Research

Apr 162014
 

Market Based InstrumentsIn a previous post I explained that the Carbon Price is not a Carbon Tax. That it was an Effluent Charge with a Tax Differential component. Regardless of this, they are all examples of Market Based Instruments. What they are is actually known as Price Based Market Based Instruments or just Price Based Instruments. There are generally three kinds of Market Based Instruments: Price Based Instruments, Quantity Based Instruments (or Rights Based Instruments) and Information Based Instruments.

You may have heard the Minister for the Environment explain that they will replace the “Carbon Tax” with a market based mechanism, insinuating that the Carbon Price is not a market based instrument. He is quite wrong; my master’s thesis was entitled ‘Market Based Instruments for Reducing Pollution Loads Entering Darwin Harbour’ and I will explain in basic terms what these actually are.

Price Based Instruments

Market based instruments that set a price, a charge or a fixed unit cost are known as Price Based Instruments. As previously discussed, Price Based Instruments might include policy mechanisms and instruments such as effluent charges and taxes. But they may also include:

Full Cost Pricing (and include different pricing structures)

Tax Rebates and Tax Differentiation

Insurance Premium Charges

Reverse Deposit Schemes (Container Deposit Schemes)

Subsidies, Rebates and Grants

User Charges

Performance Bonds

Covenants

These are what is known as Pigouvian Taxes. And I think the term Pigouvian Tax is where a lot of the confusion has entered the debate. However, all this term means is that the polluter absorbs the full cost of the production (or consumption) process. How this is done most efficiently and effectively is to be determined by the policy maker, and will be the subject of a later post. How price based instruments act as a market based instrument will also be discussed at a later stage, because it isn’t necessarily intuitively apparent – which is partly the problem that gives rise to comments and purchase in the population that pricing is not a market mechanism.

Quantity and Rights-Based Instruments

Quantity and rights-based Market Based Instruments are what most people think about when they think of ‘Market Based Instruments’. There really only a few types of instruments in this category and it is probably the narrowest policy set for Market Based Instruments. There really are only two types of Market Based Instruments in this category:

Cap and Trade Schemes, Permits and Tradeable Permits

Total Maximum Daily Load Schemes (including accounting and budgeting schemes)

These Market Based Instruments contain a strong regulatory basis as well as frequent market transactions. Offsets can be created and in this sense they operate both as a futures exchange and also a quasi options exchange, with regulatory bodies acting as market-makers. The exchange’s effectiveness is successful or not successful depending on the interaction of these elements.

Theoretically, such Market Based Instruments are most suited to environmental policies where there are a large number of diffuse polluters, and the impacts of pollution are not isolated. That is, a reduction in pollution in one area will benefit the whole, not just the local environment. I will discuss this dynamic at a later date. But in short, it is why Australia’s carbon pollution reduction policies have favoured a cap and trade scheme.

Information-Based Market Based Instruments

Information based Market Based Instruments are also known in the literature as Friction Reduction Schemes, or Friction Reduction Market Based Instruments.

You may ask why these are included as Market Based Instruments. The simple answer is that markets function on the basis of information. There are two things that move a market – noise, and information. Companies listed on stock exchanges are regularly releasing information. It is a legal requirement. There is legal recourse for some buyers when they have been sold something under false pretences in many different kinds of transactions.

These Market Based Instruments are said to reduce friction because they are designed to provide the user or the transacting parties with the available information. Available information is an important component of rational choice making in decision theory in classical economics, and I have some level of qualms with this philosophical position. But for the purposes of policy making, it is at least a worthy aspiring goal for policy.

Information based Market Based Instruments include:

Right to Know legislation

Eco-labelling

Public Information Campaigns

Accreditation

Summary

I hope that I have had some success in helping shed light on what actually Market Based Instruments actually are in environmental policy. There is a broad range of policy options at the hands of decision makers. The pros and cons of each and in what circumstances each market based instrument is likely to be effective will be discussed over time in this blog. But don’t be fooled by politicians and their use of jargon when discussing Market Based Instruments and the underlying philosophy for addressing environmental problems.

If you have any questions or queries, leave a comment, or suggestion. Or if you want me to go over anything in detail, let me know!

Mar 312014
 

Susan Bernstein’s Housing Problems: Writing and architecture in Goethe, Walpole, Freud and Heidegger is an attempt at extending literary theory to the realm of architecture, and in particular, housing.

It is a project that largely under-delivers on its promise, in an overly wordy and unnecessarily complicated argument that covers up and confuses the structure of the work. However, there are some worthwhile arguments and links between written works and the physical surroundings of the thinker’s analysed. These are not likely to be of interest to anyone who isn’t specifically looking at the philosophical and theoretical underpinnings of built housing form.

Housing is a particular area of interest for me, so this book was recommended in the context of providing a theoretical framework for conceptualising the analysis of housing problems.

I don’t really see the arguments presented in the book as a way of analysing housing problems. Rather, to me, it seems much more useful in analysing the structure of housing design in areas over time.

For instance, one argument put forward by Bernstein using Derrida is that housing forms a kind of “social archiving” and self-policing or self-censorship. The social archiving for mine is linked to, but not explicitly stated in the text with Heidegger’s position on the true expression of the self, and relation of the self to the external environment, presented in the architecture of housing.

It might seem overly academic (and it is), however it has direct relationship to the way housing construction and design evolves over time. Once upon a time, houses in Mandurah were almost solely the domain of designs maximising their summertime use as beach house getaways. Now, houses in Mandurah are built to cater for the needs of owner occupiers.

In a recent trip to Lancelin, I could see the beginnings of this evolution begin to happen as well, albeit in the early stages. The same can be seen in Darwin housing. Post cyclone Tracy homes have a completely different texture and function to those being built presently for cashed up southern investors, and those looking for a place to crash in between partying and working well paid shifts.

The social history and interactions with the environment contained in the architecture of housing do create ethical dilemmas, policy problems and social angst when housing evolves. This level of housing problems, which is an extension of the arguments presented by Bernstein in Housing Problems, is not articulated. And it is a shame. Because with the link between the thinkers, and their relationship with built form, and the creation of housing problems as places evolve, the project would have overcome the stumbling blocks that stop this book from becoming a worthwhile read.

Mar 252014
 

I came to Steve Keen’s Debunking Economics after dabbling in reading what I would call “alternative economics”. I’m not someone involved in economics as a profession, but pointing out flaws in economic theory has become a personal hobby of mine. I have read much of Joseph Stiglitz and Nicolas Nassim Taleb’s work, and although I adore reading Taleb’s work, I have not found something I could completely relate to. That is until I found Debunking Economics.

Ever since I studied first year economics, I have been a strident critic of the way economics is taught. I guess this is perhaps the product of teaching myself Marxian theory during year 12 maths, and having studied philosophy at university. I remember telling a lecturer, who had commented that I should continue with economics (after a good paper on environmental externalities), that an idiot could spot the logical flaws in what was being presented. It is perhaps somewhat ironic that I now find myself grappling with what could be deemed an “alternative economics” field, in environmental economics or some such.

I was a little reluctant to read Steve Keen’s work, given his partiality to public nudity and attention grabbing statements. But I shouldn’t have been. I found Debunking Economics almost completely sums up the way I feel about how economics is taught at university level. How it has been elevated to a science, and how it holds sway over the other social sciences of which it is most certainly a part, has me scratching my head.

Keen does an excellent job of explaining how the rise of economics in academia has come about. The exploration of the history of economics is enlightening, as well as frightening. Keen’s natural ability to outline historical progression in economics allows him to critique the brain washing tactics initiated by economics departments in a similar fashion to what faith based institutions invoke on their subjects. By providing evidence and tested and defended hypotheses, he contrasts his own positions against those which hold sway in the academic world and amongst central banks.

But mostly, this book is an attack on the prevailing paradigm of neo-classical economics and its sway in the political arena.

Keen invokes a common sense approach to economic critique which will appeal to the layperson. Terms such as “efficient markets” are attacked, as they mean something completely different to those in finance and economics to the layperson. Which Keen quite rightly emphasises is problematic, because economists actually play on this gap in knowledge to manipulate those on the outside to follow what is actually a falsity.

For mine, Keen’s book is a must read for anyone interested in economics, or economic policy. It is a truly enlightening read on the likely future of economics as a worthwhile intellectual endeavour. Anyone that has a natural inclination to be sceptical of economists, or even those that don’t, would be well advised to read this book. I think it’s also a must read for those studying or have studied economics.

I don’t think I can do Debunking Economics justice in such a short space of time. It is actually quite a dense read for something that is actually very accessible. It definitely does add to the appeal of his positions. From time to time I will have to look at individual arguments in Debunking Economics to further the arguments being made in my exploration of market-based instruments.

Mar 072014
 

How to write a lot brands itself as a “practical guide to productive academic writing”, and for the most part this is true. It could also be an exposition in keeping it simple stupid for the academic writing arena. It really is one and the same.

I read this book on the recommendation of some academic writers during #AcWriMo. Paul J. Silvia, an academic psychology specialist in writing, presents the common complaints put forward by academics as to why they don’t write, and why they don’t publish.

For mine, it is just a positive affirmation of what I already do when I’m writing productively, and what others I’ve worked with have espoused previously.  For others, and in particular for students, the book dispels many of the myths surrounding productive writers.

The message is simple – create a routine and prioritise activities that are writing, or will help you write. As the age old saying goes in academia, if you haven’t got five minutes a day to write, no one can help you. By promoting a routine of writing and writing related tasks, it becomes habitual. I notice myself that when I am writing a lot, I am competitive with myself to exceed yesterday’s output, and become agitated when my writing routine is disrupted. I look for any possible opportunity to be writing. But this is a good situation to be in. I wonder how many people do get annoyed when they aren’t writing, or if they’ve just become resigned to not writing and then put up a smokescreen of excuses that Silvia outlines in this book.

Silvia does not just outline the problems inherent in academic writing and for producing academic scholarship. He also outlines strategies and solutions for developing a culture of writing. These I think are very under rated tips. Getting together a writing group – every week or every second week – will reinforce the requirements for writing. I think this is missed by most students and academic staff. Being able to introduce some measure of accountability from a group, rather than relying on deadlines, is a great way to ensure writing becomes habitual and gets done.

Had I been told that I could get through my undergraduate degree rather easily with just writing 50 or 100 words per day during semester, I perhaps would have been much more productive and successful. But this is what the book really amounts to – explaining how to break down writing tasks to manageable sizes that then don’t become overwhelming in totality.

The importance of developing some level of self accountability is also expressed in How to Write a Lot. I think Silvia has stolen my idea of being able to chart success in writing tasks, and output. He gives his results in an SPSS format, which I think is great if you haven’t already attempted to do something similar. At one stage I kept a database of my word output, and noticed that my most productive days for writing were Wednesday and Thursday. This is perhaps one thing that is lacking in this book – the importance of analysing when in the week and during the day you are most productive in writing.

At some point down the track, I’d also like to analyse what type of exercise is the most beneficial for my writing output. I certainly notice that walking and cycling are the most beneficial for my writing output, and that cricket and golf are perhaps the worst – but I have no evidence to support this claim. It may just be the associated alcohol intake that is the problem.

How to Write a Lot addresses my biggest weakness – how to turn writing a lot into writing productively. I write a lot. But I don’t always have much to show for it. Writing sometimes becomes a procrastination tool instead of doing other more important writing. There are simple, focussed tips given in How to Write a Lot to make sure what you are writing is structured, and presented in a way that can later be used for publication. Prioritising productive writing rather than pure output is something I hadn’t given a lot of thought to.

At the same time Silvia explains the importance in depersonalising your own writing. Emotional investment is something students find quite difficult to grapple with. I certainly found this rather difficult whilst writing my thesis, but it is an important trait to be able to develop in order to write more, and write more productively. Hanging off every word becomes pointless when an editor, examiner, lecturer, tutor or boss is going to tear it apart and make you rewrite and review it in any case. Accepting this before you begin writing is probably the biggest lesson that I took out of this book. And this lesson is one that is important for anyone at any stage of their writing.

I would highly recommend this book to anyone who is looking to increase their writing output, or looking for ideas to tune up something that is not quite right. If you have a colleague or a student that is stuck on one of the many stumbling blocks of writing, I’d suggest leaving this book on their desk.

Mar 062014
 
Back Beach, Bunbury
Back Beach, Bunbury

So I’ve been tasked with teaching a unit in Oceanography this semester. It’s hard to not to feel that I’m out of my depth, so to speak. As someone versed mainly in water quality management, there is only so much I can bring to the table, personally. But then I realised it doesn’t particularly matter, because almost everyone else involved in this field is in the same boat.

Oceanography is perhaps one of the few remaining “descriptive” sciences which is a collection of other scientific areas, simply because we do not know enough about the topic itself – or because it is too huge an area of investigation to be compartmentalised. In this way, I guess it is much like “climate science” or “climatology” where multiple scientific endeavours have been thrust towards forming a coherent study in an area requiring research and investigation.

We really have only begun to break the surface in our knowledge of the oceans. It is truly in many ways one of our “last frontiers”. The oceans are alien to us, so much so that much of the understanding of oceans comes from our study of the universe.

The cry of many rings out that we should stop spending so much on such far flung ventures as research in astronomy. But it is this research and investigation and its ability to look back through time that has helped us unlock many of the secrets of the formation of the ocean and the history of planet Earth. It is the best example of seemingly obscure scientific endeavour having “real world” application. We have an idea of how our oceans might have formed because we can observe similar processes happening elsewhere in the universe. Medical imaging is being improved because of the advances in space and astronomy research.

Many of our waters, particularly off the coast of Australia are quite literally unchartered. But I didn’t realise exactly how extensive this area is until I read the brilliant book Northern Voyager’s: Australia’s Monsoon Coast, which is a fantastic historical work on the maritime history of Northern Australia.

It is why the oceans are so special – they hold such a significant place in the history and culture of many civilizations. It is why oceans are the nexus of myth and science and where photographers, historians, poets, photographers, film makers, artists, surfers, submariners and a whole host of scientists all have a role to play in the study, representation, understanding and protection of the oceans into the future.

It is also why I feel comfortable about talking about Oceanography and especially in my areas of expertise. There are some pressing issues facing the water quality of our oceans. The impact of changing water quality and in particular salinity levels and ocean currents is something I personally find fascinating. As is the market failure and subsequent lack of responsibility in addressing the great ocean garbage patches. Over the next few months, I look forward to bringing you a series of posts relating to these and other issues in our oceans.

Further Reading

Powell, A. (2010). Northern Voyagers: Australia’s Monsoon Coast in Maritime History. Australian Scholarly Publishing, Melbourne.