Firms can pay us to recycle

Recycling comes more instinctively for those on low incomes and who live in low-income countries compared to their respective high-income counterparts.

To increase the amount that we recycle and conserve, we must privatise the process and enable private companies to people for recyclable goods. In many areas, if people put out more goods for recycling than their allotted quota, the local authorities refuse to collect it. Private companies, however, have incentives to collect as much as they can and would do otherwise. By further incentivising households via fair compensation, we could significantly increase the rate of recycling. Furthermore, why should we, as suppliers of recyclable goods, be expected to hand over our products for free?

Also, given the tough socioeconomic climate, extra income derived by providing an additional, monetary reward to households that recycle whilst cutting government expenditure would be helpful.

People who recycle out of necessity are aware of the economic value of those goods; in India, consumers are paid to hand over their recyclable goods such as glass bottles, plastics, newspapers, etc. by various private companies and this initiative is practiced voluntarily across society due to the mutual financial benefits it incurs. In the UK, there are some places where we can ‘cash in’ our bottles, cans and newspapers but they are few and far between – it is also inconvenient for us as suppliers. Furthermore, if firms in India are able to collect from peoples’ houses and also pay for those goods, why are our firms unable to do the same? One reason could be that India has a relatively flexible labour market and lower wages. However, even though higher wages are prevalent in Britain, relatively advanced technology can still make this feasible by keeping costs down and financially rewarding those whom they procure goods from. Alternatively, and preferably, we could ease up on immigration restrictions a bit more, remove the minimum wage and instantly make this business model feasible.

In the UK, the financial benefits of recycling are neither directly felt by the consumer nor properly managed by the collection authority. Instead, it is squandered by inefficient management and stunted by unfair outcomes. If government continues to subsidise and undertake this activity then this inefficiency and its corresponding sub-potential recycling volume will continue.

This is a case of too little capitalism, not too much

The latest outrage that the Guardian tells us we should all be upset about is how the poor villagers of Nejapa, in El Salvador, get done over by the greedy capitalists taking all the water:

Water everywhere for profit in Nejapa, but few drops for local people to drink
While big companies make millions from El Salvador’s water-rich Nejapa municipality, locals have little or no access to water

Hmm, gosh, that’s bad. There is one very interesting little line in the piece though:

Najarro says she pays $7 a month (£4.38; almost 10% of her salary) for municipal water, even though her taps often run dry and the water that runs from them may not be safe to drink.

It’s the local council that she gets her water through? And a quick look around tells me that pretty much all of the country gets its water through the government. And as Wikipedia itself says:

Tariffs and cost recovery

ANDA tariffs

ANDA tariffs average US$ 0.30/m³ and are below levels found in many other Latin American countries. Furthermore, ANDA tariffs are not socially equitable since the subsidies implicit in the low tariffs predominantly benefit the non-poor. First, users without access to the network, which are usually the poorest, do not receive the consumption subsidy. Second, users served by other providers than ANDA do not receive a subsidy for consumption. Third, among users that have ANDA service, the poor receive fewer subsidies than the non-poor as a consequence of the tariff structure. Tariffs are for both water and sewer services. As a result, there is a cross-subsidy from users without sewer connection to those with a sewer connection who are usually better off.

For political reasons, adjustments of ANDA water tariffs have been infrequent. Between 1994 and 2006 ANDA tariffs were only adjusted twice, in 1994 and 2001. The inflation-adjusted tariff, however, barely changed.

Tariffs by other service providers

Tariffs paid by water users in rural areas do recover financial operating costs, since no direct subsidies are available. They are often much higher than tariffs paid by ANDA customers. Some rural water users in pumped systems receive a subsidy through the Fondo de Inversión Nacional en Electricidad y Telefonía (FINET), which subsidizes electricity tariffs.

Cost recovery of ANDA

The financial situation of service providers in 2006 did not provide any more for self-financing of investments. ANDA’s working ratio was close to 1, indicating that the company barely covers its operating and routine maintenance costs. The reason for the reduced self-financing capacity is a significant increase in the unit costs of ANDA from US$0.21/m³ in 1994 to US$0.46/m³ in 2001, and US$0.63/m³ in 2004. The reason for the important increase of the unit cost in 2004 is not clear, but it could be due to the inauguration of the energy-intensive Río Lempa system that pumps water from the Rio Lempa to San Salvador in that year.

So, the government charges very little for water but this doesn’t help the poorest as they’re not even on the water system. And so little is charged for water that they’re not able to actually build out the water system simply because they’ve not the money to do so. And this might also have an effect upon how much water there is to go around:

It is estimated that 90 percent of the surface water bodies are contaminated. Nearly all municipal wastewater (98 percent) and 90 percent of industrial wastewater is discharged to rivers and creeks without any treatment.

They “treat” sewage by dumping it in the nearest river.

This is not a problem of excessive capitalism: this is a problem of too little capitalism. Recall what happened in our own water systems, here in Dear Old Blighty, when the nationalised water companies were sold off. Investment went up, water quality went up, environmental degradation went down.

It’s entirely true that in theory a government could, possibly, determine the optimal investment levels in a natural monopoly like water and sewage services. And that there’s an argument why government should do so. Actual experience though seems to show that governments tend to allocate less than that optimal level. Which is why privatised systems almost always show a rise in the level of investment.

Too little capitalism here, not too much.

The horrible, horrible, error in the IPCC’s latest report

Oh dearie me, this is something of an error at the heart of the IPCC’s latest report into the perils of climate change. And it all stems from a thoroughly incomplete look at the economic models about what might happen. Here’s what they say:

Without additional efforts to reduce GHG emissions beyond those in place today, global emission growth is expected to persist driven by growth in global population and economic activities (Figure 3.1) (high confidence). Global GHG emissions under most scenarios without additional mitigation (baseline scenarios) are between about 75 GtCO2eq/yr and almost 140 GtCO2eq/yr in 210016, which is approximately between the 2100 emission levels in the RCP 6.0 and RCP 8.5 pathways (Figure 3.2)17. Baseline scenarios exceed 450 parts per million (ppm) CO2eq by 2030 and reach CO2eq concentration levels between about 750 ppm CO2eq and more than 1300 ppm CO2eq by 2100. Global mean surface temperature increases in 2100 range from about 3.7°C to 4.8 °C above the average for 1850-1900 for a median climate response. They range from 2.5 °C to 7.8 °C when including climate uncertainty (5th to 95th percentile range)18.

It’s important to understand something here. “Additional efforts” does not mean that we simply install more solar panels (just as an example) for price, ethical or market reasons. It means that policy is changed so that more solar panels (again, just as an example) are installed. It means that we’ve got to change the incentives under which people operate, through legislation or regulation, in order to get people to change their behaviour.

This has been true right from the start of the worries about climate change: business as usual forecasts of emissions look at varying levels of wealth, population and technology and assume that all of those various scenarios could happen without government intervention. “Mitigation”, like “effort” here, means intervention to reduce emissions below some or any of those business as usual scenarios.

And here’s the problem with the assumption they’re making about future emissions. Absolutely no one (no one sane at least) believes that we’re ever going to get anywhere near the levels they’ve just assumed above. As Matt Ridley has put it:

The IPCC commissioned four different models of what might happen to the world economy, society and technology in the 21st century and what each would mean for the climate, given a certain assumption about the atmosphere’s “sensitivity” to carbon dioxide. Three of the models show a moderate, slow and mild warming, the hottest of which leaves the planet just 2 degrees Centigrade warmer than today in 2081-2100. The coolest comes out just 0.8 degrees warmer.

Now two degrees is the threshold at which warming starts to turn dangerous, according to the scientific consensus. That is to say, in three of the four scenarios considered by the IPCC, by the time my children’s children are elderly, the earth will still not have experienced any harmful warming, let alone catastrophe.

But what about the fourth scenario? This is known as RCP8.5, and it produces 3.5 degrees of warming in 2081-2100. Curious to know what assumptions lay behind this model, I decided to look up the original papers describing the creation of this scenario. Frankly, I was gobsmacked. It is a world that is very, very implausible.

For a start, this is a world of “continuously increasing global population” so that there are 12 billion on the planet. This is more than a billion more than the United Nations expects, and flies in the face of the fact that the world population growth rate has been falling for 50 years and is on course to reach zero – i.e., stable population – in around 2070. More people mean more emissions.

Second, the world is assumed in the RCP8.5 scenario to be burning an astonishing 10 times as much coal as today, producing 50% of its primary energy from coal, compared with about 30% today. Indeed, because oil is assumed to have become scarce, a lot of liquid fuel would then be derived from coal. Nuclear and renewable technologies contribute little, because of a “slow pace of innovation” and hence “fossil fuel technologies continue to dominate the primary energy portfolio over the entire time horizon of the RCP8.5 scenario.” Energy efficiency has improved very little.

These are highly unlikely assumptions.

They’re not just highly unlikely assumptions: they’re near insane ones.

What has actually been done is to take current emissions levels (actually, from a few years ago) and then draw a straight line inference about what will happen if they carry on growing as they have been. Completely ignoring the fact that we’ve already done a great deal to change what’s likely to happen in the future. After all, as we keep being told, solar PV is now just about cost competitive with coal and will be cheaper in only a few short years (by 2020 is a serious and sober prediction). At which point why on earth would people start to use more coal than we do today? For a higher portion of our energy desires?

That simply doesn’t make any sense whatsoever. And that brings us to that distinction between “effort” and market processes. If solar PV does become cheaper than coal (as is obvious it will) then it becomes a market process to install it. No “effort” in the sense of government action is required.

Another way to make this same point is that the IPCC is completely ignoring all of the work that we’ve already done to try to beat climate change. They’re not taking account of the fall in the costs of renewables and therefore not including the obvious fact that more renewables are going to be installed in coming years. Whatever governments do or propose. The same can be said for LED light bulbs (not quite right yet but they very soon will be) and myriad other technologies that have been developed in recent years.

It’s a basic and obvious piece of logic that if we see that we’ve got a problem ahead of us we should, when we consider what we should do about it, take into effect the results of the things that we’ve already done to solve said problem. And it’s this that the IPCC is not doing. They are predicting future emissions without taking account of the technologies we’ve already developed which will reduce emissions. They are thus arguing that there’s too much still to do.

It’s a horrible, horrible, mistake.

Breaking news: Paul Ehrlich still wrong about population


There’s a story floating around about how new studies show that even if there’s another world war, or some mass pandemic, the human population of the world is going to keep on rising. That’s true, for most of those who are going to have children in the coming decades are already alive and we’ve a reasonable enough idea of how many children each of them is likely to have.

The bit that caught my eye though is that the paper is edited by Paul Ehrlich. That’s usually a sign that there’s going to be something wrong with it. And so there is:

Amoral wars and global pandemics aside,
the only humane way to reduce the size of the human population
is to encourage lower per capita fertility. This lowering has been
happening in general for decades (27, 28), a result mainly of
higher levels of education and empowerment of women in the
developed world, the rising affluence of developing nations, and
the one-child policy of China (29–32). Despite this change, environmental
conditions have worsened globally because of the
overcompensating effects of rising affluence-linked population
and consumption rates (3, 18).

It’s that “despite” that grates. For while female education and empowerment are indeed correlates of lower fertility, they are not the causes. It is that rise in affluence that is behind all of the three. In a subsistence economy there is no spare capacity to educate anyone, let alone women. And a subsistence economy is also going to be a human and animal powered one, an economy in which there’s not going to be much empowerment of the physically weaker sex. It’s only when a society gets richer that we can all start, male and female alike, using that attribute that makes humans different, our brains, as we leave the heavy labour to the machines. and it’s also that greater wealth that leads to the falls in child mortality, the education of women, those correlates of falling fertility.

That is, Paul Ehrlich is still getting the drivers of human population numbers wrong.  Not that we should be too hard on him: probably a bit late in his career for a fundamental rethink, isn’t it?

The answer isn’t blowing in the wind

Last week, EU leaders agreed to the next round of targets for reduction of carbon dioxide emissions: a headline target of a 40% reduction on 1990 by 2030. But rather than let the market decide how to reach this goal most efficiently, they also set a 27% target to add more renewable energy to the mix.

In practice, this love affair with renewable energy means promoting wind and solar; there is little scope for new hydropower plants and large scale, practical wave and tidal power seems to be as far away as ever. There is no rational justification for this, but politicians seem to be incapable of fixing top level targets and providing a market framework to meet them.

Wind and solar power have been heavily promoted by the green lobby as the clean alternative to fossil fuels and policymakers have swallowed the bait enthusiastically. The more perceptive of them may already have realised that life is a lot more complicated than that but, for those who still need to see the light, I recommend they read a new report published by the Scientific Alliance and the Adam Smith Institute.

Wind Power Reassessed: A review of the UK wind resource for electricity generation will make uncomfortable reading for those who continue to put their faith in wind farms. The author, Dr Capell Aris, has analysed the data on wind speed and direction collected from a total of 43 sites across the UK (22), Ireland and northern Europe over a period of nine years. He then used this data to calculate the output of a fleet of wind farms.

The results will be no surprise to anyone who has looked at this topic in any detail: output is highly variable, and the entire fleet would only produce 80% or more of its rated output for about one week a year. The problem is that, however much we hear about wind being a free resource and the cost of equipment coming down, the effect of adding more and more wind turbines to the electricity grid is to push prices up with only a modest impact on carbon dioxide emissions (the whole reason for current policy) and no improvement in energy security.

If there were no arbitrary renewable energy target, governments would be free to focus on what most voters expect: providing a framework in which a secure and affordable energy supply can be delivered. If emissions are also to be reduced, the most effective measures currently would be a move from coal to gas and a programme of nuclear new build. In the meantime, the renewables industry continues to grow on a diet of subsidies, and we all pick up the tab. Getting out of this hole is not going to be easy, but it’s time the government started the process rather than continuing to dig deeper.

Martin Livermore is the Director of the Scientific Alliance.