Monday, 18 August 2014

Climate Change Issues for the New Zealand Election

By Suzi Kerr

The biggest environmental issue that New Zealand must address seriously now is climate change mitigation. In doing this we need to show leadership, use science (especially economics and psychology), and have politics focus on what really matters to voters.

The following post was originally presented as a speech at the Auckland University Business School Ballot Box event on Wednesday, August 13.

Why climate change?

It is irreversible, cumulative, systematic (affects all aspects of life on earth), and complex.  While solutions need not be expensive if done well, they will involve all aspects of our society:  economy, culture, diet, identity, recreation …

Climate change is the greatest threat to our biodiversity, water resources and oceans in the long term.  In contrast to climate change, water issues are mostly reversible and biodiversity issues are more focused in both the effects and the solutions.

Addressing these other environmental issues is good and will often help with climate change but we cannot effectively address climate change only through related issues:  significant opportunities will be missed and some effort will be misdirected. For example many people still talk about insulation programs as climate policy despite strong evidence that in the short run at least, they have had almost no effect on emissions.

So what should we be discussing about climate change in the context of the election?  

Tuesday, 12 August 2014

Economic perspectives on climate change mitigation: Part 1 climate change as a free-rider problem

By Judd Ormsby 

This is the first of a series of posts on climate change and the different perspectives offered from within economics. This first post sets the scene by framing climate change as a free-rider problem.

Most weekends I like to drive out to Makara Beach, about a half hour drive from where I live. I like to sit in the cafĂ©, order a cheese and onion toasted sandwich, drink coffee, and eat chips. It’s an enjoyable way to spend a Sunday. But it’s likely one of the most emissions-intensive ways to spend my time. I know climate change is a problem. I know that it makes economic sense for us to mitigate. I know that climate change might even alter my enjoyment of trips to Makara or lower my future earnings through its effect on the economy in general. But I also know that whether or not I go out to Makara will make no detectable difference to the Earth’s climate. My carbon emissions may be high but they are a drop in the ocean of global emissions. When mitigating my carbon emissions is costly I have an enormous incentive to ‘free-ride’. The cost could be in terms of money, in the case of investing in a solar panel for my home, or it could be in terms of the quality of my leisure, in the case of my visits to Makara.

Friday, 8 August 2014

Pricing Carbon: Who should surrender?

Corey Allan, Research Analyst, Motu Economic and Public Policy Research

With only 99 regulated participants, New Zealand is able to cover 100% of its CO2 emissions from the energy sector (liquid fossil fuels and stationary energy) in the NZ ETS. Europe has only managed to cover 43% of total GHG emissions from energy, in a scheme where more than 11,500 installations are covered. New Zealand has been able to obtain full coverage because of a unique feature of its scheme – we placed the point of obligation for the energy sector upstream. The rationale behind an upstream point of obligation is discussed in a recent paper co-authored by Suzi Kerr. The paper highlights the benefits of an upstream point of obligation in energy and the lessons that China (and other countries) could draw from New Zealand’s experience with an upstream point of obligation.