Iceland Cometh

Iceland Found Another Way to Clean Up a Financial Crisis Unlike the U.S., the country let its banks fail and bailed out lots of consumers. Bloomberg, September 25, 2018       While flying last week to a conference in Reykjavík, it dawned on me that I knew almost nothing about Iceland. What little understanding…

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10 Monday AM Reads

My morning train reads: • What Billy Beane and Jim Simons Have in Common (Institutional Investor) • ‘Great vampire squid’ no longer — Goldman Sachs has finally rehabbed its reputation, 10 years after the financial crisis (Business Insider) • Skyscrapers Too Pricey for Bankers Are Full of Crypto Startups (Bloomberg) • Nick Hanauer, the Plutocrat of the Common Man (Democracy) • Trump…

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Big UK manufacturers cut jobs amid Brexit uncertainty

Number of employees at large firms fell for second successive month in September

Britain’s biggest manufacturers are cutting jobs and becoming increasingly reluctant to hire amid growing uncertainty over Brexit, according to a survey.

The report from the IHS Markit and Chartered Institute of Procurement and Supply purchasing managers’ index found the number of employees working at large firms fell for a second successive month in September.

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New study finds incredibly high carbon pollution costs – especially for the US and India | Dana Nuccitelli

As a wealthy, warm country, the US would benefit from implementing a carbon tax to slow global warming

The social cost of carbon is a measure of the economic damages caused (via climate change) by each ton of carbon pollution that we produce today.  It’s difficult to estimate because of physical, economic, and ethical uncertainties.  For example, it’s difficult to predict exactly when various climate tipping points will be triggered, how much their damages will cost, and there’s also a question about how much we value the welfare of future generations (which is incorporated in the choice of ‘discount rate’).

In 2013, the Obama administration set the federal social cost of carbon estimate at $37 per ton of carbon dioxide (up from the previous estimate of $22).  That was a conservative estimate – in recent years, research has pegged the value closer to $200 because recent research has shown that global warming slows economic growth, which makes it quite expensive.  A majority of economists in a 2015 survey believed the federal estimate was too low, but Republicans have recently been trying to dramatically lower it anyway.

To calculate social cost of carbon, you need to answer four questions in sequence:

1. How would the economy change with no climate change (including GHG emissions)?

The idea was to combine an approach to analyzing the climate effect of a marginal emission of carbon dioxide that Ken Caldeira and I had recently developed, with a climate damages model described in what was then a working paper by Marshall Burke and collaborators. My co-author Massimo Tavoni pointed out that by combining these two tools, we could produce the first comprehensive, country-level estimates of the social cost of carbon.

Our paper out today in Nature Clim. Change calculates the economic impact of a ton of CO2 emissions – ie, the social cost of carbon – for all countries:

In the United States, there sometimes seems to be a misconception that investments in climate change mitigation are charitable acts. Because climate change presents a more existential threat to developing countries, the argument is that having historically contributed the most CO2 to the atmosphere, the US should reduce its emissions in order to reduce the impacts of these past actions on others.

On the other hand, our analysis demonstrates that the idea that the biggest beneficiaries of reductions in carbon dioxide emissions by the US would be other countries is a myth.  Our results suggest that based on pure self-interest, the US should be willing to pay around $40/ton to avoid an emission of CO2. What’s more, the US is very consistently in the top 3 of country-level social costs of carbon – by this metric one of the biggest losers from climate change.

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UK manufacturers cut spending plans as Brexit fears rise

Only one-third of companies expecting to increase their investments, says report

British manufacturers are pulling back sharply on investment plans due to mounting uncertainty over Brexit and growing fears of a global trade war, a report has warned.

Just one-third of companies said they planned to increase their investment in plant and machinery – a record low in the fifth annual survey carried out by the EEF manufacturers’ body and Santander Bank. Investment by small companies was particularly squeezed, with three-quarters saying they were having to mothball spending plans in the coming two years.

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