America's Next Top Economic Model?
Policymakers are looking to economic modelers to help them understand some of the implications of greenhouse gas cap-and-trade policies. And most of the models used for the purpose are of a class called "Comptuable General Equilibrium" models, or CGE models. Based largely on the thoughts of a couple of academic economists (Prof. Peter Dorman among them), we've been pretty skeptical of the predictive value of CGE modeling.
But our critiques have been tame: UCLA prof. Matthew Kahn really, really doesn't like CGE models:
To be honest, these CGE models are crap. These black box models must take a strong stand on dozens of behavioral responses where in each of these cases we don't really know what the elasticity is. Feed in 20 bad estimates and you won't get back a great tasting meal...
The CGE crew's model isn't science, it is magic and it makes economists look bad.
Aw, quit being such a shrinking violet, Prof. Kahn!
For Richer, For Poorer
The Canadian Center for Policy Alternatives has a new report on the ecological footprint of Canadians that's worth at least a quick glance.
For those who aren't familiar with the concept, the "ecological footprint" is a measure of the impact of a wide range of human activities -- energy, food, clothing, shelter, you name it -- put in terms of a common unit: the number of acres of global land required to produce (or recover from) the impacts of those activities. The methodology lets us compare, say, the lifestyle of a Northwesterner with a Norwegian or a Nigerian, on more-or-less equal footing. Unsurprisingly, folks in industrialized countries -- those of us can afford cars, big houses, lots of stuff, and food that's high on the food chain -- have a relatively large "footprint."
What's most interesting about the CCPA study is that it looked at the ecological footprint of Canadians at different income levels (see the chart). The trend isn't too surprising: the folks at the bottom rung of the socioeconomic ladder have a smaller footprint than those towards the top. What is a bit unexpected, though, is the big jump in the footprint of the richest decile. Apparently, a high-income lifestyle really does result in a significantly larger impact on the planet.
Frequently, we hear that only wealthy nations are able to fix environmental problems. If you're just scraping by, there's no way you'll bother to protect parks, or limit pollution; you've got bigger fish to fry. This argument is often trotted out to support rapid economic growth as a way of protecting the planet. (For the geeks out there -- the concept that environmental impacts decline as the economy grows is called "the environmental Kuznets curve.")
But to the extent that ecological footprint measures are an accurate gauge of environmental impact, the "environmental Kuznets curve" is something approaching bunk. Wealthier nations tend to have higher footprints per capita, as do wealthier individuals within a nation. Economic growth, by itself, just won't save the planet. The key, as always, is to make sure the right sorts of things are growing -- something that the market, all by itself, simply doesn't do.
