Peatland and modelling

Have CSERGE developed Earth's very own Deep Thought?

Peatlands are important. It is estimated that Northern peatlands store more than 455Pg of carbon (Gorham 1991), which, according to my calculations, is roughly twice as much as the carbon stored in the world’s tropical rainforests[1]. So yeah, these soggy, waterlogged landscapes are pretty important.

The large swathes of peatland that now exist in the circum-arctic region are believed to have developed during the late Pleistocene and early Holocene as ice sheets retreated and the climate became warmer and wetter. The hypothesis that climate has been the prime driver of peat formation is supported by Macdonald et al (2006) who use radiocarbon dating to establish the timing of peat development across northern Europe. They find that peatland expansion across all continents occurred in a pattern that reflects fluctuations in global temperatures with initial expansion during the Bølling-Allerød warm period (c.14.7–14.5 ka bp) slowing during the colder conditions of the Younger Dryas (c.12.65–11.5 ka bp) before rapidly increasing after the end of the Younger Dryas at around 11.5 ka bp.

Evidence from the UK, however, indicates anthropogenic impacts have also been important causes of peatland formation. For example, Oldfield (in Walker and West (eds) 1970) has shown that Blelham Bog in the Lake District was artificially established in the early 19^th century as a result of human flooding of former peat cuttings with subsequent stream diversion throughout the 19^th century encouraging further silt deposition and, hence, peat formation.

While the contribution of humans to peatland therefore appears variable, it is clear that anthropogenic impacts are the overwhelming drivers of contemporary peatland destruction. In Europe alone, it is estimated that out of a total mire and peatland area of 617.000km2, 52% has been converted over last century with the main areas of conversion including agriculture (50%), forestry (30%) and peat extraction (10%) (Byrne et al 2004). It's clear that future land-use decisions should preserve this significant carbon sink, but how can we ensure that such decisions are made?

Here I believe that recent developments in environment-economy modelling can, again, be instructive. Work is being undertaken at The Centre for Social and Economic Research on the Global Environment to develop integrated land-use models that will allow decision-makers to measure the impacts of land-use changes not only in terms of changes in market-priced commodities, such as agricultural output and timber, but also non-market benefits such as the recreational services of forests and, importantly, the carbon sequestration benefits of peatland.

Bateman et al (2013) provides an example of how such modelling developments can promote pro-peat land-use decisions. The authors use a series of decision models to explore how land use patterns change under various scenarios defined in terms of the magnitude of climate change and the strength of environmental regulations. Valuation models are then used to determine the magnitude of changes in market and non-market benefits that are the result of land use in each scenario. The images below show the results from the ‘world markets’ scenario in which environmental regulation and policy are weakened unless they coincide with improved agricultural production. Looking at the maps, the difference between market (agricultural) and non-market (ghg emissions and recreation) outcomes is explicit. Chopping down trees and converting peatland to agriculture would be expected to increase agricultural output but the maps below show how this also causes increased carbon emissions and losses in recreational benefits (going for a walk in a field of potatoes isn’t quite the same as going for a walk in an ancient forest).

Images from Bateman et al (2013)

These maps might look nice but what’s the point of this? Bateman et al (2013) show that basing land-use decisions solely on market values will have considerable detrimental effects and, while this result is pretty unsurprising, the model developed by CSERGE makes the point impossible to ignore.

I do, however, have some reservations. The novel aspect of Bateman et al’s modelling approach is the combination of a land-use decision model with a valuation model. This allows all the impacts of land use changes to be expressed in terms of a single monetary unit (note that the maps above are all in terms of £/ha/yr). To me, there seem to be two issues with such an approach. The first is that this means that modelling results are inevitably going to depend on the monetary values that are placed on non-market benefits such as the carbon sequestration services of peatland. I’ve written before about the importance of such environmental valuation but it’s important to recognise that the model’s conclusions will always be contingent on the valuation methods used.

While I believe that environmental valuation has many benefits, my second, and more significant, concern is that policy makers place too much emphasis on such modelling exercises. I worry that politicians are far too keen to hold up the results of such models as facts that make further deliberation redundant, ignoring that the results are actually contingent on subjective valuation method decisions.

So yes, environment-economy models such as that developed by CSERGE can aid pro-peatland decision-making but it’s vitally important to use them correctly as tools to inform further debate rather than infallible oracles that always produce The Truth.

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[1] To put the peatland figure in context I used NASA’s estimate of the total carbon stored in tropical forests (247 billion tons) and used this converter to express the figure in petagrams. I am pretty ignorant about comparative carbon storage estimates so if this appears way off to anyone please let me know!  

A brief note on Kraken

no, not that Kraken...

A while ago I wrote about the effect that financialisation is having on private sector investment. The recent approval of EnQuest’s development of the Kraken oil field, however, suggests that the private sector is willing to invest – just in the wrong type of energy! Compared to the £5.55bn that was invested in renewables in the UK in 2012 (Frankfurt School UNEP Centre and BNEF 2013), EnQuest’s £4bn project is startling: how can a single fossil fuel project amount to over 70% of total renewable investment?

The Kraken news story reminded me of a report published earlier this year that highlights the magnitude of the financial resources that are being devoted to fossil fuel exploitation (Leaton et al 2013). The report emphasises that burning already known fossil fuels reserves would generate carbon emissions large enough to warm the planet by more than the 2°C that the Copenhagen Accord states should be the upper bound of climate policy targets. The authors argue that further investment in fossil fuels is therefore a waste of scarce financial resources but estimate that, despite this, the top 200 global oil, gas and coal mining companies spent $674bn in 2012 to find and develop new fossil fuel sources. Ironically, this figure is approximately 1% of global GDP, which what the Stern Review (2006) concluded would be necessary to stable atmospheric carbon dioxide levels at 500-550ppm by 2050.

Because of the private sector’s apparent aversion to green investment, it seems that the public sector will have to step up as the national green financier. I’ll be posting  later this week about whether it’s possible for government to spearhead a surge in green investment, so make sure you check it out. Until then, how about some music that seems to reflect the private-sector attitude…

Climate change and conservation

Evidence about the extinction of megafauna, such as the giant sloth,
can be used to challenge climate-species fatalism

If the planet is already locked into significant climate change, as is widely recognised, then what is the point of conservation? In the past, the earth has undergone considerable changes that have been accompanied by species extinctions and so aren’t contemporary conservation efforts just wasting resources by attempting to preserve species that are maladapted to the present climate?

The above statement is an example of what I like to call ‘climate-species fatalism’, which argues that human efforts will be unable to overcome the pressures placed on endangered species by climate change therefore rendering conservation pointless. While economists may be notorious for holding controversial opinions, I’m just trying to provoke a response here and don’t actually believe this. Although climate-species fatalism may appeal to politicians looking for an excuse to avoid action, I would argue that evidence from past extinction events implies that, even in the present context, conservation can still prove effective.

The wave of late Pleistocene megafauna extinctions is a good case in point. 50 ka BP the planet was home to over 150 genera of megafauna (animals >44kg) but by 10 ka BP at least 97 of these had become extinct. The causes of this significant extinction event are debated and there is a rich academic literature that attempts to solve the megafauna mystery. Was it the arrival of trigger-happy human populations who hunted easy-to-catch larger species to extinction or are shifts in climate to blame? While proof of the latter of these causes would support the position of climate-species fatalists, Barnosky et al (2004) have undertaken a comprehensive summary and analysis of a range of studies that indicates that both factors were significant. Observing that the global wave of extinctions occurred in a pattern of regional pulses, the authors assess both paleoecological evidence about major regional climate shifts and archaeological evidence about the date of human population arrival to suggest that regional extinctions peaked when both adverse human and climatic pressures were present.

These findings have present day relevance as they imply that, even as unavoidable climate change places increased pressure on species, addressing anthropogenic impacts that are adversely affecting threatened species can mitigate extinction risks.

So if conservation remains important, what sort of policies should conservationists be pushing for? I have previously discussed the development of integrated environment-economy models and believe that they can offer an insight here. In particular, Lenzen et al (2012) have developed a particular economic-environment model that analyses the impact of trade on global biodiversity. By evaluating the species impact of supply chains and combining this with an analysis of international trade patterns, the authors have been able to show how the impacts that consumers have on biodiversity often extend well beyond national borders. For example, the study finds that UK imports threaten 285 species abroad owing to the high volumes of environmentally harmful crops such as tea, coffee and palm oil demanded by UK consumers.

This shows that a national approach to conservation, which focuses exclusively on domestic biodiversity impacts, will be inadequate to preserve global biodiversity. Lenzen et al (2012) emphasise that their findings show how local biodiversity threats are driven by global trade systems and argue that this international dimension demands similarly international conservation policies. For example they argue that policies to address production practices with damaging impacts on local biodiversity should acknowledge the role of international traders and consumers as well as local producers themselves. This gives support to initiatives such as the Roundatable for Sustainable Palm Oil which seeks to increase the sustainability of palm oil production through engagement with stakeholders across the commodity’s geographically dispersed supply chain.

    

While climate-species fatalism is challenged by historical evidence I fear that, unless further conservation efforts are made at an international level, conservation policy will be inadequate to mitigate the extinction threats posed by climate change and the climate-species fatalists will be proved right.

A brief comment on carbon taxation

Last week I wrote about the importance of environmental economics and in particular the topic of environmental valuation. A significant and debated subject within this field is carbon taxation and there is a considerable literature that analyses different schemes around the world and tries to establish the correct ‘shadow price’ of carbon (a price that reflects the negative effects of carbon emissions), in order to determine the ‘optimal’ rate of taxation. Carbon taxation is such a large topic that an entire blog could be devoted to the subject – as dull as that may be – and so I will not attempt a summary here but instead want to explain my opinion on the subject.

The logic of carbon taxation is simple and comes straight from economics 101. Carbon emissions cause negative effects on parties other than the emitter but are un-priced and therefore occur at a level above that which maximises social wellbeing. To redress this, carbon taxes are necessary to increase the private costs of emitting so that they align with the social costs of emissions. Simply put, if you levy a tax on something people (should) do it less and therefore harmful things, like smoking and carbon emissions, should be taxed. Although this – like most economics – is a simplification, I believe that the basic principle makes sense and I therefore support economic taxation as a way to reduce carbon emissions.

Despite this endorsement, I fear that there is too much emphasis, both within academic economics and policy making, on this one policy tool. This is probably because carbon taxation requires relatively little public intervention when compared to other schemes such as cap-and-trade systems and therefore appeals to politicians who are wary of large administrative costs and accusations of being against the free market (an apparently indefensible position in contemporary politics).

I worry that carbon taxation is becoming a token green policy that politicians can flag up as proof of their environmental credentials detracting attention from the overall inadequacy of environmental policy. Statements such as this made by the OECD are increasing the problem as they suggest that governments should only engage in the most ‘cost-effective’ environmental policies instead of employing a range of tools to achieve ambitious policy aims. With organisations such as the committee on climate change stating that global carbon emissions need to peak by 2020 and then be halved by 2050 in order to avoid severe climate change, it is obvious that carbon taxation alone does not constitute adequate environmental policy.

To achieve a green transition, environmental policy needs to move beyond laissez-faire market tinkering and become more imaginative and ambitious. While carbon taxation is undoubtedly an important policy tool, academic and policy work should give up the holy-grail-like quest for the ‘optimal’ level of taxation and instead focus on developing an environmental policy arsenal capable of mitigating and tackling the considerable threats posed by climate change.  

Can you get to that? - the wisdom of funk and history

When you base your love on credit and your loving days are done,
the cheques you signed with love and kisses later come back signed insufficient funds 

- Can you get to that, Funkadelic

What reason can I possibly have for introducing this post with some 70s funk? To me, the song’s lyrics make the point that the accumulation of debt, which is the equivalent to the erosion of wealth, has implications. Although the concept of ‘wealth’ is often viewed from a solely monetary perspective (as the assets that an individual owns such as savings and housing), some economists argue that this narrow definition needs to be extended to include the natural and social forms of wealth that sustain human wellbeing (such as environmental processes and education). This concept of ‘comprehensive wealth’ means that ‘environmental debt’ can be defined as actions that reduce the ability of the natural environment to sustain human wellbeing, which brings us back to Funkadelic’s lyrics:

Well, I read an old quotation in a book just yesterday
,Said "Gonna reap just what you sow,
The debts you make you have to pay."

The collapse of ancient civilisations in southern Mesopotamia exemplifies the catastrophic impacts that the accumulation of excessive ‘environmental debt’ can have on human societies. Irrigated agriculture was essential to the development of early Sumerian societies around 5300 BC as it enabled high crop yields that were able to sustain sedentary, urban populations (Leick 2003). Between 2350 and 1700 BC, however, crop yields declined considerably owing to an increase in salinity that impeded the cultivation of wheat and, although populations were able to adapt by shifting to the more salt-tolerant crop of barley, yields continued to remain below 50% of previous levels (Chew 2001). Thompson (2004) argues that these dramatic declines in food production drove depopulation in Southern Mesopotamia causing a northward shift in regional power that ended the dominance of Southern civilisations. 

The extent to which human activities caused this disastrous increase in salinity is debated. Jacobsen and Adams (1958) suggest that population pressures necessitated the construction of large irrigation channels resulting in progressive salinisation as over-irrigation caused ground water levels to rise. An alternative explanation that emphasises the impact of climatic change is presented by Issar (1995), who argues that variations in climate diminished the flow of the Tigris and Euphrates rivers, reducing the amounts of water available to flush salts from irrigated land. I believe that the most adequate explanation of south Mesopotamian decline, however, is a synthesis of these alternative hypotheses as articulated by Chew (2001) who states that climatological changes undermined an agricultural system that had been pushed to it’s ecological limits as a result of intense cultivation practices.

The critical point here is that the Mesopotamian populations did not recognise that their intensive farming practices were reducing environmental resilience and thereby undermining the capacity of the natural environment to sustain their civilisation. In other words, they were running up environmental debt with inadequate consideration of the consequences. 

So what can be done to avoid a repeat of the Mesopotamian experience?

It is inevitable that the efforts needed to ensure contemporary human civilisation is not undermining the natural wealth upon which it depends are numerous and diverse. In order to increase the effectiveness of such efforts, and discourage actions with deleterious environmental effects, it is vital that methods of monitoring and quantifying natural wealth are developed. While this may seem like blue-skies thinking, several governments – including the UK Treasury – are currently attempting to incorporate environmental variables into the national accounting frameworks that are the basis of standard economic indicators such as GDP. If you can get past the crippling dullness of the video below (it is produced by the Office for National Statistics after all), it provides a pretty good explanation of what’s being done in the UK. 

By providing an objective environmental monitoring framework with which politicians could be held to account these methodological developments could promote a green transition by increasing political motives to preserve – and perhaps even enhance – environmental wealth. However, despite the potential of environmental accounting, I’m pretty skeptical that it will actually achieve anything. To date, very few environmental variables have been considered and negligible public awareness of the concept means it is unlikely to displace GDP as the raison d'être of politicians. In the face of current political priorities I fear that valuable lessons, both from funk and from the past, are going to continue to be ignored and that the accumulation of environmental debt will continue until the consequences start to manifest themselves in pretty severe ways. 

The industrial revolution, Malthusian constraints and modelling

A view of Machester from Kersal Moor, Willian Wylde (1852)

The industrial revolution that occurred in Britain during the mid to late 18^th century initiated an unprecedented increase in material living standards that continues today. Before the mid-18^th century, income per capita was stable and relatively equal across the world with the emergence of global inequality occurring concurrent with the industrial revolution (see below). 

Gross domestic product per capita depicting data from Maddison (2007)

This has led to the period being known as ‘the great divergence’. As the historian P.H.H. Vries writes:

‘The great divergence in the end, by definition, must boil down to the fact that during its industrialisation Britain escaped from the Malthusian constraints and Smithian limits that characterised (advanced) organic economies’. (Vries 2001 p 423).

This escape from ‘Malthusian constraints’ described by Vries indicates how the industrial revolution caused a considerable change in the relationship between economic activity and the natural environment: from being limited by a dependence on the natural environment, production was now able to accelerate considerably through mineral and fossil fuel exploitation (Thomas 1985). However, although the industrial revolution changed the nature of the production-environment relationship, it did not terminate it; contemporary economic activity remains dependent on the environment. The present-day dependence of production on the natural environment might seem obvious to some, but I believe that the relational shift caused by the industrial revolution has led to a chronic neglect of environmental considerations within mainstream academic economics.

This is particularly apparent within the esoteric subject of economic modeling. Whenever you hear that the IMF or some similar institution has produced an economic forecast, it’s not just the outcome of a bunch of suits sat in a room gazing at crystal balls. These forecasts are produced using mathematical models of that consist of thousands of equations intended to describe the significant relationships within an economic system[1]. Establishing these relationships is a considerable task and therefore a degree of simplification is necessary and, because the natural environment does not overtly limit contemporary economic production, there has been a tendency to ‘simplify’ away environmental factors. Although major commodity prices such as oil and grain are usually included, there is no consideration of soil fertility, water quality, climate or any similar ‘uneconomic’ environmental variables. 

Such oversight is dangerous. As previously stated, economic activity is still dependent on and impacts the environment. If models are unable to capture how these environmental impacts change in response to economic variation and how these changes feedback into economic systems, the environment is going to remain inadequately considered by policy makers and economies are going to become increasingly vulnerable to external environmental impacts. Thankfully, the environment-shaped hole in contemporary models is being addressed by several projects that are attempting to create new models capturing interactions between economic activity and the environment (for example see Tukker et al 2009 and Peters et al 2011).

Although the particular environment-economy relationships included in these new models differ between projects and are often estimated from past data, which risks overlooking threshold effects, their development can only be seen as a good thing as they are challenging orthodox models in which the economy is represented as a self-contained system unbound from the ‘malthusian constraints’ of the environment.  

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[1] (sadly more tangible and entertaining models such as the Phillip’s model are no longer used).