Tag Archives: economics

China Economic Impact Study Distorts Reality

This study is an exercise in statistical manipulation that distorts reality. Many factors affect productivity such that any correlation between TFP and atmospheric temperature is inconclusive. A correlation even if present is not indicative of causation or even that one is the “primary driver” of the other.

Peng Zhang, Olivier Deschenes, Kyle Meng, Junjie Zhang. Temperature effects on productivity and factor reallocation: Evidence from a half million chinese manufacturing plants. Journal of Environmental Economics and Management Volume 88, March 2018, Pages 1-17

This paper uses detailed production data from a half million Chinese manufacturing plants over 1998–2007 to estimate the effects of temperature on firm-level total factor productivity (TFP), factor inputs, and output. We detect an inverted U-shaped relationship between temperature and TFP and show that it primarily drives the temperature-output effect. Both labor- and capital- intensive firms exhibit sensitivity to high temperatures. By mid 21st century, if no additional adaptation were to occur, we project that climate change will reduce Chinese manufacturing output annually by 12%, equivalent to a loss of $39.5 billion in 2007 dollars. This implies substantial local and global economic consequences as the Chinese manufacturing sector produces 32% of national GDP and supplies 12% of global exports.

Empirical Economics Research Results are Biased

J. P. A. Ioannidis, T. D. Stanley and H. Doucouliagos The Power of  Bias in Economics  Research.  The Economic Journal, 127 (October), F236–F265. Doi: 10.1111/ecoj.12461

We investigate two critical dimensions of the credibility of empirical economics research: statistical power and bias. We survey 159 empirical economics literatures that draw upon 64,076 estimates of economic parameters reported in more than 6,700 empirical studies. Half of the research areas have nearly 90% of their results under-powered. The median statistical power is 18%, or less. A simple weighted average of those reported results that are adequately powered (power ≥ 80%) reveals that nearly 80% of the reported effects in these empirical economics literatures are exaggerated; typically, by a factor of two and with one-third inflated by a factor of four or more.

California Republicans Stray over to the Dark Side


California’s cap and trade approach is simply not sustainable. It’s like shooting yourself in the foot.  

“A small group of California Republican legislators are reversing their opposition to AB 32 — the “Global Warming Solutions Act” — and embracing California’s controversial climate change policies.” click here

Life Cycle Assessment-Based Optimization of Drinking Water Treatment

Capitanescu F, Rege S, Marvuglia A, Benetto E, Ahmadi A, Gutiérrez TN, Tiruta-Barna L. Cost versus life cycle assessment-based environmental impact optimization of drinking water production plants. Journal of environmental management 2016 Apr 21;177:278-287. doi: 10.1016/j.jenvman.2016.04.027.

Empowering decision makers with cost-effective solutions for reducing industrial processes environmental burden, at both design and operation stages, is nowadays a major worldwide concern. The paper addresses this issue for the sector of drinking water production plants (DWPPs), seeking for optimal solutions trading-off operation cost and life cycle assessment (LCA)-based environmental impact while satisfying outlet water quality criteria. This leads to a challenging bi-objective constrained optimization problem, which relies on a computationally expensive intricate process-modelling simulator of the DWPP and has to be solved with limited computational budget. Since mathematical programming methods are unusable in this case, the paper examines the performances in tackling these challenges of six off-the-shelf state-of-the-art global meta-heuristic optimization algorithms, suitable for such simulation-based optimization, namely Strength Pareto Evolutionary Algorithm (SPEA2), Non-dominated Sorting Genetic Algorithm (NSGA-II), Indicator-based Evolutionary Algorithm (IBEA), Multi-Objective Evolutionary Algorithm based on Decomposition (MOEA/D), Differential Evolution (DE), and Particle Swarm Optimization (PSO). The results of optimization reveal that good reduction in both operating cost and environmental impact of the DWPP can be obtained. Furthermore, NSGA-II outperforms the other competing algorithms while MOEA/D and DE perform unexpectedly poorly.

China-Led Infrastructure Investment Bank Support Growing

“American diplomats are upset that dozens of countries — including Nepal, Cambodia and Bangladesh — have flocked to join China’s new infrastructure investment bank, a potential rival to the World Bank and other financial institutions backed by the United States.” click here

Do the Federal “Revolving Loan” Funds Help or Hurt Achieving Safe Drinking Water, Clean Lakes and Rivers?

States are fully dependent upon federal funds for most of their programs and especially programs for drinking water and pollution control. The Clean Water State Revolving Loan Fund has been around since 1987. The Drinking Water State Revolving Loan Fund has been around since 1996. Yes, lots of money has been granted to states to provide loans to some municipalities for drinking water and/or wastewater treatment. When a states gets their grant every year they usually blow their horn to maintain an image of doing good for the citizens (e.g. Nevada). But the amount of money provided is very small compared to the overall need.

In the long run have these programs help or hurt the cause? In reality, such programs are simply not sustainable yet they continue to be funded for political expediency. But perhaps it is time to reexamine these and other federal programs related to drinking water and pollution control. A burgeoning federal and state bureaucracy does not keep drinking water clean nor do they prevent pollution.

We have more technological tools available now that when these regulatory programs began. Continuing unsustainable programs such as these are quickly becoming counterproductive.