Transcript International Review of Environmental and Resource Economics

Addressing Megacity Risks:
Climate Change and Disasters
by
Adam Rose
School of Policy, Planning, and Development
Center for Risk and Economic Analysis of Terrorism Events
University of Southern California
Climate Change Mitigation
• Analysis of Advantages of Emissions Trading
- U.S. mega-regions (highly urbanized)
- Pacific Rim (China, Hong Kong, Singapore)
- China conservation regions (municipality cluster)
• Illustration of new concepts & new geography
Western Climate Initiative:
Mega-Region
• Initiated in 2006—focus on emissions trading
- originally 5 U.S. states & 1 Canadian provinces
- now 7 states & 4 provinces (plus observers: 6
U.S., 1 Canada, 6 Mexico)
- also discussions with EU & Pacific Rim
• Mega-Regions need not be contiguous; because
of stock pollutant character of GHGs
WCI Membership Grows
Original Participants:
British Columbia,
Washington, Oregon,
California, Arizona, and
New Mexico.
WCI Membership Grows
Original Participants:
British Columbia,
Washington, Oregon,
California, Arizona, and
New Mexico.
In 2007: Manitoba,
Montana, and Utah.
WCI Membership Grows
Original Participants:
British Columbia,
Washington, Oregon,
California, Arizona, and
New Mexico.
In 2007: Manitoba,
Montana, and Utah.
In 2008: Ontario and
Quebec also join.
Cost/Saving Potential of Mitigation Options in Michigan, 2025
Mitigation Option
Cost or Savings per
ton of GHG Removed
TLU-6: Land Use Planning and Incentives
-$189.00
TLU-3: Truck Idling Policies
TLU-5: Congestion Mitigation
-$85.00
-$81.00
RCI-4: Adopt More Stringent Building Codes for
Energy Efficiency
-$35.00
RCI-2: Existing Buildings Energy Efficiency
Incentives, Assistance, Certification, and
Financing
-$28.00
RCI-1: Utility Demand-Side Management for
Electricity and Natural Gas
-$19.00
ES-3: Energy Efficiency Portfolio Standard
-$19.00
AFW-10: Landfill Methane Energy Programs
-$1.57
ES-13: Combined Heat and Power (CHP)
Standards, Incentives and/or Barrier Removal
$4.09
TLU-1: Promote Low-Carbon Fuel Use in
Transportation
$16.00
GHG Emissions Trading
in the Pacific Rim
• Region contains many megacities, including city
states of Hong Kong & Singapore
• Major trading area with history of cooperation
• An agreement with an innovative approach to permit
allocation may entice China to join:
“No Harm” rule: give DCs enough permits such
that they incur zero costs after trading
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in million 2006 dollars
Net Costs of GHG Trading
12,000
20,000
10,000
8,000
6,000
Trading Cost
4,000
Net Cost
Cost Saving
2,000
0
-2,000
-4,000
China Conservation Quota System
• China’s conservation goal: 2.2% per year
• Examine system of interregional quota trading
(analogous to emissions trading)
• China starting to decentralize implementation:
municipalities & regions
• New delineation of region per socioeconomics
=> a region consisting of 3 municipalities
Chinese Conservation Regions
Beijing
Tianjin
Shanghai
Economic Resilience: Key Questions
• Is resilience a meaningful concept?
• Can resilience be rigorously defined?
• Can resilience be empirically measured?
• How effective has resilience been to date?
• Can resilience be enhanced or depleted?
• Are megacities more resilient or less resilient?
Economic Resilience Defined
General Definition:

static: ability of a system to maintain function if shocked

dynamic: speed of a system to recover from shock
Types of Resilience:

inherent: normal ability during crises to maintain function
(input/import substitution, market reallocation)

adaptive: ingenuity during crises
(increased substitution possibilities, market strengthening)
Motivation for Resilience
• Individual and business survival
• Need/profit—New “business continuity” industry
• Acknowledgement of interdependence:
“Companies have started to realize that they
participate in a greater ecosystem, and that their
IT systems are only as resilient as the firms they
rely on to stay in business.”—IBM Executive
Examples of Resilience
• Individual Business (and Household)
- conservation of critical inputs
- use of inventories
- business relocation
• Market
- efficient allocation of resources via price signals
- non-interruptible service premia
• Regional Economy
- importing scarce commodities
- information clearinghouses
Two-Week Power Outage in LA
• Losses with no resilience
--
$20.5B (93.6%)
• Losses with resilience
(all types)
--
$2.8B (13.0%)
• Indirect Losses (net GE)
-(as percent of direct PE losses)
$3.1B (23.8%)
Individual Resilience Options
Resilience Factor
Conservation
Adaptive Substitution
Inventories/Storage
Alternative Sources
Importance
Production Rescheduling
Total
Water
Electricity
1.0
1.6
3.0
—
58.7
75.5
6.1
3.9
—
28.1
28.7
79.4
91.0
89.6
Conclusion
• Resilience is a worthy second line of defense
- it is effective
- it is low cost
- it is self-motivated
• Resilience is yet another way we can all
contribute to reducing risks from disasters
References
• Kverndok, S. and A. Rose. 2008. “Equity and Justice in Climate Change
Policy,” International Review of Environmental and Resource Economics
2(3): 1-43
• Rose, A. 2007. "Economic Resilience to Disasters: Multidisciplinary
Origins and Contextual Dimensions," Environmental Hazards: Human and
Social Dimensions 7(4): 383-98.
• Rose, A. 2009. “A Framework for Analyzing and Estimating the Total
Economic Impacts of a Terrorist Attack,” Journal of Homeland Security
and Emergency Management 6(1): 1-27.
• Rose, A. and D. Wei. 2008. "Greenhouse Gas Emissions Trading Among
Pacific Rim Countries: An Analysis of Policies to Bring Developing
Countries to the Bargaining Table," Energy Policy 36(4): 1420-29.
• Rose, A. et al. 2009. "Climate Change Policy Formation in Michigan: The
Case for a Regional Approach," International Regional Science Review,
forthcoming.
• Wei, D. and A. Rose. 2009. “Interrregional Sharing of Energy
Conservation Targets in China: Efficiency and Equity ,” Energy Journal,
under review.