## Friday, October 23, 2009 ... //

### Kyoto pays you for deforestation

Because the Chromium team has just fixed a somewhat serious PDF bug your humble correspondent reported ;-), it's time to look at a much more serious bug, a bug of the Kyoto protocol and the related European laws:

Science, NPR, Australian ABC, Carbon Positive, TIME
The Kyoto protocol and similar treaties and bills are designed so that you get paid if you cut forests, burn the wood, and seed biofuel plants on the empty place instead. ;-) So the legal support for the biofuels is likely to be more harmful to the environment than petrol.

The authors, Timothy Searchinger et al., elaborate upon their February 2008 article in Science Express that described the regression. Now, in 2009, they also claim that there exists an "easy fix".

So far, the price for the CO2 has been small enough not to cause any effects. However, it's plausible that if the price increased sufficiently for the net CO2 emissions to be changed by the legislation, we could see a lot of deforestation.

It's questionable whether such "loopholes" may ever be completely fixed. The main problem is the inherent non-market character of the "caps".

In 1968, the author of the economic transformation of Dubček's Czechoslovakia during the Prague Spring (a third way), Mr Ota Šik, an economist born in Pilsen, has found a power plant and a colliery near Ostrava, in the Northeastern Czech Republic. A funny feature of this pair was that the power plant produced as much electricity as the colliery consumed and the colliery mined as much coal as the power plant burned. :-)

This is a typical bug that socialism routinely experiences. As Mr Petr Vopěnka, a mathematician who told us about this story in the 1990s, emphasized, there can exist not just pairs but much more complex "circles" of economic relationships in socialism that imply that the system doesn't work.

Because CO2 is being consumed and produced by so many processes, it's very hard to assign a "price tag" to all of them. You know, the human activity would be adding something like 6 ppm to the CO2 concentration (currently near 388 ppm) every year but 4 ppm is being "eaten" by processes whose rate is supported by the elevated CO2 concentration.

(Yes, I do think that the would-be skeptics who claim that we haven't added any CO2 are just crackpots.)

But it's still a fact that the resulting changes of the concentration by 2 ppm are a result of a fine cancellation because every year, the equivalent of more than 100 ppm is being produced somewhere in Nature while the nearly same amount (up to the 2 ppm difference) is being absorbed elsewhere.

If the price of CO2 emissions were substantial, it's very likely that the economic subjects would be able to find even tiny imperfections in the CO2 accounting and abuse them, thus reducing the efficiency of this whole system. Derivatives could be produced that would leverage i.e. amplify this trick. It's enough to find a circle of CO2 transfers that makes you pay nothing but that still allows you to add the carbon dioxide into the system. The power-plant/colliery example above indicates that you are likely to be able to achieve such a thing.

Even if I believed that a carbon tax (or cap) would be a good idea, which I surely don't, I would be very skeptical about all similar policies.

Hat tip: nevket240, Vitalik