School of Economics and Finance

1
Policy Discussion Meetings
Paul Frijters and Joseph Jeisman

• Recap on series for the newcomers (1 minute)
• Global Warming Stan Hurn (15 minutes)
• Its not real and its not a problem by Chris
  Coleman-Fenn (15 Minutes)
• Its real and its a problem, by Joseph Jeisman
  (15 min)
• Group Discussion

2
Introduction to series
House notices

• Once every 2 weeks on a Thursday.
• Attendance roll for honours students.
• Interruptions and arguments from students warmly
  invited. Non-presenting staff are asked to keep
  quiet until the last 20 minutes.
• Website http//www.bus.qut.edu.au/paulfrijters/di
  scussion-meetings.jsp.

3
Background

• This is a revamp of an earlier discussion group
  by the school, On steroids.
• Part of a QUT wide drive towards research
  excellence. These meetings represent a major
  commitment from the school, are part of the new
  econometrics centre, and if things work out,
  youll get a better research training at this
  school than anywhere in Oz.
• Preliminary Team Paul Frijters and Joseph
  Jeisman (main organisers), Stan Hurn, Michael
  Drew, Adrian Pagan.
• Comes from the recognition that research at
  postgrad level in Economics and Finance is a big
  step up from an undergraduate degree and requires
  major time investments.
• These meetings are an attempt to instil an
  academic attitude and acquaint those interested
  with a sense of the breadth and depth of policy
  relevant issues in economics and finance as well
  as a glimpse of the research frontier.

4
Timing
At the end of 2006 Functioning reading groups
and workshops
5
Global Warming

• Statistical Fact or Fiction?
• Stan Hurn

6
Introduction

• To maintain a certain, constant temperature, the
  rate that Earth emits energy into space must
  equal the rate it absorbs the sun's energy.
• Greenhouse gases, or gases conducive to the
  greenhouse effect, act like a blanket or the
  panes of glass in a greenhouse's walls they
  reflect the heat the earth would radiate into
  space back down towards the earth, holding it in.
  This keeps Earth's average surface temperature at
  about 60F (15C).
• If there were no greenhouse gases in the
  atmosphere, most of the heat radiated by the
  Earth's surface would be lost directly to outer
  space, and the planet's temperature would be 0F
  (-18C), too cold for most forms of life.

7
The question

• Global warming is an observed increase in the
  average temperature of the Earth's atmosphere and
  oceans.
• Part of this increase may be due to natural
  processes, and would have occurred independently
  of human activity.
• The remainder is due to a human-induced
  intensification of the greenhouse effect.
• The G8 nations believe the average global
  temperature has risen 0.6 0.2 C since the late
  19th century, and that it is likely that "most of
  the warming observed over the last 50 years is
  attributable to human activities. Furthermore,
  temperatures may increase by 1.4 to 5.8 C
  between 1990 and 2100.
• A hotly contested political and public debate
  exists over what should be done to reduce or
  reverse future warming, and how to cope with the
  consequences.

8
Anthropogenic Global Warming

• Human caused emissions of greenhouse gases
• CO2 (human respiration, burning of fossil fuel,
  deforestation)
• Methane (livestock flatulence, oil and gas
  production, coal mining, solid waste, and wet
  rice agriculture)
• Nitrous oxide (laughing gas!)
• Chlorofluorocarbons (gases used as refrigerants
  and in aerosol spray dispensers)
• Hydrochlorofluorocarbons and hydrofluorocarbons
  (CFC substitutes)

9
The argument

• Before the Industrial Revolution (when greenhouse
  gases were arguably at a stable level) Earth's
  climate tended to fluctuate widely. 
• A period from 5,000 to 3,000 BC is called the
  Climatic Optimum and another period from 900 -
  1200 AD is called the Little Climatic Optimum or
  the Medieval Climatic Optimum, both so named for
  their unusually warm temperatures. 
• Likewise, a period from 1550 to 1850 is known as
  the Little Ice Age for its unusually cold
  temperatures.  At this time, glaciers in southern
  Norway reached their greatest extent in 9000
  years. 
• With such large variations possible, it is
  difficult to know where the next natural
  fluctuation could take us.  Perhaps those who
  find that global climate is warming are simply
  measuring a natural fluctuation.  Or perhaps a
  natural fluctuation is masking the real effect of
  GHGs on the globe.

10
The battleground

• Global circulation models (GCMs)
• GCMs aim to simulate changes in climate as a
  result of slow changes greenhouse gas
  concentration.
• GCMs model surface and deep ocean circulations
  and atmospheric condtions
• Parameters are calibrated (not estimated) with
  resultant problem that a small error in the sea
  surface temperature a small bias in cloudiness
  can cause significant errors in long-term climate
  change prediction.

11
The battleground

• Time series data
• Air temperature, sea temperature, deep ocean
  temperature, the ice-core records, ice volume in
  the Antarctic
• Particularly rich time-series data are available
• Vostok ice-core data span more than 164,000 years
• A number of cycles are found in this data (the
  longest is claimed to have a period of 41,000
  years!)
• Problems
• Sensitive to choice of sample
• Use of simple models can be misleading. Letting
  Yt a bt et, where Yt represents the
  temperature at time t and et represents error
  from the trend line, a test of the hypothesis
  that b 0 may yield evidence of global warming.
  However, naïve models of this kind detect a
  deterministic trend in a relatively high
  percentage of realizations from a wide range of
  models where there is known to be no trend present

12
Global Warming

• Statistical Fact or Fiction?
• Chris Coleman-Fenn

13
Overview

• Does global warming really exist?
• Suppose it exists, what are its effects and do we
  thus really care?
• How can we resolve it?

14
Does it really exist?

• Antarctic Data
• Whereas climate models suggest that temperatures
  in Antarctica should have been warming in recent
  decades in response to increases in greenhouse
  gases, measurements show otherwise. The majority
  of the continent shows no significant trend or an
  actual decrease.

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Antarctic temperatures
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Does it really exist?

• Majority of the last 2.5 million years, earth has
  been in an ice age interrupted by interglacial
  thaws. Thaws used to occur every 41000 years but
  1,000,000 years ago this changed to every 100,000
  years.
• Mini ice-age between the 14th and 19th century.

18
Does it really exist?

• Majority of temperature measurements are taken in
  or near cities whose populations have grown
  markedly and as cities retain more heat than
  rural areas, these measurements are biased.
• Not all methods agree Kaser says that weather
  balloon readings show slight cooling over the
  tropics between 1979 and 1997.
• There are other influences on temperature that
  may be more important, such as dimming (direct
  reflection of sunlight through additional
  particles in the air).

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Suppose it does, so what?

• Ocean conveyer belt shuts down
• Thermohaline circulation of oceans shut down
  which would stop heat being evenly distributed
  causing increase of 2 to 2.5 degrees Celsius
  increase. Has occurred before and is reversible.
• Greenlands ice cap melts
• Would raise global sea levels by 7 metres and
  will occur if temperatures rise by 2.7 degrees
  and would take 1000 to 3000 years to happen.
• Methane burps
• If permafrost melts and penetration of ocean
  warming into sediments may cause release of
  pockets of methane trapped since formation of
  earth. May cause a 3 degrees Celsius increase in
  temperature and accelerate global warming. Has
  occurred many times before, probably after every
  ice age.
• Other problems more pressing?
• Nitrogen!!!!
• Benefits from more CO2? See next slide

20
Does it really exist?
Tree rings in the US are now bigger, showing
faster biomass growth!
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How can we resolve it if we wanted to?

• Reducing greenhouse emissions does not seem to
  get you much fast, nor does it seem like thats
  politically feasible

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How can we resolve it?
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How can we resolve it (II)

• We could increase Dimming ourselves
• aerosols reflect radiation and heat back into
  space. Increase such particles and reduce global
  warming?
• Let nature do it (I) Increased warming will
  increase evaporation from the oceans which will
  increase the cloud cover, reflecting more heat
  and radiation back into space.
• Let nature do it (II) Richard Lindzen of MIT
  says that global warming may dry out the upper
  levels of the troposphere. Less water in this
  level will reduce the greenhouse effect.

25
Global warming is our fault!Joseph Jeisman
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CO2 Concentration

• Over the last 150 years CO2 concentrations in the
  atmosphere have risen from approximately 280
  parts per million (ppm) to nearly 380 ppm.

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How much of this rise can be attributed to human
activities?

• Most of it (perhaps nearly all of it).
• Best evidence Fossil fuel burning and land
  clearing reduces the ratio of 13C to 12C in the
  atmosphere natural processes do not. The ratio -
  13C/12C has become about 2 lower (e.g. examining
  tree rings, corals etc), starting its decline at
  the same time the concentration of CO2 in the
  atmosphere started to increase around 1850.

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Source http//en.wikipedia.org/wiki/Image1000_Ye
ar_Temperature_Comparison.png
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Antarctic cooling

• It is important to recognize that the
  widely-cited Antarctic cooling appears, from
  the limited data available, to be restricted only
  to the last two decades, and that averaged over
  the last 40 years, there has been a slight
  warming (e.g. Bertler et al. 2004).
• It has been recognized for some time that model
  simulations result in much greater warming in the
  high latitudes of the Northern Hemisphere than in
  the South, due to ocean heat uptake by the
  Southern Ocean. This appears to be driven by
  changes in wind current that affect the
  distribution of heat in the world, not the extent
  of the increase.

Source http//www.realclimate.org