Nature : The Plant Lithographs of Ellsworth Kelly by Richard H. Axsom

My wife assures me that the Aliens book is serious but this is a pretty funky set of books.

Compare them to Ben Friedman's The Moral Consequences of Economic Growth

Customers who bought this item also bought

* The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor--and Why You Can Never Buy a Decent Used Car! by Tim Harford
* Understanding the Process of Economic Change (Princeton Economic History of the Western World) by Douglass C. North
* The End of Poverty: Economic Possibilities for Our Time by Jeffrey Sachs
* Economic Origins of Dictatorship and Democracy : Economic and Political Origins by Daron Acemoglu
* The White Man's Burden : Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good by William Easterly

Explore similar items: in Books

Too many blog entries (including my own) offer cheap talk without doing any original hard work. To show you the returns to effort, I've used the New York Times Search Engine and for each 3 year interval between 1970 and today, I've counted the number of articles that mention "Global Warming" or "Climate change".

The Figure below shows some funky patterns. I've created this to teach you a little bit about the media's decisions over how much to cover climate change and to celebrate the fact that in August 2006 Brookings will publish my Green Cities book.

Note the roller coaster in the figure below. In 1989 there is the first sharp increase in coverage of climate change. From 1970 to 1987 coverage was flat! Perhaps the Exxon Valdez spill got everyone excited in general about environmental events. Perhaps surprisingly, coverage was pretty constant of this issue in the 1990s grew sharply around the year 2000 and has tapered off recently.



The media play an important role in our lives and serious economists are only starting to study this.

Adam Smith would be impressed with this dude http://oneredpaperclip.blogspot.com/.
This guy started with a paperclip and through a series of bilateral trades he hopes to one day acquire a house. His website walks you through his trade by trade highlights of moving up and closer to his goal. How is this possible?

Imagine if there were no Internet. This guy would have to take his paperclip around his neighborhood and see what people would give him for this. The person with the maximum valuation of the paperclip would make him the best offer but in a town of 100 people, the maximum won't be that high. He'll have a lot of trouble getting his house.

In our Internet world, this dude is able to transact with perhaps 500 million or a billion Internet users around the world. With heterogeneous preferences and relatively low transaction costs for searching for a bidder, the maximum bidder over such a large set is likely to be pretty high --- especially if the item the dude is offering is viewed as rare.

Now that this guy has become a celebrity social interactions make it easier for him to achieve his goal. Usually trades are anonymous. I don't know the name of the person who gives me my coffee at the Harvard Square Starbucks and he doesn't know me.
But in this trading case, people who want their own 15 minutes of fame may be willing to give him something valuable now to be part of his "chain". This is like a groupie thing I guess.

So I actually think he will achieve his goal and that this is a tribute to the Internet's role in making Adam Smith's vision of capitalism play out.

In making cross-country comparisons, the Economist has given us the Big Mac Index and now Reader's Digest has given us the "rudeness" index. The people in New York have better manners than the people in Moscow.

Similar to recent field experiments in economics, Reader's Digest conducted the same experimental design in each city (see below) to test whether different responses were observed in different cities. Intuitively, if somebody needs help --- does the average person nearby help the person? If the answer is no, then the city is marked as "rude".

There is so much cross-country research that compares "apples to oranges" (such as national income accounts or corruption indices) that I actually much prefer this cross-country comparison.


New Yorkers are polite? Yes, says mag

By PAT MILTON, Associated Press WriterWed Jun 21, 8:27 AM ET

New Yorkers are a polite bunch.

No, really, they are. So says Reader's Digest.

The magazine sent reporters "undercover" to 36 cities, in 35 countries, to measure courtesy. New York was the only American city on the list.

In a city with a reputation for being in-your-face, New Yorkers seem to be expressing themselves with a new one-finger salute: a raised pinkie. In fact, they seem to have even better manners than people in London, Toronto and Moscow.

In its admittedly unscientific survey, the magazine's politeness-police gave three types of tests to more than 2,000 unwitting participants.

The reporters walked into buildings to see if the people in front of them would hold the door open; bought small items in stores and recorded whether the salespeople said "thank you"; and dropped a folder full of papers in busy locations to see if anyone would help pick them up.

New Yorkers turned out to be the most polite: 90 percent held the door open, 19 out of 20 store clerks said "thank you," and 63 percent of men and 47 percent of women helped with the flying papers.

In short, four out of five New Yorkers passed the courtesy test.

Mayor Michael Bloomberg said he's not surprised.

He told reporters Tuesday that whenever he travels abroad, he hears nothing but praise for the Big Apple's good manners.

"We are so jaded," he said. "We want to think the worst of ourselves, and people from around this country and around the world think exactly the reverse."

The rudest continent is Asia, Readers Digest said. Eight out of nine cities tested there — including last place Mumbai, India — finished in the bottom 11. In Europe, Moscow and Bucharest ranked as the least polite.

Reader's Digest, which has readers in 21 languages, is publishing the results in its July issue.

___

Associated Press Writer Verena Dobnik contributed to this report.

___

Urban economists continue to use real estate prices to measure compensating differentials. In english, if a house is in a good public school district how much more expensive is it relative to a similar structure in a bad school district? There are a vast number of studies that use this same intuition to value non-market goods such as proximity to fast public transit, proximity to the coast, clean air, distance from Superfund sites etc.

The study discussed below presents a novel empirical approach to study a new "local public bad" (whether a sex offender live close to you). This type of study will estimate for the marginal home buyer how much of a price discount must you offer them to live near such a weirdo. If I'm highly risk averse and I have several young children, there might be no price such that I would buy a house to live next to this guy. Clearly in this case, I would not be the "marginal buyer".

This paper adds to a recent literature on how the public responds to "report cards" issued by government. Other examples include school report cards (see the work of Figlio) and work in Los Angeles on public health report cards for restaurants (i.e does the restaurant have mice and bugs) see the work of Leslie of Stanford. Market prices and outcomes do respond to this new information.

In the case of the sex offenders below, do they over-respond? People are bayesians --- what is their subjective probability that the offender will be a repeat offender and put their children at risk? Or is the price discount a reflection of other neighbors laughing at you that you live near the weirdo?


From www.nber.org

Megan's Law Hits Local Property Prices

"When a sex offender moves into a neighborhood, houses within a one-tenth mile area around the sex offender's home fall."

If a registered sex offender, reformed or not, moves into your immediate neighborhood, it's bad financial news. The potential price for your home likely has been trimmed substantially.

Economists Leigh Linden and Jonah Rockoff measure the impact of living in close proximity to such a convicted criminal in There Goes the Neighborhood? Estimates of the Impact of Crime Risk on Property Values from Megan's Laws (NBER Working Paper No. 12253). They combine data from the housing market with data from the North Carolina Sex Offender Registry to find that when a sex offender moves into a neighborhood, houses within a one-tenth mile area around the sex offender's home fall by 4 percent on average (about $5,500), while those further away show no decline in value. "These results suggest that individuals have a significant distaste for living in close proximity to a known sex offender," the authors conclude.

Crime is predominantly a local issue, with the majority of both violent and non-violent offenses taking place less than one mile from a victim's homes. Most government expenditures on police protection are local. They add up to more than $50 billion a year across the nation. Residents can respond to more crime by voting for anti-crime policies, or by moving away.

One popular anti-crime effort is a body of legislation known as Megan's Laws. In 1994, a seven-year-old girl named Megan Kanka was brutally raped and murdered by her next-door neighbor. The man had been convicted in 1981 for an attack on a five-year-old child and an attempted sexual assault on a seven-year-old. But none of his neighbors knew these facts. Megan's Laws require the notification of the public regarding the location and description of convicted sex offenders. By the imposition of such a post-prison requirement, these laws represent a significant change in the legal practice of dealing with convicted criminals after they have been released from jail. This provision has made these laws extremely controversial and subject to numerous court challenges. Two cases reached the Supreme Court. It upheld the relevant laws as legitimate civil regulation, rather than retroactive criminal punishment, in response to the recidivism threat imposed by sex offenders on the communities in which they live.

A 1994 federal law, the Jacob Wetterling Crimes Against Children and Sexually Violent Offender Registration Program, created a mandatory state requirement for the registration of sex offenders. It threatens non-complying states with a reduction of federal grants for state law enforcement efforts. The legislation was extended in 1996 to require the dissemination of information in the registry.

By now, all 50 states maintain a registry making some information available to the public. However, the method of compliance varies significantly. Forty-six provide public Internet access to the offender registry. Louisiana has perhaps the most aggressive notification law. It requires offenders to, "give notice of the crime for which he was convicted, his name, and his address to at least one person in every residence or business within a one mile radius of his residence in a rural area and a three tenths of a mile radius in an urban or suburban area."

In North Carolina, the "Amy Jackson Law" requires all individuals released from prison on or after January 1, 1996 -- the date of the law - for offenses of kidnapping, prostitution, sexual exploitation of a minor, or sexually violent offenses against anyone, to register. It applies equally to individuals convicted in other states who move to North Carolina. Offenders are required to register within 10 days of release from prison and for 10 years after being released from prison.

Linden and Rockoff focus on Mecklenburg County where there were 518 registered offenders. They excluded offenders with addresses that could not be located on a map, offenders living in a jail or halfway-house, and offenders who had been living in their current residence for just a short period of time. Some 63 percent of the crimes of the registered sex offenders in that county are classified as Indecent Liberty with a Minor, sometimes referred to as "child molestation," and do not involve physical force or violence. Some 11 percent of the sexual offenses involved force or violence, 10 percent were rape.

The other important source of information came from the Mecklenburg County Division of Property Assessment and Land Record Management. The paper uses very detailed data on the locations of convicted sex offenders and the dates on which they moved into a neighborhood and variations over time in values of homes sold in the specific locations in which an offender chooses to live. The authors estimate that a single offender depresses property values in the immediate vicinity by $4,500 to $5,500 per home. Altogether, the presence of sex offenders has shrunk property values in the County by about $58 million.

Assuming that individuals are reacting to the increased probability of being victimized by a neighboring sex offender, the authors estimate that the victimization costs of sex offenses total more than $1 million per case. That is far in excess of estimates by economists cited in the criminal justice literature. The authors note that this large figure could be driven partially by individuals overestimating the probability of victimization, or by other costs associated with living near a sex offender (such not allowing children to play outside). Either way, Linden and Rockoff conclude there is a great willingness in the public to pay for policies that would shield residents from sexual offenders

-- David R. Francis

When considering the expected damage caused by a terrorist attack, how does urban population density affect Homeland Security's calculations? For example, if an attack in New York City will kill 100 times as many people as an attack in Omaha, should this affect the spatial distribution of Homeland Security funds?

I pose this question because of the following quote in Gary Becker's blog entry below:
"One problem is that as coastal cities like Los Angeles, San
Francisco, Boston, New York, and Washington became better
prepared to fight terrorism, terrorists might shift inland,
to places like Detroit, Chicago, Cleveland, Omaha, Topeka,
and elsewhere. As the bombing in Oklahoma City showed, even
attacks in smaller cities cause considerable fear and
consternation."

A similar issue has arisen in the pollution haven literature. Many economists have documented that dirty manufacturing is leaving big cities and locating in small cities that face less regulation (see the work of Vern Henderson, Matt Kahn, Michael Greenstone). Since these smaller cities have fewer victims, this deflection of dirty activity to smaller cities is a GOOD thing (relative to the initial status quo of dirty activity in big cities)! Ronald Coase would approve!

Why doesn't the same logic apply to terrorist attacks? I realize that small states have 2 senators each and they will vote to protect their voters but if our goal is to minimize total lives lost to terrorist attacks then "deflecting" terrorists to low density, less populated cities will help to achieve this goal. I realize that in a perfect world we could protect every square inch of this nation 24/7 but I'm assuimg that like all "economic men and women" that we must prioritize in a world of scarce resources.




http://www.becker-posner-blog.com/archives/2006/06/antiterrorism_a.html

Antiterrorism Allocations--Becker

Posner discusses many of the thorny issues involved in the
allocation of funds by The Department of Homeland Security
to American cities to combat terrorism. I will concentrate
my comment on how to align the incentives of cities to those
of the country as a whole.

Posner points out that there is a conflict between the
incentives of cities and those of the federal government.
When cities do more to prevent terrorism against their
residents and buildings, they also help the country fight
terrorism against other cities and towns without getting
compensated for that help. He also indicates that if the
federal government simply gives money to cities, the cities
may reduce the amounts they would otherwise spend fighting
terrorism. Both problems arise in many infrastructure and
entitlement programs, such as road-building, Medicare for
the poor, and the fight against contagious diseases.

These sources of the tendency for cities to underspend on
anti-terrorist activities can be at least partially overcome
if Homeland Security did not outright give various amounts
to different cities, but instead relied on the method used
to combat similar issues that arise with other grant
programs. The Department of Homeland Security should offer
to give cities a certain number of dollars for each dollar
they spend on antiterrorist activities. For example, if a
city spent $30 million, they might get an additional $60
million from the federal government. In this example, a city
would get to spend $3 dollars for each dollar they used from
their own funds to fight terrorism.

Federal matching of this type discourages cities from
cutting back on their spending to fight terrorism since they
lose say $3 dollars for each dollar they cut back. Matching
grants also induce cities to give de facto recognition to
the fact that each dollar they spend helps residents of
other cities as well by improving the overall American fight
against terrorism. The ratio of federal spending to city
spending should be a measure of the ratio of the benefits to
other cities compared to the benefits to the city spending
their own money to fight terrorism.

The matching need not be independent of how cities spent
their own monies. Cities are more likely on their own to
spend on salaries than on capital goods that are produced
elsewhere since spending on employees gives jobs to local
residents. The matching grants should then be oriented
toward capital spending rather than labor spending. In fact,
the Homeland Security program is so oriented, and that seems
to me to make some sense.

However, matching grants, particularly if the ratio of
federal to local contributions is large, can create the
opposite problem from that created by outright grants;
namely, cities may spend too much since their spending is
multiplied through the amounts available in matching funds.
This is usually controlled by placing upper limits on the
amounts that could be received in matching funds. Cities
that are especially attractive to terrorist attacks--such as
New York and Washington--would spend more fighting terrorism
even without federal grants. Still, on their own they may
not spend enough, so the upper limits they could receive in
matching grants should exceed that available to say Kansas
City.

One problem is that as coastal cities like Los Angeles, San
Francisco, Boston, New York, and Washington became better
prepared to fight terrorism, terrorists might shift inland,
to places like Detroit, Chicago, Cleveland, Omaha, Topeka,
and elsewhere. As the bombing in Oklahoma City showed, even
attacks in smaller cities cause considerable fear and
consternation. That is why a federal program has to be
national, and target smaller places as well as larger ones.
Matching grants encourage smaller cities also to contribute
to the fight against terrorism, and they will spend more
when they become more vulnerable after the more attractive
terrorist targets became better prepared. So the system is
partly self-correcting through the incentives that cities
have to protect their own citizens.

But matching grants do not solve all the problems of how to
best allocate limited federal funds. So the federal
government will still need some guidelines that determine
which cities should be given more Homeland money, although
in a matched way.

As China's economy grows, what are the likely environmental impacts for China and for the rest of the World? This New York Times piece does a pretty good job laying out the key issues. It does not attempt to examine what are the priorities of the key government officials who have the power to curb pollution exports. Put bluntly, if public health researchers claim that current levels of Chinese coal burning cause a loss of 1 million statistical lives in China is this a sufficient cost to encourage the governemnt to "do something"? A Mancur Olson pressure group story would say that the "victims" from the pollution face high transaction costs to work together to lobby the government.

On top of the within China externalities, this article claims that pollution exports from China are reaching California. If this is a serious problem, then the U.S should consider transfering "green technologies" to China and subsidizing such activity to reduce both the sulfur dioxide emissions and the C02 emissions from power plants.

One other point; will China sign a "Kyoto Protocol" by the year 2050? They will be less likely to do so if they have invested in costly dirty coal fired plants that are difficult to retrofit with "green technologies". This article does not do a good job discussing how China's choices today affect its future climate change policies.


June 11, 2006
The Energy Challenge
Pollution From Chinese Coal Casts a Global Shadow
By KEITH BRADSHER and DAVID BARBOZA

HANJING, China — One of China's lesser-known exports is a dangerous brew of soot, toxic chemicals and climate-changing gases from the smokestacks of coal-burning power plants.

In early April, a dense cloud of pollutants over Northern China sailed to nearby Seoul, sweeping along dust and desert sand before wafting across the Pacific. An American satellite spotted the cloud as it crossed the West Coast.

Researchers in California, Oregon and Washington noticed specks of sulfur compounds, carbon and other byproducts of coal combustion coating the silvery surfaces of their mountaintop detectors. These microscopic particles can work their way deep into the lungs, contributing to respiratory damage, heart disease and cancer.

Filters near Lake Tahoe in the mountains of eastern California "are the darkest that we've seen" outside smoggy urban areas, said Steven S. Cliff, an atmospheric scientist at the University of California at Davis.

Unless China finds a way to clean up its coal plants and the thousands of factories that burn coal, pollution will soar both at home and abroad. The increase in global-warming gases from China's coal use will probably exceed that for all industrialized countries combined over the next 25 years, surpassing by five times the reduction in such emissions that the Kyoto Protocol seeks.

The sulfur dioxide produced in coal combustion poses an immediate threat to the health of China's citizens, contributing to about 400,000 premature deaths a year. It also causes acid rain that poisons lakes, rivers, forests and crops.

The sulfur pollution is so pervasive as to have an extraordinary side effect that is helping the rest of the world, but only temporarily: It actually slows global warming. The tiny, airborne particles deflect the sun's hot rays back into space.

But the cooling effect from sulfur is short-lived. By contrast, the carbon dioxide emanating from Chinese coal plants will last for decades, with a cumulative warming effect that will eventually overwhelm the cooling from sulfur and deliver another large kick to global warming, climate scientists say. A warmer climate could lead to rising sea levels, the spread of tropical diseases in previously temperate climes, crop failures in some regions and the extinction of many plant and animal species, especially those in polar or alpine areas.

Coal is indeed China's double-edged sword — the new economy's black gold and the fragile environment's dark cloud.

Already, China uses more coal than the United States, the European Union and Japan combined. And it has increased coal consumption 14 percent in each of the past two years in the broadest industrialization ever. Every week to 10 days, another coal-fired power plant opens somewhere in China that is big enough to serve all the households in Dallas or San Diego.

To make matters worse, India is right behind China in stepping up its construction of coal-fired power plants — and has a population expected to outstrip China's by 2030.

Aware of the country's growing reliance on coal and of the dangers from burning so much of it, China's leaders have vowed to improve the nation's energy efficiency. No one thinks that effort will be enough. To make a big improvement in emissions of global-warming gases and other pollutants, the country must install the most modern equipment — equipment that for the time being must come from other nations.

Industrialized countries could help by providing loans or grants, as the Japanese government and the World Bank have done, or by sharing technology. But Chinese utilities have in the past preferred to buy cheap but often-antiquated equipment from well connected domestic suppliers instead of importing costlier gear from the West.

The Chinese government has been reluctant to approve the extra spending. Asking customers to shoulder the bill would set back the government's efforts to protect consumers from inflation and to create jobs and social stability.

But each year China defers buying advanced technology, older equipment goes into scores of new coal-fired plants with a lifespan of up to 75 years.

"This is the great challenge they have to face," said David Moskovitz, an energy consultant who advises the Chinese government. "How can they continue their rapid growth without plunging the environment into the abyss?"

Living Better With Coal

Wu Yiebing and his wife, Cao Waiping, used to have very little effect on their environment. But they have tasted the rising standard of living from coal-generated electricity and they are hooked, even as they suffer the vivid effects of the damage their new lifestyle creates.

Years ago, the mountain village where they grew up had electricity for only several hours each evening, when water was let out of a nearby dam to turn a small turbine. They lived in a mud hut, farmed by hand from dawn to dusk on hillside terraces too small for tractors, and ate almost nothing but rice on an income of $25 a month.

Today, they live here in Hanjing, a small town in central China where Mr. Wu earns nearly $200 a month. He operates a large electric drill 600 feet underground in a coal mine, digging out the fuel that has powered his own family's advancement. He and his wife have a stereo, a refrigerator, a television, an electric fan, a phone and light bulbs, paying just $2.50 a month for all the electricity they can burn from a nearby coal-fired power plant.

They occupy a snug house with brick walls and floors and a cement foundation — the bricks and cement are products of the smoking, energy-ravenous factories that dot the valley. Ms. Cao decorates the family's home with calendar pictures of Zhang Ziyi, the Chinese film star. She is occasionally dismissive about the farming village where she lived as a girl and now seldom visits except over Chinese New Year.

"We couldn't wear high heels then because the paths were so bad and we were always carrying heavy loads," said Ms. Cao, who was wearing makeup, a stylish yellow pullover, low-slung black pants and black pumps with slender three-inch heels on a recent Sunday morning.

One-fifth of the world's population already lives in affluent countries with lots of air-conditioning, refrigerators and other appliances. This group consumes a tremendous amount of oil, natural gas, nuclear power, coal and alternative energy sources.

Now China is trying to bring its fifth of the world's population, people like Mr. Wu and Ms. Cao, up to the same standard. One goal is to build urban communities for 300 million people over the next two decades.

Already, China has more than tripled the number of air-conditioners in the past five years, to 84 per 100 urban households. And it has brought modern appliances to hundreds of millions of households in small towns and villages like Hanjing.

The difference from most wealthy countries is that China depends overwhelmingly on coal. And using coal to produce electricity and run factories generates more global-warming gases and lung-damaging pollutants than relying on oil or gas.

Indeed, the Wu family dislikes the light gray smog of sulfur particles and other pollutants that darkens the sky and dulls the dark green fields of young wheat and the white blossoms of peach orchards in the distance. But they tolerate the pollution.

"Everything else is better here," Mr. Wu said. "Now we live better, we eat better."

China's Dark Clouds

Large areas of North-Central China have been devastated by the spectacular growth of the local coal industry. Severe pollution extends across Shaanxi Province, where the Wus live, and neighboring Shanxi Province, which produces even more coal.

Not long ago, in the historic city of Datong, about 160 miles west of Beijing, throngs of children in colorful outfits formed a ceremonial line at the entrance to the city's 1,500-year-old complex of Buddhist cave grottoes to celebrate Datong's new designation as one of China's "spiritually civilized cities."

The event was meant to bolster pride in a city desperately in need of good news. Two years ago, Datong, long the nation's coal capital, was branded one of the world's most-polluted cities. Since then, the air quality has only grown worse.

Datong is so bad that last winter the city's air quality monitors went on red alert. Desert dust and particulate matter in the city had been known to force the pollution index into warning territory, above 300, which means people should stay indoors.

On Dec. 28, the index hit 350.

"The pollution is worst during the winter," said Ji Youping, a former coal miner who now works with a local environmental protection agency. "Datong gets very black. Even during the daytime, people drive with their lights on."

Of China's 10 most polluted cities, four, including Datong, are in Shanxi Province. The coal-mining operations have damaged waterways and scarred the land. Because of intense underground mining, thousands of acres are prone to sinking, and hundreds of villages are blackened with coal waste.

There is a Dickensian feel to much of the region. Roads are covered in coal tar; houses are coated with soot; miners, their faces smeared almost entirely black, haul carts full of coal rocks; the air is thick with the smell of burning coal.

There are growing concerns about the impact of this coal boom on the environment. The Asian Development Bank says it is financing pollution control programs in Shanxi because the number of people suffering from lung cancer and other respiratory diseases in the province has soared over the past 20 years. Yet even after years of government-mandated cleanup efforts the region's factories belch black smoke.

The government has promised to close the foulest factories and to shutter thousands of illegal mines, where some of the worst safety and environmental hazards are concentrated. But no one is talking about shutting the region's coal-burning power plants, which account for more than half the pollution. In fact, Shanxi and Shaanxi are rapidly building new coal-fired plants to keep pace with soaring energy demand.

To meet that demand, which includes burning coal to supply power to Beijing, Shanxi Province alone is expected to produce almost as much coal as was mined last year in Germany, England and Russia combined.

Burning all that coal releases enormous quantities of sulfur.

"Sulfur dioxide is China's No. 1 pollution problem," said Barbara A. Finamore, a senior attorney at the Natural Resources Defense Council's China Clean Energy Program in Washington. "This is the most serious acid rain problem in the world."

China released about 22.5 million tons of sulfur in 2004, more than twice the amount released in the United States, and a Chinese regulator publicly estimated last autumn that emissions would reach 26 million tons for 2005, although no official figures have been released yet. Acid rain now falls on 30 percent of China.

Studies have found that the worst effects of acid rain and other pollution occur within several hundred miles of a power plant, where the extra acidity of rainfall can poison crops, trees and lakes alike.

But China is generating such enormous quantities of pollution that the effects are felt farther downwind than usual. Sulfur and ash that make breathing a hazard are being carried by the wind to South Korea, Japan and beyond.

Not enough of the Chinese emissions reach the United States to have an appreciable effect on acid rain yet. But, they are already having an effect in the mountains in West Coast states. These particles are dense enough that, at maximum levels during the spring, they account at higher altitudes for a fifth or more of the maximum levels of particles allowed by the latest federal air quality standards. Over the course of a year, Chinese pollution averages 10 to 15 percent of allowable levels of particles. The amounts are smaller for lower-lying cities, like Seattle, San Francisco and Los Angeles.

China is also the world's largest emitter of mercury, which has been linked to fetal and child development problems, said Dan Jaffe, an atmospheric scientist at the University of Washington.

Unless Chinese regulators become much more aggressive over the next few years, considerably more emissions could reach the United States. Chinese pollution is already starting to make it harder and more expensive for West Coast cities to meet stringent air quality standards, said Professor Cliff of the University of California, slowing four decades of progress toward cleaner air.

Nothing Beats It

China knows it has to do something about its dependence on coal.

The government has set one of the world's most ambitious targets for energy conservation: to cut the average amount of energy needed to produce each good or service by 20 percent over the next five years. But with an economy growing 10 percent a year and with energy consumption climbing even faster, a conservation target amounting to 3.7 percent a year does not keep pace.

All new cars, minivans and sport utility vehicles sold in China starting July 1 will have to meet fuel-economy standards stricter than those in the United States. New construction codes encourage the use of double-glazed windows to reduce air-conditioning and heating costs and high-tech light bulbs that produce more light with fewer watts.

Meanwhile, other sources of energy have problems. Oil is at about $70 a barrel. Natural gas is in short supply in most of China, and prices for imports of liquefied natural gas have more than doubled in the last three years. Environmental objections are slowing the construction of hydroelectric dams on China's few untamed rivers. Long construction times for nuclear power plants make them a poor solution to addressing blackouts and other power shortages now.

For the past three years, China has also been trying harder to develop other alternatives. State-owned power companies have been building enormous wind turbines up and down the coast. Chinese companies are also trying to develop geothermal energy, tapping the heat of underground rocks, and are researching solar power and ways to turn coal into diesel fuel. But all of these measures fall well short. Coal remains the obvious choice to continue supplying almost two-thirds of China's energy needs.

Choices and Consequences

China must make some difficult choices. So far, the nation has been making decisions that it hopes will lessen the health-damaging impact on its own country while sustaining economic growth as cheaply as possible. But those decisions will also add to the emissions that contribute to global warming.

The first big choice involves tackling sulfur dioxide. The government is now requiring that the smokestacks of all new coal-fired plants be fitted with devices long used in Western power plants to remove up to 95 percent of the sulfur. All existing coal-fired plants in China are supposed to have the devices installed by 2010.

While acknowledging that they have missed deadlines, Chinese officials insist they have the capacity now to install sulfur filters on every power plant smokestack. "I don't think there will be a problem reaching this target before 2010," said Liu Deyou, chief engineer at the Beijing SPC Environment Protection Tech Engineering Company, the sulfur-filter manufacturing arm of one of the five big, state-owned utilities.

Japan may be 1,000 miles east of Shanxi Province, but the Japanese government is so concerned about acid rain from China that it has agreed to lend $125 million to Shanxi. The money will help pay for desulfurization equipment for large, coal-fired steel plants in the provincial capital, Taiyuan.

The question is how much the state-owned power companies will actually use the pollution control equipment once it is installed. The equipment is costly to maintain and uses enormous amounts of electricity that could instead be sold to consumers. Moreover, regulated electricity tariffs offer little reward for them to run the equipment.

In 2002, the Chinese government vowed to cut sulfur emissions by 10 percent by 2005. Instead, they rose 27 percent. If Chinese officials act swiftly, sulfur emissions could be halved in the next couple of decades, power officials and academic experts say. But if China continues to do little, sulfur emissions could double, creating even more devastating health and environmental problems.

Even so, halving sulfur emissions has its own consequences: it would make global warming noticeable sooner.

China contributes one-sixth of the world's sulfur pollution. Together with the emissions from various other countries, those from China seem to offset more than one-third of the warming effect from manmade carbon dioxide already in the atmosphere, according to several climate models.

But the sulfur particles typically drift to the ground in a week and stop reflecting much sunlight. Recent research suggests that it takes up to 10 years before a new coal-fired power plant has poured enough long-lasting carbon dioxide into the air to offset the cooling effect of the plant's weekly sulfur emissions.

Climate experts say that, ideally, China would cut emissions of sulfur and carbon dioxide at the same time. But they understand China's imperative to clean up sulfur more quickly because it has a far more immediate effect on health.

"It's sort of unethical to expect people not to clean up their air quality for the sake of the climate," said Tami Bond, an atmospheric scientist at the University of Illinois at Urbana-Champaign.

The Hunt for Efficiency

The second big decision facing China lies in how efficiently the heat from burning coal is converted into electricity. The latest big power plants in Western countries are much more efficient. Their coal-heated steam at very high temperatures and pressures can generate 20 to 50 percent more kilowatts than older Chinese power plants, even as they eject the same carbon-dioxide emissions and potentially lower sulfur emissions.

China has limited the construction of small power plants, which are inefficient, and has required the use of somewhat higher steam temperatures and pressures. But Chinese officials say few new plants use the highest temperatures and pressures, which require costly imported equipment.

And Chinese power utilities are facing a squeeze. The government has kept electricity cheap, by international standards, to keep consumers happy. But this has made it hard for utilities to cover their costs, especially as world coal prices rise.

The government has tried to help by limiting what mines can charge utilities for coal. Mines have responded by shipping the lowest-quality, dirtiest, most-contaminated coal to power plants, say power and coal executives. The utilities have also been reluctant to spend on foreign equipment, steering contracts to affiliates instead.

"When you have a 1 percent or less profit," said Harley Seyedin, chief executive of the First Washington Group, owner of oil-fired power plants in Southeastern China's Guangdong Province, "you don't have the cash flow to invest or to expand in a reasonable way."

A New Technology

The third big choice involves whether to pulverize coal and then burn the powder, as is done now, or convert the coal into a gas and then burn the gas, in a process known as integrated gasification combined combustion, or I.G.C.C.

One advantage of this approach is that coal contaminants like mercury and sulfur can be easily filtered from the gas and disposed. Another advantage is that carbon dioxide can be separated from the emissions and pumped underground, although this technology remains unproven.

Leading climate scientists like this approach to dealing with China's rising coal consumption. "There's a whole range of things that can be done; we should try to deploy coal gasification," said Dr. Rajendra K. Pachauri, chairman of the United Nations-affiliated Intergovernmental Panel on Climate Change.

The World Bank in 2003 offered a $15 million grant from the Global Environment Facility to help China build its first state-of-the-art power plant to convert coal into a gas before burning it. The plan called for pumping combustion byproducts from the plant underground.

But the Chinese government put the plan on hold after bids to build the plant were higher than expected. Chinese officials have expressed an interest this spring in building five or six power plants with the new technology instead of just one. But they are in danger of losing the original grant if they do not take some action soon, said Zhao Jian-ping, the senior energy specialist in the Beijing office of the World Bank.

Another stumbling block has been that China wants foreign manufacturers to transfer technological secrets to Chinese rivals, instead of simply filling orders to import equipment, said Anil Terway, director of the East Asia energy division at the Asian Development Bank.

"The fact that they are keen to have the technologies along with the equipment is slowing things down," he said.

Andy Solem, vice president for China infrastructure at General Electric, a leading manufacturer of coal gasification equipment, said he believed that China would place orders in 2007 or 2008 for the construction of a series of these plants. But he said some technology transfer was unavoidable.

Western companies could help Chinese businesses take steps to reduce carbon-dioxide emissions, like subsidizing the purchase of more efficient boilers. Some companies already have such programs in other countries, to offset the environmental consequences of their own carbon-dioxide emissions at home, and are looking at similar projects in China. But the scale of emissions in China to offset is enormous.

For all the worries about pollution from China, international climate experts are loath to criticize the country without pointing out that the average American still consumes more energy and is responsible for the release of 10 times as much carbon dioxide as the average Chinese. While China now generates more electricity from coal than does the United States, America's consumption of gasoline dwarfs China's, and burning gasoline also releases carbon dioxide.

An Insatiable Demand?

The Chinese are still far from achieving what has become the basic standard in the West. Urban elites who can afford condominiums are still a tiny fraction of China's population. But these urban elites are role models with a lifestyle sought by hundreds of millions of Chinese. Plush condos on sale in Shanghai are just a step toward an Americanized lifestyle that is becoming possible in the nation's showcase city.

Far from the Wu family in rural Shaanxi, the Lu Bei family grew up in cramped, one-room apartments in Shanghai. Now the couple own a large three-bedroom apartment in the city's futuristic Pudong financial district. They have two television sets, four air-conditioners, a microwave, a dishwasher, a washing machine and three computers. They also have high-speed Internet access.

"This is my bedroom," said Lu Bei, a 35-year-old insurance agency worker entering a spacious room with a king-size bed. "We moved here two years ago. We had a baby and wanted a decent place to live."

For millions of Chinese to live like the Lus with less damage to the environment, energy conservation is crucial. But curbing that usage would be impossible as long as China keeps energy prices low. Gasoline still costs $2 a gallon, for example, and electricity is similarly cheap for many users.

With Chinese leaders under constant pressure to create jobs for the millions of workers flooding from farms into cities each year, as well as the rapidly growing ranks of college graduates, there has been little enthusiasm for a change of strategy.

Indeed, China is using subsidies to make its energy even cheaper, a strategy that is not unfamiliar to Americans, said Kenneth Lieberthal, a China specialist at the University of Michigan. "They have done in many ways," he said, "what we have done."

Keith Bradsher reported from Hanjing and Guangzhou, China, for this article and David Barboza from Datong and Shanghai.

The marginal revolution has posed a good question; What is new and essential in economics? Our challenge is well stated by the nobel laureate George J. Stigler, in The Conference Handbook, 85 J. POL. ECONOMY 441, 442 (1977). "Adam Smith said that." Stigler was arming young economists with good comments at an academic seminar. But does Stigler's quip apply to all of the thoughts by leading academic economists in 2006?

http://www.marginalrevolution.com/marginalrevolution/2006/06/what_is_new_and.html

My own answer to Tyler's question is social interactions. Empirical and theory work on non-market effects of jealousy, keeping up with the joneses, altruism, environmentalism, religion and different groups living "side by side". These real world issues cannot be handled in an arrow/debreu economy. Such issues help meld economics, psychology, political science and sociology into a true empirical social science. I think this is pretty exciting stuff. But, enough about me -- let's see what some serious guys think.


One way to think about what is new in economics is to look to Chicago and Gary Becker in particular. Here is a recent website related to a recent conference in his honor.
Ed Glaeser and George Akerlof are quoted below.

http://www.chicagogsb.edu/news/2006-04-11_pricetheory/04-BiggestQuestions.aspx

The biggest questions facing economists today are about more than money; they involve things like terrorism, democracy, religion, and race. Economists discussing the “Biggest Questions of the Day” at the Hyde Park Center April 8 said these problems require them to consider social issues in addition to economic principles—and that Nobel laureate Gary Becker showed them how.

“The reason we feel free to study these [social issues]—the fact that these things are part of our jobs—is Gary’s greatest legacy,” said Edward Glaeser, professor of economics at Harvard. “The agenda for the biggest questions is using Beckerian tools to understand them. It is not optional—you have to address these topics, and the only way to address them properly is using the tools of Chicago economics.” Glaeser was among panelists at the inaugural conference of the Becker Center on Chicago Price Theory Founded by Richard O. Ryan. The event honored Gary Becker, University Professor of Economics and of Sociology.

Glaeser presented a list of big questions that included terrorism and anti-Americanism, and religious and ethnic conflict in sub-Saharan Africa. These questions are connected by a thread of false belief, Glaeser said. For example, there is little correlation between what America actually is and does and what people believe it to be. But there are “entrepreneurs of error” who have an interest in perpetuating falsehoods, and in a large percentage of cases people believe what they’re told without thinking about it, he said.

“Parents, teachers, politicians, the media, religious leaders are all in the belief-formation business—all are occasionally the suppliers of truth or the suppliers of error,” Glaeser said. “It’s the nexus between psychology and economics. Psychology documents how people are persuaded, but it doesn’t take into account how frames, influences, and situations are the result of market forces. They can be only understood with a market analysis, and only economics has the tools to make sense of them.”

Becker, who chose not to present his own list of big questions but rather to comment on those presented by the other panelists, agreed. “Economists must find a new model to address persuasion and what gets done in the government. We first have to understand it; then we can hope to improve it,” he said. “A big issue now is understanding persuasion.”

In terms of terrorism, Becker said, one question is, what can government policy do to reduce the threat? “Another is, what can we learn through economic analysis about who becomes a terrorist? It’s not just poverty. It’s not just a clash of civilizations,” he said. “We don’t have a good understanding, but economists can make progress on this.”

Another issue for economists, Becker said, is one that has not only interested him since the early days of his career, but which remains one of the biggest questions of the day, according to George Akerlof, 2001 Nobel Laureate in Economic Sciences and Koshland Professor of Economics at the University of California, Berkeley.

“The continued disparity between whites and blacks is a leading problem that is special to the United States,” Akerlof said, “We see this in the discrepancy between incarceration rates of whites and blacks, and in the differences in numbers of single-parent families.

Added Becker, “The black/white issue is the American dilemma. It’s gotten better in significant ways—economically, educationally, politically. But while blacks have participated in growth, they haven’t caught up. It’s a puzzle to understand why not, and still a major world issue challenging economists.”

Another major question on Akerlof’s list was global warming. He said the “evidence now is quite abundant that this is a serious problem,” and pointed to measurable effects, such as the increased power of hurricanes and what he calls “the galloping glaciers of Greenland,” which are heading toward the ocean at a faster rate than was previously thought impossible.

“The economics of this are that it should be curbed by taxation and those kinds of externalities,” Akerlof said. But it’s more complicated than that. “The solutions to global warming will require cooperation among many different governments, and they aren’t going to want to change tax structures to create the right incentives to diminish carbon emissions into the atmosphere. Dealing with the economics of that is a first order question.”

The world poverty of underdeveloped countries is another big question, according to Akerlof. “Massive poverty is the result of the failure of governments and markets,” he said. “It’s a failure to adhere to and support a rule of law. Some say a failure of markets, but why do markets systematically fail?”

Becker suggested they fail because governments impose obstacles that prevent the basic abilities and talents of a population to be manifest. “Markets don’t work perfectly,” he said, “but it’s hard to look at poverty in the world and conclude anything other than, Most obstacles aren’t the difficulties of having markets function, but the obstacles put in place by misguided government policy. I say misguided in quotes—usually there’s a reason you have these policies, and it’s because certain individuals are benefiting and it’s hard to get special interest to change.”

But, Becker said, when governments remove these obstacles, as in the cases of India and China, “it makes a big difference.”

Akerlof’s last big question of the day had to do with the possibility of worldwide macro-economic collapse. “It’s not about to happen right now,” he said, “but if deficits continue within the definite future, we’ll go into what we thought was a minor crisis, which can evolve into something major. I’m worried about that.”

To conclude the discussion, moderator Austan Goolsbee, Robert P. Gwinn Professor of Economics, likened Chicago economics to Disneyland. “If Chicago is the Disneyland of economics,” he said, “Gary Becker is Walt Disney.”

—Carmen Marti

My students at the Fletcher School are fascinated by sustainable development. Unfortunately for them, I'm still trying to figure out what these words mean! The piece I report below is pretty interesting. It makes the point that the "wish list" for defining Sustainable Development has gotten longer and longer without a serious attempt to prioritize this list. Instead, the concept is intentionally kept vague to help build an international coalition of nations willing to endorse the vague general concept.

In reading his piece, I wondered about something else. Who is Foreign Affairs written for? It is too easy a read to be for academics (there is no data presentation, theory presentation or statistical analysis) but its tone is too serious and proud to be viewed as mere bathroom reading. Is this written for Washington Beltway people who are looking for some gravitas for a relatively low time price? Somehow I've always viewed this journal as an outlet for Henry Kissenger when he has something pressing that he wanted to say to policy wonks. My advice to the editors of Foreign Affairs is to get more economists, especially younger ones, involved in writing for them.

Returning to the point of this blog entry, a key point in attempting to define sustainable development is progress with respect to adjusting national income accounts for capital depletion. Larry Goulder and a team at Stanford and Kirk Hamilton at the World Bank have attempted to make some progress here. The challenge arises with respect to index weights. If nation #1 emits 5 more tons of greenhouse gases than nation #2, how many $ do you want to deduct from nation #1's GNP measure in calculating "green GNP"? Kirk Hamilton chooses to value CO2 at $20 per ton so he would subtract off 20*5. Where does his valuation weight ($20 per ton) come from? Go ask Joe Stiglitz, I have no idea -- perhaps the marginal damage caused by such emissions isn't a constant? All kidding aside, in his defense at least he is honest about the assumptions that are needed if one were serious about giving out global "green" report cards. The ESI from Yale and Columbia doesn't really grapple with this index weight issue well.


Recovering Sustainable Development
By David G. Victor
From Foreign Affairs, January/February 2006

Summary: Sustainable development -- the notion that boosting economic growth, protecting natural resources, and ensuring social justice can be complementary goals -- has lost much appeal over the past two decades, the victim of woolly thinking and interest-group politics. The concept can be relevant again, but only if its original purpose --
helping the poor live healthier lives on their own terms -- is restored.

DAVID G. VICTOR is Director of the Program on Energy and Sustainable Development at Stanford University and an Adjunct Senior Fellow at the Council on Foreign Relations. He is the author of the CFR report Climate Change: Debating America's Policy Options.

A FASHIONABLE NOTION

The concept of sustainable development first emerged from academic seminar rooms two decades ago, thanks to a
best-selling report called Our Common Future. Put together by the World Commission on Environment and
Development, the report argued that boosting the economy, protecting natural resources, and ensuring social
justice are not conflicting but interwoven and complementary goals.
A healthful environment, the theory goes, provides the economy with essential natural resources. A thriving
economy, in turn, allows society to invest in environmental protection and avoid injustices such as extreme poverty.
And maintaining justice, by promoting freedom of opportunity and political participation, for example, ensures that
natural resources are well managed and economic gains allocated fairly. Civilizations that have ignored these
connections have suffered: consider the Easter Islanders, who by denuding their forests triggered a spiral of
economic difficulties and strife that eventually led to their civilization's collapse.
Yet even as sustainable development has become conventional wisdom over the past two decades, something has
gone horribly wrong. Because the concept stresses the interconnection of everything, it has been vulnerable to
distortion by woolly thinking and has become a magnet for special interest groups. Human rights watchdogs, large
chemical companies, small island nations, green architects, and nuclear power plant operators have attached
themselves to the fashionable notion only to subvert it for their own ends. Instead of bringing together nature, the
economy, and social justice, sustainable development has spawned overspecialized and largely meaningless
checklists and targets. Particularly harmful has been a series of consensus-driven UN summits that have yielded
broad and incoherent documents and policies. Sustainable development, the compass that was designed to show the
way to just and viable economics, now swings in all directions.
This deterioration was probably unavoidable. But the slide matters, and not only because sustainable development
has become a cover for inaction and a black hole for resources; it is also a wasted opportunity. The concept has
gained such a powerful following over the past two decades that if it recovered its original meaning, it could become
a guiding force for governments, firms, and nongovernmental organizations (NGOs). Fixing this mess requires
understanding how it came to be and recalibrating the compass so that it can reliably point in a single direction
again.
THE PRICE OF FAME
One way to trace the slide of sustainable development is to follow the idea's degradation through the UN. After all,
its earliest high-profile proponent, the World Commission on Environment and Development, headed by then
Norwegian Prime Minister Gro Brundtland, operated under a UN mandate. The UN General Assembly and the UN
Secretariat were always at the forefront in championing Brundtland's vision. And today, the conferences,
commissions, and task forces that constitute the sustainable development apparatus all find their focus within the
UN system. What happens there is worth observing -- not because the UN is solely responsible for what has gone
wrong, but because the organization reflects the aspirations and flaws of the players that are.
The trouble began at the 1992 Earth Summit in Rio de Janeiro, which involved more than 100 heads of state, 170
governments, 2,400 representatives from NGOs, and nearly 10,000 journalists. The attention generated by the
meeting kindled demand for more conferences. The result was a decade of summits, with one held almost every
year, that covered a range of topics, including demographics (in 1994), the rights and roles of women (in 1995),
social development (in 1995), and the expansion of urban habitats (in 1996). Most of these gatherings, the
culminations of arduous negotiations, produced two documents: a detailed action plan for insiders and a crisper
statement of principles for outsiders. At Rio, these were called, respectively, Agenda 21 and the Rio Declaration.
Action plans tend to be sprawling documents that offer something for everyone. They are crafted through a
consensus process in which the easiest way for special interests to get what they want is to agree with everyone else.
The result is often an incoherent and costly wish list. The secretariat of the Rio summit estimated that
implementing Agenda 21 might cost $600 billion a year in new spending, of which $125 billion would have to come
as foreign assistance from the industrialized countries. Since then, summit negotiators have not even bothered to
tally the costs of their plans. And in the meantime, the international community has continued to behave like a child
crafting his dream order of Christmas presents out of the Bible-size FAO Schwarz catalog.
Statements of principles have not had much effect either. The documents are usually drafted in lawyers' false
poetry: they are meant to inspire without offending any specific interest group. Principle 2 of the Rio Declaration,
for example, purported to offer a fresh interpretation of the conflict between a nation's sovereignty and its
international responsibilities: "States have, in accordance with the Charter of the United Nations and the principles
of international law, the sovereign right to exploit their own resources pursuant to their own environmental and
developmental policies, and the responsibility to ensure that activities within their jurisdiction or control do not
cause damage to the environment of other States or of areas beyond the limits of national jurisdiction." Nobody
really knows what the sentence means. Advocates for sovereignty (especially in developing countries) claim that it
endorses sovereign freedom of action, whereas advocates for environmental responsibility (notably NGOs from rich
industrialized nations) claim that it establishes international duties.
The Rio process, moreover, bred a set of new institutions. Two new secretariats were created to oversee the
implementation of two new treaties, one on climate change, the other on biological diversity. Summit participants
also set up the Commission on Sustainable Development (CSD), which holds an elaborately prepared meeting every
year and is charged with the impossible task of monitoring the implementation of the Agenda 21 commitments. The
CSD, in particular, has accomplished very little.
DELUSIONS OF GRANDEUR
Governments and the UN system have also marginalized sustainable development by failing to articulate serious
objectives and coherent strategies for its implementation. Agenda 21 embraced every goal offered up in anticipation
of the Rio summit, but it set no specific priorities or targets, making it impossible to mobilize support for any
strategy or to measure progress. At the 2002 World Summit on Sustainable Development, the process reached its
lowest point with a sprawling and incoherent plan. Participants endorsed eight broad Millennium Development
Goals (MDGs) -- including the eradication of extreme poverty, the provision of universal primary education, and the
assurance of equality for women -- that had been crafted at the UN's Millennium Summit two years earlier. Since
then, the UN Secretariat has parsed these broad objectives into 18 specific targets and 48 indicators. But the MDGs
are already losing traction because governments have limited power to directly affect these outcomes. Most of the
world is closer to meeting the MDGs now than it was a decade ago, but that is largely because human welfare has
generally been improving. (The most striking exceptions are found in the many African countries that score worse
today on most measures of human welfare.)
The MDGs, targets, and indicators do not constitute a strategy that informs the actions of governments, companies,
and NGOS. Most of what the MDGs envision is beyond the power of any enterprise to deliver. Consider, for
instance, the efforts that would be needed to meet the MDG to "develop a global partnership for development." The
indicators designed to measure compliance with this goal include some activities that governments do control, such
as the amount of untied official development assistance (ODA) they offer, which, in the right settings, can help
alleviate poverty. But they also include special targets for ODA to small island nations and landlocked states that
serve no strategic purpose -- reflecting these nations' special ability to manipulate UN commitments to their narrow
advantage. And regarding the indicators on which progress has been most remarkable -- access to phone services,
computers, and the Internet -- advances have been the fortuitous byproduct of technological development and have
often reflected the accidental wisdom of governments' decisions to let the market work on its own.

The trouble with sustainable development and the MDGs is that they reflect a diplomatic process that has devoted
too much effort to lengthening the international community's wish list and not enough to articulating and ranking
the types of practical measures that are the hallmark of serious policymaking. Governments might have wondered
whether any given dollar in aid would be best invested in water treatment, poverty alleviation, or structural
adjustment, or if it would be better to treat the causes of underdevelopment, such as corruption, or its symptoms,
such as inadequate health care. Yet these crucial questions were left unanswered -- and often even unasked.
THE POVERTY PRIORITY
The only way to fix the mess with sustainable development is to return to Brundtland's fundamentals. Sustainable
development must be viewed afresh, as a framework for every aspect of governance rather than as a special interest.
It can be revived by following four courses of action: making a priority of alleviating poverty, dropping the
environmental bias that has hijacked the entire movement, favoring local decisions over global ambitions, and
tapping into new technologies to spur sustainable growth.
First, and most fundamental, progress on sustainable development requires more success with economic
development, in particular poverty alleviation; the other two prongs of sustainability, environmental protection and
social justice, will lack force until basic living standards are improved. Development experts do not know exactly
which policies best boost development, and without a well-accepted theory, many have tended to embrace grand
schemes, such as the MDGs, that are politically unrealistic and unlikely to deliver results. But these uncertainties
should not mask a growing canon of good sense about the policies that offer the best chances for eradicating
poverty. One place to start is with some of the careful studies conducted over the last decade, especially those done
by the World Bank. They show that a few key institutional factors -- such as fiscal discipline, openness to market
competition, strong investment in education, political freedom, and low levels of corruption -- largely explain why
some countries flourish while others wither. The breadth of consensus on these points is reflected in the
comprehensive 2005 Human Development Report by the UN Development Program (UNDP), which endorses a
similar institutional focus for alleviating poverty.
Yet very few of these factors, such as openness to competition or investment in primary education, appear among
the MDG indicators. Equally vital levers for development -- including anticorruption measures, the protection of
private property, and the containment of civic strife -- do not appear, because the soft-spined corps of believers in
sustainable development has been unwilling to advocate policies that some view as intrusions into national
sovereignty. Getting serious about sustainable development requires redrawing the lines of sovereignty; if
sustainable development is a universal concept, then governments have a universal responsibility to promote it.
In the United States, some of this advice is already being put into practice through the Millennium Challenge
Corporation (MCC), a governmental organization whose origins lie in President George W. Bush's promise to
provide new development assistance to the countries that can best use the money. The plan was to offer a $5 billion
annual increase in development assistance by FY2006. Unfortunately, as with so many of this administration's bold
projects, progress on the idea is being hobbled by halfhearted implementation and perennial underfunding -- the
partial result of a budget crunch brought on by unsound tax policies and the ballooning cost of the Iraq war. The
MCC has run into trouble implementing its funding strategy. Countries with the best conditions for making effective
use of MCC money are those best able to attract private investment on their own. On the other hand, countries with
conditions that are least conducive to development -- and thus the least eligible for MCC aid -- are also likely to be
the poorest and those in the greatest need of a hand. This Catch-22 most affects Africa, which includes, according to
the UNDP's most recent tally, 14 of the 18 countries in the world whose human development has regressed since
1990. The United States has voluntarily increased foreign aid by $8 billion since 2000 and is the largest single
supplier of aid to Africa. Other donors have also redoubled their efforts in Africa. But on most of the continent,
governments have no viable plan to ensure economic growth, and sustainable development remains far from reach.
GREEN WITH ENVY
It is also necessary to challenge the environmental bias that has dominated the sustainable development agenda.
From the outset of the Brundtland commission's work, developing countries have rightly feared that the developed
world's concern about the environment would overshadow their interest in development. They insisted that the Rio
summit be called the UN Conference on Environment and Development, but diplomats from the industrialized
countries (even the conference's secretary-general, Canadian Maurice Strong) nonetheless referred to it informally
as the Earth Summit. The two treaties signed in Rio, the UN Framework Convention on Climate Change and the UN
Convention on Biological Diversity, mostly reflected the environmental priorities of the industrialized world. A
treaty on protecting the world's forests was also considered. The developing countries, rich in forests and wary of
intrusion, organized to kill it, but because nothing really dies in the diplomatic world, the stillborn convention has
been resurrected as a set of new principles and institutions known as the UN Forum on Forests. So far, the forum
has had little effect on forests -- except to further deplete them by generating a prodigious number of documents.
The tactical success of environmentalists, especially well-organized multinational NGOs based in industrialized
countries, in moving their issues to the top of the sustainable development agenda is unhealthy -- even for
environmentalism. Easy pickings in the UN have distracted environmentalists from the more urgent need to
articulate ways in which they can contribute to the other pillars of sustainability: development and social justice.
And this lapse has alienated them from an important base of potential partners in the developing world. Notably,
the 2004 report of the high-level UN panel (which included Brundtland) convened by UN Secretary-General Kofi
Annan to articulate new visions for world security was strikingly thin on environmental matters -- evidence that
such issues have not sufficiently permeated mainstream policymaking in much of the world.
After being hoodwinked at Rio, the developing countries made sure that the 2002 World Summit on Sustainable
Development did not include the word "environment" in its title. Nonetheless, the multinational environmental
lobby has continued to score tactical victories in many areas that the industrialized states control, especially
funding. The Global Environment Facility (GEF), which was created in 1991 to provide funds for the then nascent
sustainable development apparatus, now finances projects in six areas: climate change, biodiversity, pollution in
international waters, land degradation, ozone depletion, and persistent organic pollutants. These areas largely
match the leading environmental priorities of diplomats from the industrialized nations, not the most pressing
concerns of the states that GEF funds were intended to address. Climate change and biodiversity are top priorities
for most industrialized countries and also, therefore, for the GEF: the two issues alone consume two-thirds of the
GEF's resources. However, these concerns are disconnected from the real developmental priorities of the poorest
populations in developing countries. In the area of climate change, for example, the GEF's funding strategy is to
push for the development of technologies such as solar and wind-generated energy, which emit no carbon dioxide, a
leading cause of climate change. These are darlings of environmentalists in the North, who claim that these exotic
technologies, although currently expensive, will become cheaper with time. That argument is of dubious relevance
to the 1.6 billion people who lack electricity today. For them, real progress usually comes in the form of less sexy but
more cost-effective options, such as diesel generators and grid extensions.
THINK LOCAL
The third step toward recovering sustainable development is remembering that the theory works only if it is
approached as a hardheaded calculation about tradeoffs, rather than as an amalgam of sacrosanct principles. The
cocktail-party version of sustainable development gleams with promises of harmony and globalism: economic
growth, environmental protection, and social justice can be achieved fully and simultaneously; because the
ecosystems and economies of nations are interdependent, the problems they face require global solutions. In fact,
however, the concept has practical relevance only if it can accommodate local preferences and capabilities.
Cocktail-party visions of sustainability properly laud the benefits of electricity, for example, as a cure for darkness
and a substitute for costly candles. Yet the diesel generators that bring electric lighting to the most remote areas are,
in some respects, a paragon of unsustainability: diesel, which is derived from oil, is an exhaustible and polluting
resource. Poor communities love diesel-generated electricity nonetheless: it has brought them television,
high-quality lighting, and refrigeration, which were unavailable before. Similarly, whenever multinational
environmentalists have sought to ban DDT worldwide, developing countries have resisted, wisely pointing out that
the pesticide is crucial to controlling mosquitoes and other disease carriers in poor regions such as West Africa.
The last decade of UN summits propagated the myth that sustainable development can promote international
harmony through "global action plans" and "universal principles." In fact, providing sustainability is a highly
political activity governed by interests and resources that vary widely from one place to another. Advocating MDGs
that apply equally to Latin America (where reaching them is fortuitously at hand) and Africa (where development is
largely stagnant) makes little sense. The only way to craft serious goals is from the bottom up, focusing on
responsible systems of government rather than disconnected global processes to do most of the work. But this
approach, although pragmatic, is less satisfying ideologically and more demanding -- and therefore ignored by
cocktail-party globalists.
The current disconnect between global ambitions and local realities helps explain why efforts to curb climate
change, for example, have achieved so little. Although the problem's effects are inherently global, its causes are
resolutely local. In most of the world, including many developing countries, domestic authorities choose what
energy system to use, and because they decide how much fossil fuel to consume, they effectively control emissions of
carbon dioxide. Globalists in industrialized countries are clamoring for "engaging" the governments of developing
countries by pressing them to accept caps on emissions. But every major developing country has rejected the
demand as an unfair limit on their development, leaving reform at an impasse.
5 of 6
So how can countries be compelled to enforce policies that deviate from their immediate interests in order to pursue
the global good? Partly by allowing them to interpret the mandates of international agreements according to their
local priorities. Take, for instance, Beijing, Shanghai, and Guangzhou -- three of China's most rapidly growing cities
-- which are all struggling with local air pollution. To cut down on noxious emissions, they have (at least) two
options. They can either move power plants and heavy industry outside their borders and import the goods and
electricity they need, or they can change their primary fuel from coal to natural gas or nuclear energy, both of which
are much cleaner. Although either solution would provide China's cities with the energy they need, each one has its
drawbacks. Whereas the first would do little to curb China's total effluent of carbon dioxide -- the country as a whole
would still burn prodigious amounts of coal -- the second would force Chinese officials to rely more heavily on a less
carbon-intensive fuel (gas) that they have little experience using and would have to import in large quantities. To
convince Chinese officials to adopt the second strategy even though it seems less favorable to them, the
international community could offer a package of measures, including assurances to secure China's gas supplies and
agreements to share related technology. In other words, industrialized Western countries could align their objective
to slow global warming with China's domestic interests.
The primacy of local interests applies to highly industrialized countries as well. In Europe, governments are
implementing the Kyoto Protocol on climate change by customizing it to local and regional needs: they are creating
an emissions-trading system that lets individual companies trade credits for their carbon dioxide emissions, thus
allowing greater flexibility in meeting the treaty's targets. Meanwhile, governments elsewhere are also developing
their own locally tailored trading systems. The authors of the Kyoto Protocol envisioned a single global trading
system with a single global price. But such a uniform system is not being implemented because the institutions that
allocate credits, monitor compliance, and enforce agreements operate mainly at the local and national levels.
Instead, a host of emissions-trading systems are emerging from the bottom up. (The United States, meanwhile, has
refused to ratify the agreement for the compelling reason that it cannot satisfy the treaty's core commitment to
bring down U.S. emissions of greenhouse gases to an average of seven percent below 1990 levels between 2008 and
2012. Although abandoning the protocol was a wise decision, Washington has not offered any credible plan to
manage emissions in the United States.)
TECH SAVVY
Any serious effort at sustainable development will also need to harness the technologies that most affect economic
growth and mediate the consequences of growth for the environment. Unfortunately, the sustainable development
apparatus has been strikingly ineffective on technological matters. The only technological area in which
governments have set specific goals is "technology transfer," the handing over of hardware to developing countries
-- a gesture often espoused in UN talks but rarely witnessed in the field. Such goals are largely pointless anyway
because most technologies spread through markets rather than thanks to transfers between governments.
Some efforts to harness technological progress for the benefit of sustainable development are under way. They
include a long-overdue attempt to promote innovation in areas that matter to very poor countries -- such as
developing a vaccine for malaria -- but that have been overlooked by private firms that normally focus their efforts
on creating products to combat the diseases of wealthier consumers.
Governments have found it particularly difficult to set credible policies for the development and application of
technologies that have long commercial lives. The problem is especially acute for investors in energy infrastructures
who are contemplating new technologies that might help address the problem of climate change. In Europe, where
the rules on emissions trading are in flux, utility companies have been wary of building new power plants in the
absence of greater fiscal certainty, increasing the risk of severe electricity shortages. And in the United States, where
there is no meaningful federal policy on greenhouse gas emissions, investors in long-term energy assets such as
power plants (the single greatest emitters of carbon dioxide) must make multibillion-dollar commitments without
knowing what regulatory regime may exist in the future. A few years ago, this problem was not particularly serious
because nearly all new power plants in the United States were fired with natural gas. But today, natural gas costs
five times what it did in the 1990s, there are no new gas plants under construction, existing plants are running at
only 30 percent of capacity, and dozens of new coal plants are being designed. Unless the U.S. government soon
announces a credible plan for the future regulation of emissions, utilities will invest in conventional coal-fired
power plants. Within a few years, the country could be saddled with far more carbon dioxide emissions as a result of
these plants than if the government had given investors a reason to fund less carbon-intensive sources of energy.
Governments and companies must find ways to keep sometimes tyrannical public opinions from blocking the
development and use of certain essential new technologies. Today, there is latent public discomfort regarding
carbon sequestration, a technology that entails injecting deep underground large volumes of carbon dioxide that
would otherwise go into the atmosphere. Elements of the technology are already widely used in oil and gas
operations, but carbon dioxide injection projects are under way at only two facilities in the world. This fix holds the
promise of an elegant engineering feat, but the technology is not without danger. There are risks of leaks, some
potentially catastrophic, and some countries (notably the United States) still lack adequate regulatory regimes for
controlling underground disposal. The industry would do well to keep early demonstration projects at remote and
especially safe sites in order to quiet public alarmism.
Worries that even ill-advised public resistance could stymie such worthy projects are not far-fetched: other
promising technologies have run afoul of misguided opinions and poor regulatory policies. Across Europe, for
example, public opposition to genetically engineered foods has prompted regulations to keep some of those foods
off the market despite growing evidence that they are good for both consumers and the environment. Some of the
key technologies for controlling carbon dioxide pollution may face a similar fate. Nuclear power, for example, is
probably favored as a low-carbon means of generating electricity. Yet in many countries, it remains politically
untenable.
BACK TO THE FUTURE
Despite its beginnings as a powerful animating concept, over the last two decades sustainable development has
become meaningless. It has fallen prey to a collection of special interest groups that have both hollowed out the
concept and lost track of what they can best do to implement it. When it has been applied, the theory has often
distorted the real priorities of development.
Fixing the concept will require going back to its origins, and especially stressing the integration of economic and
ecological systems while leaving it up to competent local institutions to decide how to set and pursue their own
priorities. Advocates for sustainable development should not promote false universal goals. Because local needs and
interests will necessarily vary, sustainable development must be redefined repeatedly, from the bottom up,
wherever it is to be put into practice. Sustainable development can have worldwide relevance and appeal, but only if
its original purpose of helping the poor live better, healthier, and fairer lives on their own terms is restored.
www.foreignaffairs.org is copyright 2002--2006 by the Council on Foreign Relations. All rights reserved.

How much more wind power should the U.S invest in and where should these pretty wind turbines be placed? Not in Ted Kennedy's backyard on cape cod for sure, but where? At the University of Chicago, the wind blew hard off of Lake Michigan maybe the midway could become a useful space after all? The environmental movement faces a challenge in stating its priorities. Is climate change the #1 issue that is far ahead in importance of other issues such as maintaining the size of the bat population?

If wind power is "green" but it is a disamenity in terms of beauty and it chops up a few bats and birds, is it a net winner? Clearly this depends on how much power it creates and how much we value this lost natural capital. Will contingent valuation guys get to dust off their tools to price these bats?

My policy suggestion here would be to have an auction where windy communities would be offered compensation for accepting the turbines. Whoever has the lowest willingness to accept would be allocated the turbines. There would be a public choice question of what these "winning" communities would do with the money they receive but wouldn't this be an efficient outcome that Coase would like?


June 6, 2006
Debate Over Wind Power Creates Environmental Rift
By FELICITY BARRINGER

OAKLAND, Md. — Dan Boone has no doubt that his crusade against wind energy is the right way to protect the Allegheny highlands he loves. Let other environmentalists call him deluded at best, traitorous at worst. He remains undeterred.

For four years or more, Mr. Boone has traveled across the mid-Atlantic to make every argument he can muster against local wind-power projects: they kill birds and bats; they are too noisy; they are inefficient, making no more than a symbolic contribution to energy needs.

Wind farms on the empty prairies of North Dakota? Fine. But not, Mr. Boone insists, in the mountainous terrain of southwestern Pennsylvania, western Maryland or West Virginia, areas where 15 new projects have been proposed. If all were built, 750 to 1,000 giant turbines would line the hilltops, most producing, on average, enough electricity to power 600 homes.

Wind projects are in the midst of a huge growth spurt in many parts of the country, driven by government incentives to promote alternatives to fossil fuels. But Mr. Boone, who wields a botanist's trowel and a debater's knife with equal ease, wants to slow them down with community activism, regulatory action and legal challenges.

His crusade harks back to the campaigns against nuclear power plants, toxic-waste dumps and dams on scenic rivers that were building blocks of the modern environmental movement. But the times, and the climate, are changing. With fears of global warming growing more acute, Mr. Boone and many other local activists are finding themselves increasingly out of step with the priorities of the broader movement.

National groups like Greenpeace and the Sierra Club used to uniting against specific projects are now united for renewable energy in general. And they are particularly high on wind power — with the caveat that a few, but only a few, special places should be turbine-free.

"The broader environmental movement knows we have this urgent need for renewable energy to avert global warming," said John Passacantando, executive director of Greenpeace U.S.A. "But we're still dealing with groups that can't get their heads around global warming yet."

Indeed, the best winds, especially in the East, tend to blow in places that are also ideal for hiking, sailing, second homes and spirit-soothing views. These include the Green Mountains, the Adirondacks, the Chesapeake Bay, Cape Cod and the ridges of northern Appalachia. Local opposition to unwanted development remains a potent force.

So when it comes to wind, the environmental movement is riven with dissonance and accusations of elitism. Robert F. Kennedy Jr.'s very public opposition to the 130-turbine Cape Wind energy facility proposed off Nantucket Sound has driven a wedge between activists. Dan Boone's circuit riding against wind projects, while not attracting the same celebrity notice, has exasperated many Sierra Club compatriots even more.

Like Mr. Kennedy, Mr. Boone says the areas he wants to protect are uniquely vulnerable. His family owns property near the proposed projects, just as Mr. Kennedy's does near the Cape Wind site.

But Mr. Boone says that wind supporters are the ones pursuing their own agenda at the expense of the public interest.

"I'm not sure that wind turbines in this region will significantly reduce the outcome of global climate change or actually have any role," Mr. Boone said. "The very limited benefit doesn't justify the risk of wiping out a lot of interior forest habitat."

National environmental leaders reject this argument.

"There's no free lunch," said Paul Hansen, executive director of the Izaak Walton League of America, a venerable sportsmen's group. " 'Not in my backyard' is not environmentalism."

The Alleghenies are a big backyard, with views that are both spectacular and problematic. Flowering shrubs like shadbush and preening flowers like trillium are framed by oaks, maples and longleaf pines. But intermittent industrial tree farming has repeatedly denuded some mountainsides. On both sides of the border near here in far western Maryland, second-home development is booming. The air has often been fouled by the Mount Storm coal-fired power plant.

If Ned Power, a wind-energy development company, puts up 100 or so turbines along 14 miles of ridgeline near Mount Storm, wind-energy supporters say, how much does that further spoil the landscape?

Kevin Rackstraw, a regional manager of Clipper Windpower whose proposed 40-turbine project in western Maryland has drawn Mr. Boone's fire, said opponents lacked perspective.

"Dan looks at all the impacts of a given wind project," Mr. Rackstraw said, "but doesn't say: 'If we didn't have wind, what would we have?' Coal. Think of the impact of acid rain and mountaintop removal."

The Ned Power project is just one target of Mr. Boone, 49, a former state wildlife biologist who now works as a consultant. In interviews, he said he first focused on the issue when working as a botanist on a study related to an early wind power project. The environmental-impact statements, he said, were grossly inadequate.

Now he drives from Highland County in western Virginia (where 38 turbines are proposed on Tamarack Ridge) to Bedford, Pa. (where early discussions of an unnamed project are under way) to talk to local groups or crystallize their objections for them. In Annapolis, Md., and Charleston, W.Va., he uses state utility regulators' licensing hearings to throw up roadblocks before wind projects. He is eager to argue with industry officials in any venue, questioning their facts, assumptions and motives.

"The rush is on now because a lot of the places they've targeted have no zoning, and it's easy to get in that kind of large-scale development," he said. "This part of the country has really good energy prices. Developers are keying in on that."

Mr. Boone's quiver of anti-wind arguments includes economic analyses, but his first line of attack is biological: he contends that they are a threat to bats and potentially to migratory birds and that they break up forest habitat.

Scores of raptors and other birds were killed by the first generation of wind turbines set up at Altamont Pass in Northern California. Since the Altamont Pass turbines were erected in the early 1980's, turbine design has been altered, and most subsequent studies have shown that birds tend to fly above the height of most turbines though some experts say more studies are needed.

But the turbines south of here in Thomas, W.Va., have been lethal to bats. More than 2,000 were killed in 2003 at the Mountaineer project, whose 44 turbines are owned by FPL Energy, a big power company that is the wind industry's dominant player.

Industry officials agree that the bat mortality measured at the Mountaineer site is unacceptable, and they are studying the benefits of deterrent devices and the best ways to modify turbine operations in bat-rich areas.

To Mr. Boone, wind energy will never make a big enough difference to justify its impact in the region. "You have to remember that these tax advantages are so huge," he said, "that these developers are keen to latch onto all the mythology — whether it's global warming or something else."

Asked if he thought global warming was a myth, he said: "No, I'm not calling it mythology." But industry officials, he contended, will "take things out of context."

Mike Tidwell, the director of Chesapeake Climate Action Network and one of Mr. Boone's adversaries, bristles at the attack. "Wind industry guys are the straightest-shooting people," Mr. Tidwell said. "Most got into it because they had an environmental ethic."

But Mr. Boone has plenty of allies, too. "He's the greatest naturalist I've even known," said Betsy Johnson, chairwoman of the Maryland chapter of the Sierra Club. "Dan has been very helpful in educating us with what problems there can be with an energy source like wind."

The industry Mr. Boone regards so suspiciously is on a roll. The total share of energy that wind farms generated nationwide in 2004 was tiny — about one-third of 1 percent, according to the Energy Department. But by 2020, according to industry estimates, wind's share of the county's energy portfolio could grow ten- or twentyfold.

For the environmental movement, wind supporters say, the transition from the protection of place to the protection of planet is bound to be wrenching.

"Wilderness conversations are spiritual," said David Hamilton, the Sierra Club's national director of global warming and energy programs. "We've always been a place-based organization, protecting places," but "protecting our climate" is "just looking at it from a different angle and a different elevation."