CCNet – 13 April 2011
The Climate Policy Network
Fear Itself: Overreaction To Risk Is A Costly Folly
In the face of a low-probability fearsome risk, people often exaggerate the benefits of preventive, risk-reducing, or ameliorative measures. Many people will focus, much of the time, on the emotionally perceived severity of the outcome, rather than on its likelihood. Vivid images and concrete pictures of disaster can ‘crowd out’ the cognitive activity required to conclude and consider the fact that the probability of disaster is really small. --Cass Sunstein and Richard Zeckhauser, Overreaction to Fearsome Risks
Scared people who don’t understand or care about parsing probabilities end up spending far more than is rational to avoid truly tiny risks. Worse yet, policy makers are often stampeded by frightened constituents into enacting regulations that cost far more than the benefits they offer in risk reduction.--Ronald Bailey, Reason Online, 12 April 2011
The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary. --H.L. Mencken
Russell Jones, American Petroleum Institute’s senior economic adviser, called the Shale study bunk. "This study lacks credibility and is full of contradictions,” Jones said. “The main author is an evolutionary biologist and an anti-natural gas activist who is not credentialed to do this kind of chemical analysis." --International Business Times, 13 April 2011
There is no energy shortage. What we have is a shortage of energy that we are allowed to be used. The list of energies we are allowed to use just keeps getting shorter. Techno-politico elitists are busily crossing out everything on the list, like coal, nuclear, all petroleum products, wood, and biofuels. The latest to join that list is the hope of the future: natural gas.—Pierre Gosslin, NoTricks Zone, 13 April 2011
The previously anti-nuclear Lib Dem, who famously became pro-nuclear on appointment to Energy Secretary, is yet to pronounce definitively on what the Japan atomic disaster may mean for UK plans for 10 new stations. But he has ordered an inquiry into safety concerns and several ministers seem to be smoothing the way for a new official line – that we don’t need nuclear power after all. Rowena Mason, The Daily Telegraph, 11 April 2011
High carbon alternatives, such as coal and gas, may be used to ensure energy security if investors believe nuclear power is no longer a viable option. Using these alternatives would further detract from the Government’s CO2 reduction target of 80 per cent by 2050. --Emily Smoucha, Green Wise Business, 12 April 2011
What may be just as worrying to UK politicians is the impact of greater safety requirements on the cost of building each £5bn nuclear power station. The Government simply cannot ask the UK consumer to bear much more cost on their electricity bills without pushing thousands more into fuel poverty. -- Rowena Mason, The Daily Telegraph, 11 April 2011
1) Ronald Bailey: Overreaction To Risk Is A Costly Folly - Reason Online, 12 April 2011
2) Growing Nuclear Concerns May Deter Investors In UK - Green Wise Business, 12 April 2011
3) Is Chris Huhne Preparing For His Second U-turn On Nuclear? - The Daily Telegraph, 11 April 2011
4) Shale Gas Study Disputed - International Business Times, 13 April 2011
5) Britain Set To Veto EU Carbon Tax Plans - Euractiv, 13 April 2011
6) Alan Carlin: A Multidisciplinary, Science-Based Approach To The Economics of Climate Change - The Global Warming Policy Foundation, 12 April 2011
7) Research On Forecasting For The Manmade Global Warming Alarm - The Global Warming Policy Foundation, 13 April 2011
1) Ronald Bailey: Overreaction To Risk Is A Costly Folly
Reason Online, 12 April 2011
Do we pay too much to avoid minuscule risks? Yes, according to a new study by Office of Information and Regulatory Affairs (OIRA) administrator Cass Sunstein and Harvard University economist Richard Zeckhauser. The study, “Overreaction to Fearsome Risks,” published recently in the journal Environmental and Resource Economics, finds that “in the face of a low-probability fearsome risk, people often exaggerate the benefits of preventive, risk-reducing, or ameliorative measures.” Consequently, the researchers find that “in both personal life and politics, the result is damaging overreactions to risks.”
Translation: Scared people who don’t understand or care about parsing probabilities end up spending far more than is rational to avoid truly tiny risks. Worse yet, policy makers are often stampeded by frightened constituents into enacting regulations that cost far more than the benefits they offer in risk reduction.
Sunstein and Zeckhauser note, “Overreaction to risk is frequently found in the environmental realm.” As an example of overreaction they point to the Three Mile Island (TMI) nuclear meltdown in 1979. The Kemeny Commission report concluded that “the radiation doses received by the general population as a result of exposure to the radioactivity released during the accident were so small that there will be no detectable additional cases of cancer, developmental abnormalities, or genetic ill-health as a consequence of the accident at TMI.” Sunstein and Zeckhauser suggest that the country overreacted after the meltdown when construction of new nuclear plants stopped in the United States for 30 years. One consequence of the de facto nuclear power moratorium is that the coal-fired plants built instead caused many morehealth problems than new nuclear plants likely would have.
To illustrate how bad people are at understanding minuscule risks, the two researchers conducted an experiment with Harvard and University of Chicago law students who were asked what they would be willing to pay to avoid a one-in-a-million cancer risk. They could check off $0, $25, $50, $100, $200, $400, and $800 or more. One set of students was merely asked the question while another was given a highly emotional description of how gruesome cancer can be and then asked. The unemotional group averaged about $60 to avoid a one-in-a-million risk of cancer, while the emotional group averaged $210, nearly four times more.
Sunstein and Zeckhauser find “many people will focus, much of the time, on the emotionally perceived severity of the outcome, rather than on its likelihood.” They add, “With respect to risks of injury or harm, vivid images and concrete pictures of disaster can ‘crowd out’ the cognitive activity required to conclude and consider the fact that the probability of disaster is really small.” Activating the emotional centers in the amygdala shuts down the operation of the executive functions of the pre-frontal cortex.
Taking advantage of this flaw in reasoning, the researchers observe, “In this light, it should not be surprising that our public figures and our cause advocates often describe tragic outcomes. Rarely do we hear them quote probabilities.” In other words, politicians and activists deploy sob stories to scare the public into demanding regulations on activities they dislike. Indeed, as Sunstein and Zeckhauser explain, policymakers and activists have a bias toward action in such situations when they think they can obtain credit for responding to the risk. They want to seem like heroes to the public.
“If we look across dozens of cases, we can observe a pattern in which salient but extremely low probability risks are sometimes met with excessive responses,” write Sunstein and Zeckhauser. While not reaching any conclusions about what the government should have done or not done, the two do note that this overreaction dynamic has played out in many recent regulatory episodes, including the Love Canal contamination and evacuation incident (which led to a federal Superfund waste site clean up program), the ripening agent Alar (which was banned), shark attacks (Florida passed legislation prohibiting feeding them), terrorism (screening mail for anthrax), and terrorism (Iraq war).
So how much should someone pay to avoid a one-in-a-million risk? A “micromort” is defined as a one-in-a-million risk of dying. Let’s look at cancer. First, keep in mind that Americans have a high probability of contracting cancer. For example, an American man has a 44 percent lifetime risk of developing cancer and a 23 percent risk of dying of it. An American woman’s lifetime risk of contracting cancer is 38 percent and her risk of dying of it is 20 percent.
According to Carnegie Mellon University’s Death Risk Rankings, Americans’ average risk of dying in the next year is 8,931 micromorts. That is, out of 1,000,000 Americans alive today, 991,069 will be alive next year. With regard to cancer, Americans face an annual risk of 2,075 micromorts, which means out of 1,000,000, some 997,025 will not have died of cancer in the next year. So what does a reduction of a one-in-a-million risk of cancer amount to? Instead of 997,025 people not dying of cancer in the next year, 997,026 will not have died of cancer.
Another way to think about how much one might want to pay for avoiding a one-in-a-million risk is to make a rough calculation based on the Environmental Protection Agency’s new $9.1 million valuation of a statistical life. Since the agency uses a regulatory standard of a one-in-a-million risk, this means that its actuaries calculate that someone would be willing to spend about $9 to avoid such a risk. Now compare this amount to the 2000 study [download PDF] by Kip Viscusi and James Hamilton, Calculating Risks: The Spatial and Political Dimensions of Hazardous Waste Policy, which found that the average cost per cancer case avoided at most EPA Superfund sites was more than $100 million. And when you look at the median cost per cancer case avoided in the Viscusi and Hamilton study, Superfund looks even worse—that cost was $388 million. Assuming that Viscusi and Hamilton are right, $100 million is clearly an overreaction when even law students who were spooked by a gruesome description of cancer were willing to pay only $210 to avoid a one-in-a-million risk of cancer.
Ultimately, Sunstein and Zeckhauser suggest that institutional safeguards are the best way to insure against the harmful consequences of public overreaction. They maintain that requiring benefit-cost analysis combined with careful attention to the relevant probabilities “should provide a check on regulations that deviate substantially from objective evidence.” And who will wield benefit-cost analysis as a weapon against public overreaction? Wise bureaucrats, of course. The Office of Information and Regulatory Affairs, they note, “monitors agency action to ensure that it is directed against genuinely significant problems.” And who is in charge of OIRA? None other than the wisest of bureaucrats, Cass Sunstein.
Perhaps Sunstein will be able to prevent future regulatory overreaction, but the history as detailed in this study does not provide much confidence that he will succeed.
“If people show unusually strong reactions to low-probability catastrophes, a democratic government is likely to act accordingly,” note Sunstein and Zeckhauser. Indeed. And the tendency to overreact is exacerbated when those demanding action are not the ones paying directly for it. In addition, politicians have little incentive to quell public fears. Satirist H.L. Mencken memorably summarized this democratic dynamic: “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.” Maybe a one-in-a-million risk is not imaginary, but it's pretty damned close to it.
Science Correspondent Ronald Bailey is author of Liberation Biology: The Scientific and Moral Case for the Biotech Revolution (Prometheus Books).
Reason Online, 12 April 2011
2) Growing Nuclear Concerns May Deter Investors In UK
Green Wise Business, 12 April 2011
Emily Smoucha
As the UK Government reviews the safety of its nuclear build programme, Japan today upped the rating of the Fukushima nuclear incident putting it on a par with Chernobyl.
Japan’s nuclear regulator raised its assessment of the nuclear accident at the Fukushima plant from five to seven on the International Atomic Energy Agency scale, it emerged today. The development comes as concerns are growing over whether or not the UK can attract the necessary investment for the proposed 10 nuclear plants it plans to have up and running between now and 2030.
Japan's regulator upped its assessment because of the impact that radiation leaking from the Fukushima plant would have on human health and the environment. Japan had initially classified the incident as a level four before later raising it to level five.
Safety concerns
This weekend, Energy Minister Charles Hendry said in an interview on Radio Four that the UK should still use nuclear power to meet its energy needs because it would be more expensive to do so without it.
"We think nuclear has a role going forward," he told The World This Weekend.
However, with growing safety concerns, investors may be more hesitant to back the Government’s build programme without some Government incentives, something the Coalition said it is opposed to doing.
The 10 proposed nuclear reactors remain a key part of the Government’s plan for meeting CO2 reduction goals, but if investors feel nuclear is too risky, then alternative energy sources will need to be established to fill the void.
Energy blackouts
The UK currently gets about 20 per cent of its electricity from nuclear plants. By 2023, 18 of the UK’s 19 nuclear reactors are scheduled to be retired. The 10 proposed nuclear reactors would help produce the electricity being generated at the ones scheduled to shut down. If these 18 reactors shut down and no new reactors are built, the UK could face an energy shortage.
High carbon alternatives, such as coal and gas, may be used to ensure energy security if investors believe nuclear power is no longer a viable option. Using these alternatives would further detract from the Government’s CO2 reduction target of 80 per cent by 2050.
Full story
3) Is Chris Huhne Preparing For His Second U-turn On Nuclear?
The Daily Telegraph, 11 April 2011
Rowena Mason
The previously anti-nuclear Lib Dem, who famously became pro-nuclear on appointment to Energy Secretary, is yet to pronounce definitively on what the Japan atomic disaster may mean for UK plans for 10 new stations.
But he has ordered an inquiry into safety concerns and several ministers seem to be smoothing the way for a new official line – that we don’t need nuclear power after all.
The bosses at EDF, Centrica, RWE npower, E.ON and all must be feeling distinctly queasy, after all the time and money they’ve spent on pushing for nuclear power in Britain. They’ve been pretty successful at gaining subsidies for it too – with UK billpayers expected to pay at least £17 more per year by the middle of the decade to encourage the construction programme. Could the years of lobbying fail to pay off?
In the first warning shot, Nick Clegg, the deputy prime minister, hinted that the next generation of nuclear power stations may be too expensive following the Japanese tsunami.
Then, over the weekend, Charles Hendry acknowledges on BBC Radio Four: “We can meet our objectives without nuclear. It would be more expensive. But safety is our top priority.”
This is a distinct change of tune, after banging on for the last year about how nuclear is needed to keep Britain’s lights are to stay on. Lest we forget, many of our coal plants will close by 2015, along with many of nuclear plants as well. This leaves Britain needing to replace about a third of its generating capacity.
However, signs of public opposition to nuclear are already emerging for the first time in decades. A group of protestors blocked off the road outside EDF’s offices in Westminster on Monday morning, causing traffic chaos. And anti-nuclear protestors living near EDF’s proposed site at Hinkley Point have registered their concern about the design of Areva’s reactors, which were criticised by the French regulator last month as “very compromised”.
What may be just as worrying to UK politicians is the impact of greater safety requirements on the cost of building each £5bn nuclear power station. The Government simply cannot ask the UK consumer to bear much more cost on their electricity bills without pushing thousands more into fuel poverty.
So what are the policy-makers in the Department of Energy likely to be scrabbling together by way of a non-nuclear plan? Nuclear stations, which currently power about 20pc of the country’s needs, cannot possibly all be replaced by wind turbines. It’s already a stretching target that renewables will be making a third of the UK’s electricity by 2020.
The only real alternative lower-carbon option is modern, efficient gas, which is currently attractive due to low prices. Historically, the Conservatives have fretted over leaving Britain so exposed to energy imports, when North Sea reserves are declining. But if nuclear costs rise exponentially and the tide of public opinion turns against new stations, it looks like there would be little other choice than a dash for gas.
The Daily Telegraph, 11 April 2011
4) Shale Gas Study Disputed
International Business Times, 13 April 2011
The gas industry has slammed a new study that concludes that natural gas extracted from shale formations has a greater greenhouse gas footprint - in the form of methane emissions - than conventional gas, oil and coal over a 20 year period.
Shale gas, which has become an increasingly important source of natural gas in the United States over the past decade, refers to natural gas that is trapped within shale formations. Shales are fine-grained sedimentary rocks that can be rich sources of petroleum and natural gas.
Robert Howarth and colleagues from Cornell University in New York evaluated the greenhouse gas footprint of natural gas, obtained by high-volume hydraulic fracturing of shale formations, focusing on methane emissions.
According to the researchers, methane is a far more potent greenhouse gas than carbon dioxide, but methane also has a 10-fold shorter residence time in the atmosphere. As a result, its effect on global warming falls more rapidly. Methane contributes substantially to the greenhouse gas footprint of shale gas on shorter time scales, dominating it on a 20-year time horizon. The footprint for shale gas is greater than that for conventional gas or oil when viewed on any time horizon, but particularly so over 20 years.
Compared to coal, the footprint of shale gas is at least 20 percent greater and perhaps more than twice as great on the 20-year horizon and is comparable when compared over 100 years, the study found.
"The large greenhouse gas footprint of shale gas undercuts the logic of its use as a bridging fuel over coming decades, if the goal is to reduce global warming," Howarth said. "The full footprint should be used in planning for alternative energy futures that adequately consider global climate change."
Against that backdrop, Energy in Depth, representing the nation's independent natural gas and oil producers, has criticized the study and wrote in a blog posting on five things to know about the Cornell Shale study.
Russell Jones, American Petroleum Institute’s senior economic adviser, called the Shale study bunk. "This study lacks credibility and is full of contradictions,” Jones said. “The main author is an evolutionary biologist and an anti-natural gas activist who is not credentialed to do this kind of chemical analysis."
"In supporting documents, the authors admit that the data used was of very low quality. This study is really an exercise in selective data and manipulated methodologies used to reach conclusions that deliberately contradict mainstream science,” Jones said.
Howarth, however, defended his work as meeting strict academic and scientific standards. "It's being published in a highly respected journal and has been rigorously peer-reviewed," a report from Reuters quoted Howarth as saying. "This is not advocacy. This is science."
International Business Times, 13 April 2011
5) Britain Set To Veto EU Carbon Tax Plans
Euractiv, 13 April 2011
The British government is "highly likely" to block European Commission proposals for a carbon tax contained in a widely-circulated draft version of the Energy Taxation Directive, EU diplomatic sources said yesterday (12 April).
"Without saying that we will definitely kill this thing before it is born, I think it is highly likely that we will block it," a diplomat from one member state told EurActiv.
The draft directive, seen by EurActiv and expected to be presented today, proposes separate carbon dioxide and consumption taxes on fuel to advance the EU's climate goals for 2020.
It would oblige member states to set minimum rates of CO2 taxes at €20 per tonne for fuel used for purposes of transport and heating, from 2013.
The tax would be automatically linked to inflation – measured every third year - and it would compel member states to institute 'fuel-neutral' taxation from 2020, ensuring higher taxes for energy-intensive fuel such as coal and diesel.
A litre of diesel would be taxed at 8% more than a litre of petrol under the proposals, to deter the use of gas-guzzling SUVs and pick-up trucks.
This would also entail changes to national legislation across the European Union. EurActiv understands that as late as yesterday night (12 April), several commissioners were pushing for the proposal to be postponed until 2023.
Full story
6) Alan Carlin: A Multidisciplinary, Science-Based Approach To The Economics of Climate Change
The Global Warming Policy Foundation, 12 April 2011
Readers might be interested in a new paper of mine that asks what happens if the scientific method is applied to determining the validity of the science behind the global warming hypothesis and then applying these results to estimating the economic benefits of global warming control.
As you might expect, the conclusions are quite different from most other economic studies, as shown in Section 5. The paper was published April 1 in the International Journal of Environmental Research and Public Health, a peer-reviewed journal. The paper is unusual from a number of other perspectives.
From a policy perspective, the paper’s conclusions include the following:
From a historical perspective, the paper builds on my Comments on Draft Technical Support Document for Endangerment Analysis for Greenhouse Gas Emissions under the Clean Air Act, prepared for the US Environmental Protection Agency (EPA) in early 2009, by presenting an expanded version of a few portions of that material in journal article format, incorporating many new or updated references, and explaining the implications of the science for the economic benefits and costs of climate change control. It is also particularly noteworthy for appearing in a peer-reviewed journal rather than the “gray literature,” such as a report to EPA, where many skeptic analyses end up–something that warmists never fail to point out. Although this article was not written for EPA, it has major implications for the scientific validity (or lack thereof) of the December 2009 EPA Endangerment Finding and the economics that EPA and many economists have used to justify current efforts to regulate the emission of greenhouse gases under the Clean Air Act, cap-and-trade schemes, and other approaches to controlling climate change.
From a scientific perspective, the paper starts with a detailed examination of the scientific validity of two of the central tenets of the AGW hypothesis. By applying the scientific method the paper shows why these two tenets are not scientifically valid since predictions made using these hypotheses fail to correspond with observational data. (See primarily Section 2.)
From an economic perspective the paper then develops correction factors to be used to adjust previous economic estimates of the economic benefits of global warming control for these scientifically invalid aspects of the AGW hypothesis. (See primarily Section 2.) It also briefly summarizes many of the previous analyses of the economic benefits and costs of climate control, analyzes why previous analyses reached the conclusions they did, and contrasts them with the policy conclusions reached in this paper. (See primarily Section 5.) The economic costs of control are also critically examined. (See primarily Section 3.)
From a methodological perspective, the article argues that economic analyses of interdisciplinary issues such as climate change would be much more useful if they critically examine what other disciplines have to say, insist on using the most relevant observational data and the scientific method, and examine lower cost alternatives that would accomplish the same objectives. (See primarily Section 1.) These general principles are illustrated by applying them to the case of climate change mitigation, one of the most interdisciplinary of public policy issues.
Full paper here
7) Research On Forecasting For The Manmade Global Warming Alarm
The Global Warming Policy Foundation, 13 April 2011
J. Scott Armstrong, Kesten C. Green, Willie Soon
Testimony to Committee on Science, Space and Technology Subcommittee on Energy and Environment on“Climate Change: Examining the processes used to create science and policy” – March 31, 2011
Professor J. Scott Armstrong, University of Pennsylvania, with Kesten C. Green, University of South Australia, and Willie Soon, Harvard-Smithsonian Center for Astrophysics
The validity of the manmade global warming alarm requires the support of scientific forecasts of (1) a substantive long-term rise in global mean temperatures in the absence of regulations, (2) serious net harmful effects due to global warming, and (3) cost-effective regulations that would produce net beneficial effects versus alternatives policies, including doing nothing.
Without scientific forecasts for all three aspects of the alarm, there is no scientific basis to enact regulations. In effect, the warming alarm is like a three-legged stool: each leg needs to be strong. Despite repeated appeals to global warming alarmists, we have been unable to find scientific forecasts for any of the three legs.
We drew upon scientific (evidence-based) forecasting principles to audit the forecasting procedures used to forecast global mean temperatures by the Intergovernmental Panel on Climate Change (IPCC)—leg “1” of the stool. This audit found that the IPCC procedures violated 81% of the 89 relevant forecasting principles.
We also audited forcasting procedures, used in two papers, that were written to support regulation regarding the protection of polar bears from global warming - leg "3" - of the stool. On average, the forecasting procedures violated 85% of the 90 relevant principles.
The warming alarmists have not demonstrated the predictive validity of their procedures. Instead, their argument for predictive validity is based on their claim that nearly all scientists agree with the forecasts. This count of “votes” by scientists is not only an incorrect tally of scientific opinion, it is also, and most importantly, contrary to the scientific method.
We conducted a validation test of the IPCC forecasts that were based on the assumption that there would be no regulations. The errors for the IPCC model long-term forecasts (for 91 to 100 years in the future) were 12.6 times larger than those from an evidence-based “no change” model.
Based on our own analyses and the documented unscientific behavior of global warming alarmists, we concluded that the global warming alarm is the product of an anti-scientific political movement.
Having come to this conclusion, we turned to the “structured analogies” method to forecast the likely outcomes of the warming alarmist movement. In our ongoing study we have, to date, identified 26 similar historical alarmist movements. None of the forecasts behind the analogous alarms proved correct.
Twenty-five alarms involved calls for government intervention and the government imposed regulations in 23. None of the 23 interventions was effective and harm was caused by 20 of them.
Our findings on the scientific evidence related to global warming forecasts lead to the following recommendations:
1. End government funding for climate change research.
2. End government funding for research predicated on global warming (e.g., alternative energy; CO2 reduction; habitat loss).
3. End government programs and repeal regulations predicated on global warming.
4. End government support for organizations that lobby or campaign predicated on global warming.