Why yes, we are being lied to. Why do you ask?

A continual theme of mine is the way that the various numbers we're presented with in the political arena aren't entirely, exactly and strictly, quite true. Nothing new in this of course, the lies, damned lies and statistics line is well over a century old already. The latest, how shall we put this kindly, misdirection is on the subject of energy prices. Ed Davey tells us that we're all saving money by spending vast amounts of money on renewables.

Our analysis shows that, taken together, these policies and others mean household bills are already lower – by an average of £64 – than they would have been if we’d introduced none of our policies.

This is exceedingly difficult to believe. For energy produced by renewable means is still more expensive than that produced by fossil fuels. This is why we actually have a climate change problem: if renewables were in fact cheaper then we'd all quite naturally be using them. And it's not really possible to make the system cheaper as a whole by moving from a cheaper component of it to a more expensive one.

An excellent thrashing of this contention is provided here, at The Register:

Thus we see that the consumer price of 'leccy overall stands approximately 25 per cent higher today than it would have been if Whitehall and Brussels had left the UK energy market alone.

Mr. Davey then goes on to tell us that government action will really save us all money in hte medium term, you just wait and see:

In 2020, bills will on average be around 11 per cent lower, than they would be if we were doing nothing. Let’s be clear - bills will still be higher. But they will be £166 lower than if we sat on our hands.

The problem here is that they've made an assumption: that natural gas prices will rise by 70% in the next few years. The only reason they've made this assumption is because they've not bothered to talk to anyone at all who knows what they are talking about as the FT makes clear:

The UK’s Department of Energy and Climate Change is about to publish forecasts suggesting that gas prices could rise by up to 70 per cent over the next five years. This is scaremongering nonsense, and shows just how out of touch the Department is with the realities of the international energy market. Officials appear not to have consulted the industry or the traders. In reality the odds are that prices are just as likely to fall as to rise for three distinct reasons.

Those three reasons are shale (even if we don't produce much ourselves, there's still going to be US exports), demand has fallen because of all the renewables that everyone is being forced to use and the pricing structure of the material is about to fall over. Traditionally gas prices were linked to oil prices and it's increasingly becoming true that they are not: gas prices are linked to gas prices now.

Regular readers will know that I'm generally onboard with the idea of climate change, think it's happening, we're doing it and that something must be done about it. However, this doesn't mean that we all have to wander off into LaLa Land in our discussions of what to do about it.

I agree that a certain amount of smoke and mirrors is inevitable in politics: but what worries me is that DECC has been repeating this guff to itself so often that they actually believe it.

They really are not saving us all money on our energy bills by making energy more expensive. And it would be very nice indeed if they stopped misleading us about their doing so.

But I'm afraid we've tried Allemannsrett in Britain

George Kirby had a suggestion here on this blog last week. That we ought to copy the practise of Allemannsrett in Britain. This Nordic idea that access to the land is for all and that as long as you're just walking through you should be able to go anywhere you please. And I agree that there are attractions to such an idea. However, the real problem is that we've tried this in this country and it doesn't work here. The hint is in this that George says:

A final objection is the claim that it would be pointless to introduce the Allemannsrett in Britain as it is in Scandinavia, since here we have a much higher population density. But the vast majority of the British population lives in urban areas, and the country has many places of natural beauty and sparse population where greater rights of access could allow much greater appreciation of them.

You see, we did in fact try this. There was the Mass Trespass movement and they went off and demanded that the urban proletariat must be allowed to walk the moors. Instead of the Duke's grouse having exclusive rights to those areas of great natural beauty. The end result of which was, in the words of the National Trust:

“Kinder Scout is one of the most iconic landscapes in the Peak District because of its vast open moorland, the wildlife that it is home to and because it was the setting for the Mass Trespass. However, it is also one of the most damaged areas of moorland in the UK and its future is in jeopardy as a result of catastrophic wildlfires, a long history of overgrazing, air pollution and the routes that thousands of visitors have taken. We’ve decided to take action with our partners to save Kinder for future generations.” Mike Innerdale — General Manager for the National Trust in the Peak District

I'm afraid we're back to the basic point that Garrett Hardin made about the Tragedy of the Commons. No, it isn't and never was that assets held in common cannot be preserved. It's that when demand for a resource is greater than the regenerative capacity of that resource then access must be limited. In some manner. It could be, as with the Grand Canyon, the Park Rangers only allowing so many people down there at one time. Or it could be private property. But there does have to be some method of limiting access. Elinor Ostrom went on to show that communal restriction of access, just people working it out among themselves, can also work. But this breaks down when we've more than a couple of thousand people doing the communalling.

In most parts of the Nordic nations there are perhaps three people and a dog named Colin (Haakon is that in the local lingo?) who want to go tramping over the outside scenery. Here in the UK it's rather different. In fact, there's some 25 million Nordics looking to roam over 470,000 square miles and the UK has 63 million on 94,000 square miles. Now quite where Hardin's limit is I'm not sure but I would imagine it's something to do with the UK having 2.5 times the population on one fifth of the land.

Which brings us back to there having to be a limit. We could have the entire countryside limited by men with clipboards, counting us in and out of the meadows and moors. Or we can have our current system of private property. And even if only on the grounds of the crime rate I think that the second of those two is preferable. For I'd hate to have to calculate the murder rate, as those clipboard wielders swung from the trees, as they tried to stop people going for a walk in the woods on the grounds that 5 other people had already done so that day. "Get Orff Moi Land!" is preferable to that.

We create resources by inventing the technology that does so

One of the things that is so difficult to get over to the "Arrrgh! We're running out of everything!" crowd is that we humans actually create resources by inventing the technology that does that creation. I've blathered about this with respect to minerals here often enough. Today's example is fresh water. Of course, we all know that there's a water cycle, that we don't destroy water by using it, we just dirty it. But it is true that there are areas of the world that are becoming short of potable water. We would obviously like there to be a solution for this and it looks like there is:

The process, officials and engineers at Lockheed Martin Corp say, would enable filter manufacturers to produce thin carbon membranes with regular holes about a nanometer in size that are large enough to allow water to pass through but small enough to block the molecules of salt in seawater. A nanometer is a billionth of a meter. Because the sheets of pure carbon known as graphene are so thin - just one atom in thickness - it takes much less energy to push the seawater through the filter with the force required to separate the salt from the water, they said.

This is reverse osmosis which is nothing very new. But here's what the new part is:

"The energy that's required and the pressure that's required to filter salt is approximately 100 times less."

100 x less?

"If you can design a membrane that's completely different than what we use today, then there's a chance for more than two orders of magnitude (100 times) increase in the permeability of the membrane," Grossman said.

Well, yes, because the cost in reverse osmosis is indeed the cost of maintaining the pressure differential on either side of the membrane.

Just to put this into actual numbers. The average UK household uses some 100 cubic metres of water a year. (100,000 litres). At current desalination costs this is $50 a year for a rough guide is 50 cents per cubic metre. Reduce that cost by 100 and we're talking about a cost per household of 50 cents, or 25 pence. At which price it really doesn't matter whether we're putting rainwater, rivers, reservoirs or desalinated water into the pipes now, does it?

This also applies everywhere else too of course. Lagos, Lima, LA...potable water simply becomes a non-problem. Agreed, you'd probably still not use it to irrigate wheat but at these sorts of prices water for industrial or human consumption simply becomes something that isn't a problem.

This is entirely apart from the fact that such a water filter fine enough to seive out the sodium and chlorine ions is obviously going to be fine enough to dispose of all microbes and viri, all heavy metals and so on, any oestrogen or other molecule, thus making cleaning up polluted water vastly cheaper. Factory run off, heck, if you really wanted to, fertiliser run off from farming.

There is good news for the worrying crowd though. You can still worry about the fact that we're running out of scarce resources to worry about running out of.

To spark a shale gas revolution, shift mineral rights from the Crown to landowners

Shale gas seems to be sparking an energy revolution in the United States, but has made little traction in the UK. In his column for The Scotsman yesterday, Peter Jones discussed the main problem with shale in the UK compared with the US:

The big reason was succinctly put by Charles Hendry MP, when he was energy minister: “The situation here is very different from that in the United States, where, for example, landowners own the mineral rights beneath their homes. That is not the case in this country, so there is not the same economic driver.”

Discussing this recently with two Scottish economists, Gavin McCrone and Donald MacRae, the answer suddenly occurred to me. Why don’t we create the economic driver?

Simply put, we could do that by changing the law so that the rights to minerals in the ground under our feet belong, not to the Crown (ie, the government) but to the landowner.

...in Scotland, why have onshore wind turbines multiplied? Partly, it is because the owners of the land on which they sit, mostly moorland with otherwise little economic value, get an annual rent with payments also often going to nearby communities. Without that income, I doubt that the onshore wind industry would be half the size it is.

By changing the law, the same could be done to popularise shale oil and gas.

It's an interesting idea. Of course (as Peter admits), it would be over-optimistic to hope that such a move would yield as much gas as it has in parts of the US, but it would give people more of a reason to look.

An easy way to make food cheaper

Madsen says the news that we waste up to half the food we produce is a big reason to be cheerful:

Much is wasted in developing countries between farm and consumer because it is stored or transported badly, with some of it consumed by pests or allowed to rot.  In the developed world there are over-zealous sell-by dates and a reluctance by retailers to take misshapen vegetables, or a tendency to promote over-buying by generous two-for-one offers.

All of this is much more easily redressed than trying to increase the output of food.  If we attend to the wastage we can double the world’s supply of food without planting an extra acre.  So there is no incentive to cut down rainforests or to engage in more intensive farming, no need for extra pesticides and fertilizers.  All we have to do is stop wasting what we already produce.

He's right. I buy value-range produce because it is the same as the more expensive stuff, just a bit less attractive. Some companies have even made a virtue of imperfect-looking foods, like the promoters of the 'ugli fruit'. At farmer's markets, mud-encrusted fruit and vegetables are sold at a premium (they're more 'authentic', after all). Even if that doesn't really catch on, as Madsen says we're eating more pre-prepared food than ever. We might have found a very simple solution to a persistent problem.

We've reached Peak Farmland

We're all familiar with the screams of woe from the environmental movement. Peak oil, peak fertiliser, peak water, there's even a peak copper scare out there. The idea, if it can be flattered enough to be described as one, is that we're all using too much of whatever it is, there ain't no more and we're all going to die. Aieee!

And now we've got peak farmland approaching:

"We believe that humanity has reached Peak Farmland," said Jesse Ausubel, director of the Program for the Human Environment at the Rockefeller University in New York.

So there's no more land to grow more food on and we're all going to die Aieee! etc?

No, this is sensible people, not the usual envorinmental wailers. What they're actually saying is that given the increasing efficiency with which we use farmland we're not actually going to need any more. The true quote is:

"We believe that humanity has reached Peak Farmland, and that a large net global restoration of land to nature is ready to begin," said Jesse Ausubel, director of the Program for the Human Environment at the Rockefeller University in New York.

The one caveat is that we have to make sure we don't mess it up by growing biofuels: but even FoE and Greenpeace agree this is a bad idea now so we've only the politicians left to convince.

And it's entirely possible that this report is actually not optimistic enough. OK, this is the Mail but still: plantscrapers anyone?

Crops could soon be grown in greenhouses the size of skyscrapers in city centres across the country, it has been claimed. Birds Eye and other food producers are investigating building ‘plantscrapers’, which could accommodate hundreds of storeys worth of crops, in a bid to make farming more economical, sustainable and meet increasing demand.

Or another development, hydroponics using seawater as both the growing medium and the cooling necessary in a desert.

The old mantra was that we should buy land because they're not making it anymore. But the truth is, by making what land we do use more productive through the application of technology we are indeed making more of it. We're making more farmland, even if not more actual land.

One joy of this is that some good part of the land that is currently being farmed can be allowed to revert to nature. Which should of course please all those environmentalists: but it won't, they'll still be complaining. You see, hydroponics isn't organic. Ho hum.

We'll have to reduce recycling you know. In order to save resources

I thought this was a fun little finding. And it leads to the conclusion that we'll have to stop people recycling things. In order to save those precious natural resources. Via Mike Munger comes this:

Abstract: In this study, we propose that the ability to recycle may lead to increased resource usage compared to when a recycling option is not available. Supporting this hypothesis, our first experiment shows that consumers used more paper while evaluating a pair of scissors when the option to recycle was provided (vs. not provided). In a follow-up field experiment, we find that the per person restroom paper hand towel usage increased after the introduction of a recycling bin compared to when a recycling option was not available.

Essentially, the finding is that Jevon's Paradox works in reverse as well. Jevon's is the idea that making more efficient use of a resource doesn't necessarily mean using less of that resource. Some on the wilder shores say that it never does but it's not that prescriptive.

For example, if we make more efficient use of electricity to make light, does that mean that we'll end up using less electricity to make light? Not necessarily. Making light cheaper might mean that we simply use more of it. And that might mean that we could use less electricity overall, the same amount of even more. Light being a reasonable example as per lumen artificial light has declined in price by several orders of magnitude over the centuries. Yet it appears that we're all still using 0.7% of our incomes to provide it. One of the odder straight lines that people have found in such researches.

This paper here seems to be telling us much the same thing about recycling. When people think that paper towels will not be recycled they use x amount of them. When they think they will be they use x + y amount of them. Recycling thus increases the usage of paper towels. Now, we might argue that as the paper towels are indeed recycled then of course resource usage declines. But this isn't actually so: recycling paper quite famously causes more resource use than cutting down (and of course planting) a few more trees. This is why recycled toilet paper (erm, no, that toilet paper made from recycled paper, not actual recycled toilet paper) appears to cost more than virgin.

So, an interesting thought for the lead up to the new year. Save the planet's precious resources by recycling less. For Jevon's Paradox does indeed reverse.

Well doesn't that just kill the Peak Oil idea then?

Peak Oil is the idea that one day there just won't be any oil left and civilisation will fall over. Or for the more discriminating but no less wrong, that one day we'll be producing less oil than the oil that is demanded and thus civilisation will fall over. The major problem with these and other flavours of the same prediction is that they ignore price. If demand for oil is greater than supply of it then the price will rise. Thus there never actually is a possible position where there is no oil and civilisation falls over. The newspaper home of this idea here in the UK has always been The Guardian. So it's something of a surprise to see that same paper saying this:

But the truly global implications of the International Energy Agency's flagship report for 2012 lie elsewhere, in the quietly devastating statement that no more than one-third of already proven reserves of fossil fuels can be burned by 2050 if the world is to prevent global warming exceeding the danger point of 2C. This means nothing less than leaving most of the world's coal, oil and gas in the ground or facing a destabilised climate, with its supercharged heatwaves, floods and storms. What follows from this is that the idea of peak oil has gone up in flames. We do not have too little fossil fuel, we have far too much. It also follows directly that the world's stock markets are sitting on toxic levels of subprime coal and gas, a giant carbon bubble ready to explode.

Still nutty of course. For it's still ignoring the role of price: in this case, the relative prices of using oil and having climate change or not using oil and not having climate change. Our whole and entire problem with the whole subject is that, as best we can guess, the no oil no climate change option would be more expensive than the oil and change one. Certainly it would be vastly more expensive if we tried to implement it today. Perhaps it won't be in 50 or 100 years. But that is actually our problem today: no oil today means billions die. This is indeed more expensive than having some climate change.

But there's something else much more interesting here. This idea that we must not, indeed cannot, use all of the fossil fuels we already know about. Fossil fuels that are embedded into the stock market values of a number of companies. If we all believed that these fuels would never be used then they would be valued at nothing (or perhaps a small option value). They're obviously not so we don't so believe.

However, there are those campaigning that we should leave them alone. And one would assume that they expect to be successful at saving the world. Which is something we can test of course, their own beliefs about how effective they are going to be. If they do believe that they'll keep those fuels in the ground then obviously all those energy companies will, in the future, be worth a lot less than they are now. Which is an arbitrage opportunity: they should be short those stocks. If they're not, they don't think they will be successful: if they are they do. So, Greenies, where are your pension funds?

There seems to be something to this trade idea

I can't say that I've ever really understood this idea that we must all eat only the things that have been grown in our own region. "Region" of course is a variable thing. It seems to depend on how deep the green of the fool recommending it is. Something from "the nation" to "your back yard" is the spectrum. But as I say, I've never really understood the point.

For we know what happens when food supplies are indeed restricted to just the region one is actually in. We've been there before, back before we had decent roads. And what used to happen is that when the local crops failed then everyone died of starvation: even if 30 miles away there was a bumper crop. Quite why anyone wants to recreate the bad parts of the Middle Ages I'm really not quite sure.

As a modern example, think what would be happening in the near future given the near failure* of the American corn crop this year. We would currently be awaiting the news that Mid-Westerners were keeling over from the shortage of corn dogs no doubt. Then have a look at this other piece of news from this past week:

Chinese farmers are reaping a third record corn harvest even after a typhoon wiped out some of the crop, easing demand for imports at a time when the U.S. drought is driving sales from the biggest exporter to a four-decade low. The harvest rose 3.6 percent to 199.74 million metric tons, according to a survey of farmers in China’s seven biggest producing provinces by Geneva-based SGS SA (SGSN) for Bloomberg. The country’s stockpiles last month were at a nine-year high, and the U.S. Department of Agriculture expects a 64 percent drop in imports. The agency will raise its estimate for U.S. reserves by 2.4 percent when it reports Nov. 9, the average of 29 analyst estimates compiled by Bloomberg shows.

As you can see, no one is predicting that China is going to start exporting corn to the US. My point is, rather, that bad weather doesn't affect every part of the world at the same time. Thus harvests that are bad in one place can be offset by good ones in others.

Or if we are to put it in the terms usually reserved for this argument, the term "food security". We can only have a secure food supply if we grow all our own food. Which is nonsense of course, for our food growing is at the mercy of our weather. True food security comes from having a multitude of suppliers in many different parts of the word so that we can play that game of averages with that weather.

You know, this trade idea. The one that our greens seems to be so strongly against?

*Yes, I know, it wasn't anything like a failure but you wouldn't know that from the news stories.

Broken windows: still not good for the economy

The weather might not be predictable, but one thing is almost certain; when natural disasters strike, you can be sure that someone will claim this is a good thing. Sure enough, journalists have made the case here, here and here. It is claimed that Sandy will provide a stimulus for the US construction sector as damage estimates approach $50 billion. It is argued that in turn this growth in the construction sector will move through into other areas of the economy, this new activity driving growth.

Those who make this case could do worse than to read Frédéric Bastiat’s “What Is Seen and What Is Not Seen”. Rather than simply generating new economic activity, destruction is not costless. The cost of rebuilding devastated areas will be a cost at the cost of other alternatives. People who might have spent money on improving their homes may now have to rebuild them entirely. They have not gained wealth; they have lost the improvements to their homes that they would have otherwise enjoyed.

If it were true that destroying homes was good for growth, we should be smashing buildings as they spring up. By this logic we would be richer as a result. These arguments are seen not just in the case of natural disasters, but also when war occurs. World War II famously saw huge production numbers as nations clawed for scarce resources to build bullets and tanks. This was not production that improved the quality of people’s lives. Railings from parks and schoolyards were melted down to build bombs.

Similarly, while many breakthroughs were made in the form of new inventions during wartime, this came at the cost of other alternatives. It is impossible to compare with what might have been, but that does not mean that it is not important. Had World War II not happened then we would have been free to pursue research and development directed at improving the quality of lives, not at winning wars.

This story betrays an alarming obsession with GDP. GDP does not usefully describe the health of an economy. What is important is that people have more of the things that they want and natural disasters destroy this prosperity. Bastiat’s classic essay dispelled this myth in 1848, yet it is clearly still rampant.

There is a good news story here, but it's not one of false stimulus. It is one of the continual process of development and production. The damage in the US has been much lower than in less developed countries also struck by Sandy. Development has helped to save lives. As we lift more people out of poverty, we can expect natural disasters to be less lethal.