Yearly Archives: 2005

67 – Using communication and education to encourage land-use change in agriculture for environmental benefits

Communication and education (or more generally, extension) are widely relied upon in environmental programs. However, much of this extension is of limited effect. It is important to target extension to situations where it is more likely to have an impact, and to have realistic expectations about what can be achieved through extension.

Following last week’s piece on using incentive payments to encourage people to change their behaviour to benefit the environment, this week we look at using communication and education for the same purposes. Again the context is public funding to encourage land-use change in agriculture, but the principles are broadly relevant. By “communication and education”, I will actually mean the broader activity of “extension”, which includes communication, education, persuasion, formation of communication networks, and so on.

There are perhaps four broad roles for extension in encouraging and supporting land-use change.

(a) to encourage people to trial, and (it is hoped) subsequently adopt, new practices that are believed to be in their best interest already, and that happen to also benefit the environment, and hence benefit the broader community; (I noted in PD#66 that small, temporary incentives may potentially be useful as an element of this strategy.)

(b) to raise awareness of other issues or opportunities that may encourage land-use change (e.g. provide information about the availability of incentive payments, and how to apply for them);

(c) to provide technical information or training on how best to implement a particular technology or practice;

(d) to change people’s goals and values so that they give a higher priority to environmental outcomes, and so are more likely to change their land use.

There is probably an excessive reliance on extension in many environmental programs. Even with the most expert and persuasive extension, landholders are not likely to change their management unless they can be convinced that the proposed changes are consistent with their goals (Pannell et al., 2005). Therefore, expectations about the extent of change that is likely to result from extension need to be realistic. Large changes made by large numbers of farmers are not likely to be attributable to extension in most cases. For one thing, landholders and their lands are highly heterogeneous. Any given technology only advances the goals of some landholders, and often only on some of their land.

It is likely that the main contributions of extension will be through raising awareness and, to some extent, changing perceptions of the relevance and performance of an innovation. It is much more difficult (and sometimes ethically problematic) to change the goals of people. It seems that the Landcare movement in Australia has increased the emphasis given to conservation goals by landholders, but the extent of increase has been modest for most landholders and the movement has perhaps reached the limits of its influence.

The difficulty of changing behaviour through communication and education is highlighted by some of the experiences in health promotion. A striking example was the “Mr Fit” study, run by Len Syme (University of California) in the US in the 1970s.

Len Syme: Many years ago, we did the most expensive, elaborate, ambitious clinical trial that the world has ever seen, on heart disease. It was in the 1970s when we first really accumulated solid evidence about risk factors for heart disease. … And we decided to recruit a group of people in very high risk categories for those reasons, and to help them reduce that risk to show the difference it would make. Unfortunately the statisticians told us that we would have to have 12,000 men in order to do this study, half of whom would work with their doctors and half of whom would work with us in the clinic. In order to recruit those 12,000 men, we had to screen 500,000 men in 22 different cities in the United States. It cost $180 million.

These men went through three elaborate screenings of ten hours. We told these people, ‘Look, you may be eligible for this trial, but do not volunteer unless you really are clear about the terms. The first consideration is, you’re going to be asked to work with us in the clinic, or work with your own doctor, a random decision. And if that’s not acceptable, don’t volunteer. If you work with us in the clinic, you’re going to have to come in with your family for many sessions, you’re going to have to come in frequently at the beginning; we’re going to ask you to stop smoking, take pills for blood pressure, change your diet, and you’re going to have to come in to the clinic for six years.’

Then we had a psychologist get rid of people that we thought would be faint of heart. So we ended up with these highly motivated, highly knowledgeable, informed people who knew they were in the top 10% of risk and who were currently free of heart disease. And then we did the best intervention that I’ve ever been involved with. I mean, we brought all the families in and showed them in the clinics how to do low-fat cooking; we took them to the supermarket to show them how to read the labels in the market; we went to their homes and cooked with them in their homes with things they already had in their home; we did that with all the issues, and it was really intense and elaborate. And after six years of intervention there was no difference in the two groups.

Len’s conclusion from this was, “It’s absolutely clear that providing information to people is, I don’t want to say it’s useless, but it’s close to useless.” (For the full transcript of this interview, see here.)

Now, I am not arguing that extension is useless; there is clear research evidence of it making a difference to adoption in some cases. However, I am proposing that we need to be realistic in our expectations about it, and clever in choosing where and where not to use it as our front line tool to protect the environment.

Len Syme’s salutary tale, and other empirical evidence from agriculture, suggests that for many innovations, extension’s main contribution will be to accelerate the adoption process, rather than to lift the final level of adoption. The main exceptions (i.e. cases where the final level of adoption is greater with extension than without it) would be technologies that would have entirely failed to diffuse in the absence of extension, perhaps due to problems with trialling those technologies (e.g., low observability, high complexity).

Related to this, extension is unlikely to persuade landholders to make greater use of a technology with which they already have personal experience, unless the extension provides new information about a change that increases the attractiveness of the innovation (e.g., new information about how to better implement the innovation, or about new incentive payments to encourage adoption). When people have personal experience, they primarily rely on that for their decision making, rather than on information coming from outsiders.

Pannell et al. (2006) argue that if a practice is not adopted in the long term, it is because the farmers are not convinced that it advances their goals sufficiently to outweigh its costs. A consequence of this is that we should avoid putting the main burden for promoting adoption onto communication, education and persuasion activities. This strategy is unfortunately common, but is destined to fail if the innovations being promoted are not sufficiently attractive to the target audience.

Crucially, the innovations need to be “adoptable”. If they are not, then communication and education activities will simply confirm a farmer’s decision not to adopt as well as degrade the social standing of the field agents of the organisation. Extension providers and funders should invest time and resources in attempting to ascertain whether an innovation is adoptable before proceeding with extension to promote its uptake.

It can also be important to check that farmers do not already know enough about the innovation to make a good decision about it. It may be that they’ve already weighed it up, based on reasonably accurate information, and consciously decided not to adopt it (PD#25). If so, further extension on the subject is highly unlikely to make a difference. Llewellyn et al. (2005) demonstrate a process of targeting extension to where it can make a real difference, based on farmers existing knowledge.

For some environmental issues, the real challenge is to find or develop innovations that are not only good for the environment, but also economically superior to the practices they are supposed to replace. If such innovations cannot be identified or developed, there is no point in falling back onto communication. Promoting inferior technologies will only lead to frustration for all parties.

Trying to pull all that together and simplify it down to its essence, in the Salinity Investment Framework (SIF3, Ridley and Pannell, 2005) we reason as follows:

Extension. This is usually the appropriate response where perennials are already economically competitive, although in some cases where they are competitive [and they cause downstream costs], penalties may be warranted to discourage adoption. Extension may also be appropriate in cases where farmers generally lack information or have mis-perceptions about the salinity problem or its management.”

David Pannell, The University of Western Australia

Further Reading

Llewellyn, R.S., Pannell, D.J., Lindner, R.K. and Powles, S.B. (2005). Targeting key perceptions when planning and evaluating extension. Australian Journal of Experimental Agriculture 45 (forthcoming). full paper (52K)

Ridley AM and Pannell DJ (2005). SIF3: An investment framework for managing dryland salinity in Australia. SEA Working paper 1901. CRC for Plant-based Management of Dryland Salinity, University of Western Australia, Perth. Full paper (126K pdf) 2-page summary SIF3 project page

Pannell, D.J., Marshall, G.R., Barr, N., Curtis, A., Vanclay, F. and Wilkinson, R. (2006). Understanding and promoting adoption of conservation practices by rural landholders. Australian Journal of Experimental Agriculture 46(11): 1407-1424. Access paper at Journal web site here. Pre-publication version available here (161K).

66 – Thinking like an economist 21: Using incentives to buy land-use change in agriculture for environmental benefits

In general, the use of incentive payments in environmental programs is poorly thought through. This article discusses situations where environmental incentive payments are more likely to be a cost-effective response by environmental funders.

Incentive payments are used in many countries to encourage people to change their behaviour in ways that would benefit the environment. However, the use of incentives is usually not very discerning, and often the money involved could be spent more effectively.

The money involved is large. In Australia, for example, the two main national programs for improved environmental management in rural areas are the National Action Plan for Salinity and Water Quality (NAP, a $1.4 billion program over eight years) and the Natural Heritage Trust (NHT, a $1 billion program over five years). Sizable shares of their budgets are planned to be spent on incentive payments to landholders, mainly farmers, to change their land use practices.

One of the main changes being purchased is replacement of traditional, short-lived or ‘annual’ agricultural species, with longer lived ‘perennial’ species, to address problems of dryland salinity, biodiversity loss and soil erosion.

Incentive payments are used in two broad ways:

(a) to encourage people to trial, and (it is hoped) subsequently adopt, new practices that are believed to be in their best interest already, and that happen to also benefit the environment, and hence benefit the broader community.

(b) to compensate people for adopting practices that result in net costs to the adopters, but which benefit the environment and the broader community.

This is a crucial distinction, but one that, in my experience, many environmental funders do not sufficiently recognise. It is essential to think through these two cases if incentives are to be used well.

In case (a), the incentive payments can be small and temporary. They need only to be big enough to be effective bait, rather than long-term sustenance, because once hooked, landholders will realise that they like being hooked, and will be happy to stay hooked in the long-term. This is the same sort of situation where one could successfully use education and communication programs to encourage behaviour change. The incentive payments would mainly accelerate the change, rather than raise its final level. The final actual level of change would depend on how attractive the new land-use practices were to landholders after incentive payments ceased. So, a key question for a funder who is considering offering small, temporary incentive payments is, to what extent are the changes likely to be maintained after the payments cease? In other words, how adoptable are the practices without incentives. (See Pannell et al. (2006) for discussion of what it takes for a technology to be adoptable.) If they are not adoptable on a sufficient scale to achieve the desired environmental benefits, it doesn’t make sense to offer small, temporary incentives to encourage trialling.

In case (b), the incentives need to be large enough to provide both bait and sustenance (i.e. to compensate for losses relative to traditional practices). The incentives could either be ongoing regular payments or a larger up-front payment, but in either case they would need to be larger than case (a), probably substantially larger. Case (b) is like throwing fish food off a jetty to attract fish. The fish would hang around the jetty, enjoying the free feed for as long as it was provided, but would quickly drift away if the feeding stopped. That is, because the new practices are not sufficiently attractive in themselves, landholders would dis-adopt them once incentive payments stopped, unless the system forced them to continue through a contractual agreement, backed by monitoring and enforcement (a further expense).

Another analogy of the two cases would be that in case (a), offering incentives is like an advertising campaign, to let people know that an attractive product is available, whereas in case (b) advertising is not sufficient – the product is not sufficiently attractive – and we need to subsidise the price of the product in order for people to buy it.

A major problem with existing incentives currently being paid under the NAP and NHT is that the funders often confound the two cases. They are offering small, temporary incentives, as if they were dealing with an example of case (a), in situations that would actually require large, permanent incentives to be effective in the long term – case (b). They have not evaluated the land-use changes to see whether they are adoptable on a sufficient scale to achieve the desired benefits before designing the incentive system.

The result is that much of the money is being spent in ways that will not generate environmental benefits in the long term, because the changes will be undone once the payments cease, or once markets shift to favour other land uses.

A second problem with current incentive systems is that, in many cases, they are not well linked to environmental outcomes. Even if the land-use changes they buy were maintained in the long term, they may be in locations or at scales that mean that the resulting environmental benefits are small in relation to the payments being made. Environmental funders need to pay close attention to the cause-and-effect relationship between land-use change and environmental benefits if they are to avoid spending money on land-use changes that would not actually benefit the environment. Currently in Australia, there is not sufficient onus on the regional bodies that channel the funds to landholders to do this – that is, to seriously consider whether the changes they are buying will actually achieve environmental outcomes.

I have argued before that, for salinity management, case (a) is actually not as common as we would like, because there is currently an insufficient range of perennial plant options that are economically attractive (Pannell and Ewing, 2006), although there are exceptions, of course. More generally, a sceptic looking at funding allocated to a supposed example of case (a) could reasonably ask, if the proposed new land use practices are actually in the best interests of the landholders, why have they not been adopted already. I suggest that the practices would need to be new and poorly known to landholders for the argument that it is actually an example of case (a) to be convincing.

Identifying examples of case (b) that are worth funding also poses a number of challenges. The payments to landholders need to be large enough to cover:

  • the financial shortfall between new and traditional land-use options
  • a risk premium if landholders are to be contracted to maintain the changes in the longer-term (which they need to be if the payments are to be assured of achieving outcomes)
  • a further incentive to prompt them into action (‘bait’)

In addition there would be costs of monitoring and enforcing agreements. Because the costs involved in this case need to be large for the system to be effective, this type of incentive payment should be targeted to particularly high-priority cases. These will be cases where the values of the assets under threat are outstandingly high, and the planned land-use changes can be effective in preserving or enhancing them. Not surprisingly, Ridley and Pannell (2005) concluded that case (b) style incentive payments are justified only in special cases in the management of dryland salinity.

There is a situation that is probably somewhere between cases (a) and (b). If environmental benefits can be generated by small, relatively low-cost changes, it may be possible to convince landholders to bear those costs for the good of the broader community. In other words, because of their personal commitment to the environment, they would adopt them for the long term as a result of small, temporary incentives, so in this way it is similar to case (a). But if the changes required are large and expensive, we should not expect them to happen so easily.

So, in view of all that, setting aside the question of who should pay (PD#21), the key questions that planning bodies need to address to design sensible and effective environmental incentive schemes include the following.

1. What is the relationship between the scale of change (e.g. in land use) and the level of environmental benefits?

2. What is the relationship between the scale of change and the level of incentive payments that would be needed to achieve that scale of change?

Without answers to both of those questions, you cannot hope to adequately determine what level of incentive payments should be offered, if any, and for which purposes?

To address question 2, a number of subsidiary questions are needed:

2.1 Are the new land-use options readily ‘adoptable’ (i.e. sufficiently attractive without extra incentives)?

2.2 If so, on what scale?

2.3 If so, will small, temporary incentives help to accelerate that adoption?

2.4 Where they are not already adoptable, what scale of incentives will be needed to achieve the desired changes (compensation plus risk premium plus ‘bait’)?

2.5 If those larger incentives are paid, what system of monitoring and enforcement will be needed, and what will it cost?

So far I have not really been talking much like a hard-core economist. A hard-core economists would talk about market failure and about considering the marginal benefits and marginal costs when setting the incentive rate.

With market failure, the argument would be that in order for an incentive payment to be justified in principle, you need to be able to identify a factor that is causing the free market to fail to deliver the maximum possible benefits. A classic example of such a cause is an ‘externality’, which is a benefit or a cost that accrues to someone other than the decision maker. The implication for environmental funders would be that the changes funded would need to generate benefits for people other than the landholder (often loosely referred to as ‘public benefits’, PD#22). In this discussion, we’ve got this covered, as cases (a) and (b) at the beginning both refer to benefits ‘to the broader community’. A second cause of market failure is poor information, as in case (a) where landholders apparently don’t realise what is good for them. In fact, the existence of externalities or information failure is not a sufficient condition for market failure to exist. It is also necessary to check that the benefits of addressing the problems outweigh the costs (PD#35).

Finally, if it were possible to answer the above key questions 1 and 2 quantitatively and in dollar terms, it would be possible for funders to determine the optimal scale of land-use change and what rate of incentive would need to be paid to achieve it. You could use the two relationships from questions 1 and 2 to look at a range of scales of land-use change (corresponding to different incentive rates via question 2) and see which scale generates the greatest net benefits. It would correspond to the rate at which the marginal benefits (the additional environmental benefits from an extra hectare of land-use change) are equal to the marginal costs (the additional incentive payments required to cause land use to change on that extra hectare).

In practice this is extremely difficult to apply strictly. Neither of the two questions can be answered with much precision or certainty, and answers to question 1 will probably be difficult to convert into dollar terms, especially if the benefits include improvements in the natural environment (PD#30). Nevertheless, it should be possible to specify the approximate outcomes that are expected to result from payment of incentives: what level of additional adoption would occur, and what environmental benefits would follow (in biological, physical or economic terms)? If these cannot be specified, basic accountability requirements would say that the funders should not be spending public money on the incentives in question.

David Pannell, The University of Western Australia

Further Reading

Pannell, D.J. and Ewing, M.A. (2006). Managing secondary dryland salinity: Options and challenges, Agricultural Water Management 80(1/2/3): 41-56. Full paper (66K)

Ridley AM and Pannell DJ (2005). SIF3: An investment framework for managing dryland salinity in Australia. SEA Working paper 1901. CRC for Plant-based Management of Dryland Salinity, University of Western Australia, Perth. Full paper (126K pdf) 2-page summary SIF3 project page

Pannell, D.J., Marshall, G.R., Barr, N., Curtis, A., Vanclay, F. and Wilkinson, R. (2006). Understanding and promoting adoption of conservation practices by rural landholders. Australian Journal of Experimental Agriculture 46(11): 1407-1424. Access paper at Journal web site here. Pre-publication version available here (161K).

65 – Thinking like an economist 20: Challenges for policy economists

In this article I discuss some of the more common challenges that economists face when attempting to influence the policy process to promote the public interest.

In the past few years, a fair bit of my research has focused on Australian government policy in the area of natural resource management. I’ve concluded that the design of that policy is generally pretty poor if we want to achieve meaningful outcomes in a cost-effective way. I wondered whether it is just the natural resource management area that have such poorly thought through policy, but talking to some colleagues in Canberra, I get the impression that it is pretty normal across many, and perhaps most, policy areas. I don’t know if that’s true, but if it is, it makes one doubt whether it’s worth trying to do anything about it – it suggests that the weaknesses are caused by more than just problems in a particular policy area. I haven’t raised the white flag yet, but it is important to be realistic about the natures of politics and bureaucracies, and their implications for developing good policy.

Related to that, I was recently asked to speak about the challenges for economists in the policy sphere. Here are some specific challenges I identified, extracted from Pannell (2005b).

There are often conflicts between short-term political objectives and long-term needs for efficient policies. “Good advice on economic policy is often about convincing others that short-term responses are inappropriate” (survey respondent Alistair Watson, quoted by Pannell 2004).

As an outside expert, it can be difficult to establish credibility with policy makers, especially if you are not based in their local region. A US study found that, to a remarkable extent, state-level policy makers limit their use of expert advice to within-state experts. The tendency to rely on local, trusted information sources means that the selection of information to use in policy formation is partial and somewhat hit-and-miss. Indeed, the “experts” who are listened to may not contribute to a more efficient or effective policy. They may not even be experts in the relevant issues: “Much of the problem with bad policy comes from smart, articulate people who are operating out of their skill zone” (survey respondent Gary Stoneham, quoted by Pannell 2004).

Politicians like a crisis because fear is a more powerful motivating device than comfort. The community responds to catastrophic predictions (Lomborg 2001), including, recently, the Y2K bug and global climate change. There is a strong temptation for advocates to exaggerate the severity of the problems they wish to have addressed, contributing misinformation to the policy decision process. This may prompt urgent and short-term responses, when the real need is for careful consideration and analysis before policy strategies are selected.

There is often a mismatch between the complexity of policy problems and the simplicity of policy responses. For some problems, in my experience particularly environmental problems, there can be a great diversity of technical, economic and social issues that need to be understood. This makes it difficult even to communicate succinctly to senior policy players who are not already well informed about the details of the problem. Policy proposals need to be simple and bland enough to achieve agreement, and this can tend to drive decision making to a lowest common denominator.

For some issues, an efficient policy would involve different policy mechanisms in different circumstances (e.g. Ridley and Pannell, 2005). However, the policy process prefers a simpler policy structure, preferably with a uniformly applied policy mechanism. In some cases this might be justified on the basis of lower transaction costs, but in others I suspect that it results in substantial opportunity costs to society.

Complexity and diversity can mean that there is no consistent message going to policy makers. For example, few people are well informed about the full range of background information relevant to salinity in Australia (which include hydrogeology, economics, biology, engineering options, water resources, the context of commercial agriculture, social aspects, biodiversity, and politics), and many contributions to the public debate are narrowly conceived and poorly justified (Pannell 2005a). Even among relatively well-informed commentators, the nature of the required policy response is disputed. Some expert commentators focus on the need for hydrogeological data for targeting investments, some on the development of new management options, some on the use of engineering options, some on the importance of communication and education. One has sympathy for policy makers trying to decide whom to believe.

Politicians like everyone to feel that they are winners, or failing that, politicians like to closely control who are the winners and losers. This can result in a tendency for program funds to be shared widely among all members of the relevant section of the community, when an efficient approach would involve targeting of funds to priority cases. One hears the concept of ‘fairness’ invoked in discussions about this. It appears that political fairness tends to focus on one dimension of fairness: the expectation of current beneficiaries. Whether it is fair to taxpayers to spend tax dollars in programs that will not be very effective in achieving their objectives is less often considered.

The very existence of a system of funding creates considerable political pressure for its continuation. Understandably, those involved in spending the funds actively participate in the political process to endeavour to preserve the system. Even if new information about the policy issue indicates that a change is needed, it may be politically difficult to achieve. For example, the National Landcare Program in Australia created many new positions for Landcare facilitators. The facilitators were imbued with a particular philosophy of working with farmer groups to address environmental issues on farms. Over time, it has become clear that this approach and philosophy are less effective in preventing land degradation than was originally expected. Partly in response to this, the Program is undergoing change. However, changing the system is made difficult by the existence of many hundreds of facilitators who are philosophically connected to and financially dependent on the existing system, connected within bureaucratic and political networks, and able to mobilise the more committed farmers from their groups to fight in defence of the status quo.

So what, then, is politics?

“Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.” Ernest Benn

“Politics consists in choosing between the disastrous and the unpalatable.” John Kenneth Galbraith

“Politics is perhaps the only profession for which no preparation is thought necessary.” Robert Louis Stevenson

“Politics is supposed to be the second oldest profession. I have come to realize that it bears a very close resemblance to the first.” Ronald Reagan

He’d know.

David Pannell, The University of Western Australia

Further Reading

Pannell, D.J. (2004). Effectively communicating economics to policy makers. Australian Journal of Agricultural and Resource Economics 48(3): 535-555. Full journal paper (138K pdf)

Pannell, D.J. (2005a). Farm, food and resource issues: politics and dryland salinity, Australian Journal of Experimental Agriculture 45: 1471-1480. Full journal paper (103K) Summary version (19K)

Pannell, D.J. (2005b). Policies and politics: Challenges and opportunities for agricultural and resource economists, Paper presented at New Zealand Agricultural and Resource Economics Society Conference, Nelson, New Zealand, 26-27 August 2005, Full paper (85K)

Ridley AM and Pannell DJ (2005). SIF3: An investment framework for managing dryland salinity in Australia. SEA Working paper 1901. CRC for Plant-based Management of Dryland Salinity, University of Western Australia, Perth. Full paper (126K pdf) Summary version SIF3 project page

64 – Compliance with Kyoto

Among those countries that originally agreed to the Kyoto Protocol, what percentage of the agreed target reductions in greenhouse gas emissions has been met by now? The answer may surprise you.

Under the Kyoto Protocol, a large group of countries, collectively referred to as the Annex-1 countries, set targets to reduce their national greenhouse gas emissions relative to their estimated 1990 levels. The range of targets ranged from an 8 percent decrease (for most countries) to a 10 percent increase (for Iceland). Overall, the target aggregate reduction in greenhouse gas emissions agreed to by Annex-1 countries is 5.2%. Nicholas Schneider and Glenn Fox of the University of Guelph asked, and answered, a very interesting question about all this: What percentage of the overall target has been met by now?

Have a guess at the answer yourself. Write down your guess, before reading the rest of this article.

Schneider and Fox obtained the latest published data on greenhouse gas emissions from the United Nations Framework Convention on Climate Change web site (from 2002) and did the sums. Here is some of what they found.

The worst performing countries are Spain, Portugal, Ireland, and Canada, which have each increased emissions by several times their target decrease. For example, Spain and Portugal both had targets of an 8% decrease, but both have increased emissions by about 40%.

Australia and the US have not ratified the Protocol (along with Monaco, Croatia and Belarus), but we’ll include their results anyway. Australia’s target was an 8% increase, but we haven’t even met that generous mark. In fact we have had a 22% increase. The US missed their target by even more: target -7%, achieved +13%.

If you would like to change your guess about the overall result before I reveal the answer, feel free to do so.

OK, now you are locked in. The answer is below this picture of Glenn Fox with his modified version of the famous climate-change hockey stick.

“For all of the Annex-1 countries, including those that chose not to ratify the Protocol, … 69 percent of the target reduction in greenhouse gas emissions had been achieved, in aggregate, by 2002” (Schneider and Fox 2005, p.18). To me that seems remarkably high? A major success story!

Here is something even more remarkable: for the group of countries that have ratified the Kyoto Protocol (i.e. most of them), the aggregate emission reductions achieved by 2002 were 269% of the target. Clearly, some countries have done a remarkably good job in meeting their targets. Actually a lot have.

Here are a few examples:

  • United Kingdom: target -8%; achieved -15% (That puts an interesting light on Tony Blair’s recent outspoken stance on climate change.)
  • Germany: target -8%; achieved -19%
  • Poland: target -6%; achieved -32%
  • and many more.

For countries that have ratified the Protocol, aggregate emission reductions have exceeded the target every year since 1991. That is, it took only one year to meet the target!

“Much of the reduction in aggregate greenhouse gas emissions can be attributed to an economic downturn in the former Soviet Bloc countries, with the Russian Federation and Ukraine being the two largest reducers of emissions. By the end of the 1990s, gross domestic product in the Russian Federation had sunk to roughly half of what it had been 10 years earlier. These reductions were not the result of purposeful abatement” (Schneider and Fox 2005, p.18), but incidental emission reductions are still reductions.

This raises a really interesting point about the operation of international carbon markets: “if there are 269 credits on the supply side for every 100 credits on the demand side, the prospects for positive prices for credits in a genuinely open market among the Annex-1 countries are not great” (Schneider and Fox 2005, p.19). An open market would achieve nothing, because there would be no pressure for positive prices, which can only come about by a lack of large enough reductions.

Isn’t all that astonishing! Why haven’t we been told? Why is this remarkable and surprising good news story not appearing in the media. All those stories about the menace of climate change make no mention of this. Why would that be? One can only speculate:

  • Climate change advocates might think it is not very relevant because much of the gains relate to economic stagnation in former Soviet Bloc countries, which presumably is temporary. But surely the result is so amazing that it is worth discussing. It might teach us something. And apart from the Soviet Bloc, surely the remarkable progress in some countries of Western Europe is worthy of comment.
  • Less generously, it is not consistent with the climate of fear that some climate change advocates wish to create.
  • It might make climate change alarmists look a bit silly. They’re telling us that the climate is still getting hotter, when we have already abated greenhouse gas emission by most of the target amount. It would be unfair of us to criticise it on that basis, of course, because everyone involved knows that Kyoto is not nearly enough to affect climate in any measurable way.
  • It highlights how inherently unpredictable CO2 levels are and how difficult it will be to control them, whereas the Kyoto advocates would rather create an impression that it is something we can manage (otherwise they couldn’t justify their assertions that we need to take action). In reality, CO2 levels are largely driven by factors that are much larger and more dominant than the effects of small market prices for CO2 credits, which is the only practical mechanism in Kyoto.
  • They actually know that Kyoto is a dud policy, and they would rather not draw attention to the fact because they want to foist even bigger dud policies onto us.
  • All of the above?

Kyoto is a dud, in my view, because, even if one believes the results of the IPCC, this type of policy is incapable of generating the level of greenhouse gas abatement that would be necessary to make a meaningful difference to climate. I think the IPCC’s own modelling results lead one to that conclusion, although they would not admit it.

In my view, given all the uncertainties and the low probability of success, if we want to do something to try to moderate climate change, it should be low cost, and have good potential for high payoff. I reckon there is only one option that meets these criteria: research to develop new renewable energy technologies that are more efficient and cost effective. At the moment we hope carbon-credit schemes might create the incentives for sufficient innovation, but I think it would be much more direct and vastly cheaper to simply fund the innovation development.

David Pannell, The University of Western Australia

Further Reading

Nicholas Schneider and Glenn Fox (2005). A win for Kyoto – so where’s the party? Fraser Forum July/August 2005, pp. 18-20. available here.


This is to advertise a pretty neat database available on the internet that I don’t think has had as much publicity or use as it might have. Here is a description taken from the web site:

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The AANRO knowledge base contains about 200,000 detailed descriptions of research projects and publications on Australian agriculture and natural resources.

About 1,500 new research projects and 5,000 documents are added to the knowledge base each year. This core information is drawn from the primary industries, agriculture and natural resources government agencies across Australia.

AANRO also has a gateway to other key agriculture and natural resources websites.”

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David Pannell, The University of Western Australia