Emissions, population growth, and the Productivity Commission

Early tomorrow morning the Productivity Commission will be releasing its draft report on how New Zealand can transition to a low emissions economy.   The report was commissioned by the previous government, but this will be the first real test for the Commission in dealing with the new government –  for whom this is an issue dear to the heart.   The Commission has been trailing the report, with links to a recent presentation.   Like most Commission reports it will, presumably, be long, and full of lists of findings and recommendations.   My main interest is whether they again –  as they did in their earlier issues paper – manage to entirely avoid the elephant in the room:  the role that deliberate (immigration) policy has played (and continues to play) in driving up the population, and driving up emissions, in a country that is pretty widely-recognised as having some of the highest marginal abatement costs anywhere.

On that latter point, don’t just take my word for it.  Here was the Ministry for the Environment –  official advisers on these things –  in their report last year.

mfe

(not, it appeared, that MfE had done any more thinking about it than that)

Bear in mind too that Statistics New Zealand project that New Zealand’s population will increase by another 25 per cent by 2050 –  the date by when the current government aims to have net carbon emissions to zero – and all (net) that projected population increase is due to immigration policy.

One key indicator around emissions is total emissions per unit of GDP.  On that measure, New Zealand has the second highest emissions of any OECD country, just behind Estonia.

nz and estonia

But we seem to be heading for number 1.   That our emissions per unit of GDP are high isn’t that surprising, given the large role that pastoral farming plays in our economy.  It may even be that New Zealand –  temperate climate and all – is a relatively efficient place for such farming emissions to occur.

As the chart shows, emissions per unit of GDP have been falling in New Zealand.  Even if that first chart might suggest a modest fall, in fact it only illustrates how energy-inefficient much of the former Soviet bloc actually was.   Here is a chart showing the reduction in total emissions per unit of GDP from 1990 to 2015 (the latest OECD data) for all the OECD countries for which there is complete data.  There are four countries missing, but looking at their incomplete data, it doesn’t as though including them would change the picture.

emissions 2

On that metric –  the change in intensity – New Zealand hasn’t done badly at all.  Of the countries to the right of us on the chart, six were former Soviet-bloc countries (formerly highly resource –  including energy –  inefficient).   And the Irish numbers are badly distorted by the way in which GDP  in the last 20 years has been increasingly artificially boosted by aspects of their corporate tax regime, counting as GDP stuff that doesn’t actually happen –  or generate emissions –  in Ireland (details here).  Relative to most of the old OECD, New Zealand emissions per unit of GDP have fallen more than most –  which is all the more striking because our productivity performance has been so poor.

And yet, for the OECD as a whole gross emissions increased by only 2 per cent from 1990 to 2015, while in New Zealand they increased by 24 per cent.  The big difference isn’t that somehow New Zealand has become relative more carbon-inefficient –  we haven’t (see previous chart) – but simply that we have a whole lot more people.  And the overwhelming bulk of that population growth is due to New Zealand’s immigration policy (natural increase – itself boosted by immigration – offset by the net outflow of New Zealand citizens would have given us a population increase of only around 250000 from 1990 to 2015).

There seems to be a real squeamishness about confronting this, pretty straightforward, series of facts:

  • production here is more carbon-intensive than elsewhere among advanced economies,
  • marginal abatement costs here are higher than those in most other parts of the advanced world,
  • more people drive up total emissions, all else equal, and
  • in New Zealand trend population growth –  over the last 25 years, and in the projections to 2050 –  is mostly due to active non-citizen immigration policy.

(In fact, you might have supposed that emissions/climate issues might have featured in the Fry/Wilson book on a multi-dimensional approach to thinking about immigration policy, but no.)

And here a few of the cross-country charts of the relations between population growth and gross emissions.  This one is for all energy sectors (including transport).

emissons 3

New Zealand is very close to the line (and the line remains upward sloping even if one excludes rapidly industrialising Chile, Turkey, and Korea –  the three dots at the top of the chart).

The relationship shouldn’t be a surprise: more people means, all else equal, more requirement for power, more need for transport, and so on.  Over time, production processes tend to become more efficient, but for any given production technologies, more people will tend to mean more emissions.

Much the same relationships is present (again unsurprisingly) for total gross emissions.

total emissions

and even, more to my initial surprise, for agricultural emissions

ag emissions

In fact, as I noted in an earlier post

Somewhat to my surprise there is actually even a (weak) positive relationship between population growth and per capita emissions and emissions per unit of GDP.  I’m not quite sure why that would be, although in New Zealand (and Australia’s) case, the migrants are moving to some of the OECD countries with, already, the highest emissions per capita and per unit of GDP.

The apparent relationship between agricultural emissions and population growth (even across advanced economies) is both interesting, and particularly germane to New Zealand.  As I’ve argued elsewhere, it is plausible that if New Zealand had had much lower immigration (and thus lower population growth) and, thus, a lower real exchange rate (according to the Reddell model), the political constraints on tightening water-quality standards (especially affecting dairy industry competitiveness) and on introducing agriculture to something like the ETS would have been less intense.  The lower exchange rate would have provided a competitiveness offset.  So it is likely that, all else equal, our immigration policy has even driven up our agricultural emissions.

None of which might matter much if

(a) there was compelling evidence that very high rates of non-citizen immigration had been boosting domestic productivity, or

(b) if the marginal abatement costs for emissions in New Zealand were low.

But neither appears to be so.   And thus, if one cares at all about minimising the cost to New Zealanders of a forced policy adjustment towards a net zero carbon emissions world –  as distinct from simply forcing us all to don a hair shirt and feel the pain –  rethinking our immigration policy really should be high on the list of options for responding to the carbon goals the new government (and, less ambitiously, its predecessor) have set for themselves.  I hope  –  but am not optimistic, based on the “part preview” I linked to above  –  that the Productivity Commission, who are supposed to be politically neutral analysts, have recognised this in their report.  But perhaps I’ll be pleasantly surprised.  We’ll see tomorrow.

It isn’t as if the issues haven’t been raised with them.   Here is the link to my brief submission to their inquiry.

30 thoughts on “Emissions, population growth, and the Productivity Commission

  1. They seem to think that Auckland will become a low energy high productive Utopia (density/agglomeration/diversity); people will stop eating meat; if only we can keep attracting migrants, one of them will come up with a solution?

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      • Given that most of our exports are agricultural based, the benefits are really to a small group of farmers rather than anyone else. We locally have to pay premium prices on milk even in a global market that has falling prices because of the lack of competition in our local market. It is really tourism that is spreading the export dollar much further domestically.

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      • You are a rarity
        The single most important conclusion that is glossed over and rarely mentioned – you are a rarity

        Migrants ==> increase consumption ==> increase imports ==> requires increased exports ==> to pay for increased imports

        Liked by 1 person

      • Rarity? That is a strange description for the truth? Time to face facts rather than try and tie migrants to a host of issues with the weakest of linkages.

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  2. The real ‘elephant in the room’ is that despite billions of dollars having been spent by the put-upon taxpayers on this planet, over more than thirty years, on so-called ‘research’, there is still absolutely no hard physical evidence that mankind’s emissions of the atmospheric trace constituent, carbon dioxide, which is essential to all life, has any significant, measureable effect on global mean temperatures, or indeed, climate anywhere on our planet.

    All the warmistas have is man-made computer models, and the warmistas completely ignore the old adage of computer models — ‘garbage in, garbage out!

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    • You may or may not be right on that, but the terms of reference for the inquiry explicitly exclude those issues. They are simply asked to focus on the implications of actually targeting a big reduction in emissions.

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      • It doesn’t use offensive language, or personally attack another individual writing here. Those are really my only two criteria for deleting/editing comments.

        There are plenty of comments here I disagree with, often quite strongly. But so long as views are reasonably expressed I would almost certainly never ban them.

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      • Not really specific to either PJM’s comment or yours but I thought the poll results here were interesting.

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      • We evidently have quite different philosophies on moderation, most people don’t agree with me, but I thought I may as well say it anyway.

        It has been interesting seeing facebook recently having to give a reason as to why it only bans offensive content and not obviously false content. I’m interested to see how that will play out in the future.

        I suppose saying the gold standard is an unalloyed (lol) good idea would be an equivalent in economics, I think 97% of economists would agree with that.

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      • It is partly a reputational issue for me. Over the course of my career, I probably garnered a reputation for being less open to views not my own (which I happened to disagree with at the time) than I should have been. Warranted or not, I have tried to bend over backwards with the blog to not blocking annoying commenters, things I think just wrong or whatever. On climate change itself, it genuinely isn’t a subject that greatly interests me much (as distinct from the economics/policy of responses to it) and so I haven’t spend much time reading the arguments.

        Liked by 1 person

      • I don’t get involved in climate change discussions as they go nowhere, however, I do point out that (eg) Kiribatiti and Syria have had a population problems.

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    • The President of the United States and a vast number of US republicans have a similar view to PJM. Personally i am also somewhat unconvinced that humans can actually make a huge difference when ice core samples over hundreds of thousand of years indicate that climate can change dramatically due to global nature events anyway.

      But I am very convinced that our national herd of 10 million cows of which 5 million are for milk production does cause a huge amount of nitrate leaching, dirty waterways, contaminated drinking water, algae bloom and decimation of coastal fishing habitats.

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    • That is simply fake news.

      Irrespective of the accuracy of computer models forecasting the future rate of change of CO2 levels, there is substantial historic evidence going back millions of years showing the direct relationship between CO2 levels and temperature.

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      • Not too sure which part is fake news but your link to CO2 and temperature is just one variable. The science is much more complex such as the heat from our sun, the effect of our magnetic poles or even the shifting of our magnetic poles, the gyrations of our planet and the movement of our molten core, volcanic activity, ocean currents, comet strikes, effect of methane as well as the stored methane in the ice glaciers etc etc,

        The bible stories of Noah’s flood is supported by historical documents throughout the world which suggests a massive ice cap melting effect on a biblical scale when humans were still struggling to make a fire.

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  3. Some slightly related thoughts: I think carbon dioxide and methane are often unfairly conflated, CO2 has a half-life of ~100 years while methane’s is 12 years, CO2 hits twice by increase temperature and increasing ocean acidification while methane only affects temps, and, as you say, abatement costs are higher for methane.

    There are three main energy uses: heating, transportation, and industry (think Al smelter). Industry is already reasonably efficient due to market forces. Heating (of air, water, and food) and transportation could be greatly reduced by rebuilding in a more concentrated manner, constructing highly energy efficient mid-rises to fill out the central areas of the biggest cities in a manner like Vienna. Doing so would kill about 20-30 birds with one stone, half a dozen of them albatrosses, albeit that stone is more of a boulder.

    Transportation would benefit from electrification. It is aggravating seeing such easy steps as removing GST from electric vehicles for 10 years not being taken. Getting more cargo off roads and onto rail and electrifying the whole North Island rail grid would be another one. If it has to be done eventually why not do it now?

    Reducing population, or rate of population growth, makes just about every issue you can think of slightly less bad, but it can’t really have any big transformative effects.

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    • Just on your last para, whether you would count it as “transformative” or not, if we cut back our residence approvals target to 10-15K per annum, our population would probably be flat or falling a bit over the next 30+ years. All else equal that would reduce emissions by at least 25 per cent. That would seem very much worth having, given the goal the govt has set for itself (of course, subsequent govts may have different goals).

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      • Isn’t that preventing emissions increasing by 25% instead of reducing them by 25%?

        I always think of the original Kyoto goal: 10% below 1990 emissions. After a quick check it seems this has always been the approximate goal it is just that the deadline is always extended out.

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      • “Gases with a longer lifetime reach higher atmospheric concentrations and experience a longer lag between emissions reduction and atmospheric concentration reductions. Reducing emissions of short-lifetime
        potent gases such as methane is therefore a valuable means of rapidly slowing global temperature rise.”

        http://www.eci.ox.ac.uk/research/energy/downloads/methaneuk/chapter02.pdf

        Therefore this study indicates that action on reducing methane gas would yield faster temperature drops than that of carbon dioxide which lasts longer in the atmosphere.

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      • Getgreatstuff, methane from cattle breaks down to carbon dioxide, but doesn’t increase the amount of carbon dioxide in the slightest because it came from the atmosphere to begin with. It’s a cycle – plant takes up CO2, animal eats plant, animal excretes CO2.

        The only reason methane is considered worse than CO2 is because it has a short half-life, and the time where the impact is assessed is only 100 years. By then the methane is long gone while CO2 will be around for thousands of years. Likewise reducing methane levels will have a short-term impact but is no long term solution to increasing atmospheric CO2 levels.

        Growing crops to feedlot cattle is environmentally inefficient. But giant herds of ruminants roamed the grasslands of the planet without any impact for millennia. Carbon dioxide levels started rising when humans began burning fossil fuels.

        Liked by 1 person

      • Jill, I think the research indicates Methane has a 12 year life and Carbon dioxide a 100 year life cycle. The particular study I refer to indicates that you would yield a faster drop in temperatures if you reduce Methane gas emmissions as Methane has a 8 times greenhouse gas potency than CO2 and because it has a shorter lifecycle the impact to temperature would yield a higher and faster return on temperature reduction.

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  4. 1) NZ is at risk from synthetic meats and milks anyway

    2) Transition agriculture to full ETS scheme over a period

    3) Remove the domestic limitations on the Carbon price A government authority can decide which overseas credits are real and can be purchased for NZ carbon offset if that is the cheaper mitigation option at any point in time

    4) Eventually as nations get there act together we should end up with a benchmark international carbon price

    5) Don’t set 2050 as an absolute date for zero carbon but have it as a goal. Let the carbon price determine what is the most efficient for individual businesses and people (eg buying an electric car)

    6) Given we’ve signed up for total emissions not per capita the government will have to have a proper immigration policy or risk substantial capital outflows to fund the carbon cost.

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    • 6) or conversely just break or change the commitment; many other countries will be doing so. All the govt has to do is state that for diplomatic reasons we have to align our policies with the USA. They set the precedent: – withdraw from the Paris Agreement on climate change.

      To repeat myself please read Jim Flynn’s “No Place to Hide: Climate Change – A short introduction for New Zealanders”. Short read (80 pages), controversial conclusions, author has a giant brain.

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