Category: Environment

Categories
Economics Environment Sports This blog

[620] Of raw economic model on fresh water conservation

Dams around Klang Valley are running low on water. Despite that, I see some people water their plants during a rainy day while others wash their vehicles as if fresh water is unlimited commodity. Disgusted by the indifference shown by those people, I sat on a corner one day and tried to think what could make them care before water actually ran out and subsequently, the need of rationing. It didn’t take me long before I realized that the answer a mere basic supply and demand model.

Currently, at least in Kuala Lumpur, consumers face tiered-pricing scheme. The first 20 cubic meter cost RM0.57 per cubic meter. The next 15 cost RM0.91 per cubic meter and anything extra costs RM1.70 per cubic meter. Now, because the prices are fixed regardless of supply level — assuming ceteris paribus of course! — consumers really don’t have the incentive to conserve whenever there’s a shortage.

If we could somehow float the water price according to abundance, perhaps the flexible price or prices itself could give an appropriate signal to consumers. To put it bluntly, whenever there’s unreasonable scarcity, the price would say “hey bitch, conserve for fuck’s sake”. After all, efficient pricing theory suggests that in free market, without asymmetrical information, all information is expressed in prices. Yes, only in economics where all information could be compressed into a number…

Those that are unable and unwilling to conserve will be forced to pay more. Just imagine how high water prices should be right now in Kuala Lumpur. Note too that water supply is not an easily tradable commodity. So, as an example, if there is a water shortage in Kuala Lumpur, we really can’t just import it from, say, Singapore even if water is cheaper there. Hell, I don’t know why we want to import water from Singapore. But I trust you get the idea.

However, since water is a basic necessity of life, and the poor might be able to afford a high priced water, perhaps we should impose a price ceiling up to a certain amount (or even some quota per person in an average household) — an amount sufficient enough to sustain a non-wasteful lifestyle — something similar to the original first-20-cubic-meter-cost-57-cent (or sen) scheme. Anything higher than that amount should be charged at equilibrium price. Or, maybe even at equilibrium price plus any loss incurred due to the price ceiling. Since it should be very expensive in real term, conservation is almost guaranteed.

Four paragraphs to describe supply side; one paragraph for demand side. One paragraph to rule them all. Ack! Imagine the same thing but diametrically. Price will be higher due to low supply and high demand.

With exorbitant price, demand should decrease (assuming demand elasticity allows a decrease) and bring about a state where rates of water discharge at various dams are lower than replenishing rates. Thus, making an increase of supply possible. And greater supply lowers water price. With this regime, it’s obvious that water price will sway a lot but it will be at a dynamic equilibrium and more importantly, it’s an efficient and sustainable pricing. At the same time, it will combat Kuala Lumpur and Klang Valley’s problem.

And if demand outstrips supply, perhaps the reality of ridiculously high water price would actually rally local masses to demand certain somebody to finish up a project that connects Pahang’s water cache to Selangor’s. I wonder who is that certain somebody is…?

p/s — I’ve installed WordPress on my server. It’s here. Still need to import Blogger’s stuff into WordPress. I’m not sure about using WordPress right now. I kind of have this sense of loyalty to Blogger. But having a complete control of everything is tempting.

pp/s — na na na na na, na na na na na, na-na-na na-na-na na-na-na na, Let’s Go Blue! The Wolverines defeated the Spartans in OT again!

Categories
Environment Liberty Photography Travels

[619] Of Singaporean old building

I love a lot of things. Two of them are history and architecture. So, it shouldn’t be too astounding if I’m attracted to old buildings.

This one was taken in Chinatown, Singapore. It’s a shophouse, typical kind of building in towns and cities throughout what was once known as Malaya; Singapore included. I don’t know about Sabah and Sarawak though.

I have a picture with a row of shophouses from the same place in a previous entry of mine if you are interested.

Sometimes, I can’t help but feel amazed at how two countries have so much in common but simultaneously so different from each other. Sometimes, it’s shocking to see how two countries may have shared history or even dependent on each other but the air in between them is so full of distrust.

Human nature I suppose.

Kill all Singaporeans! LOL!

p/s – Judith Miller is freed. According to NYT (reg. req.):

Ms. Miller was freed after spending more than 12 weeks in jail, during which she refused to cooperate with the inquiry. Her decision to testify was made after she had obtained what she described as a waiver offered “voluntarily and personally” by a source who said she was no longer bound by any pledge of confidentiality she had made to him. Ms. Miller said the source had made clear that he genuinely wanted her to testify.

That source was I. Lewis Libby, Vice President Dick Cheney’s chief of staff, according to people who have been officially briefed on the case. Ms. Miller met with Mr. Libby on July 8, 2003, and talked with him by telephone later that week, they said.

If there is justice in this world, Cheney will be in trouble soon. I believe there’s justice somewhere underneath a dusty table. Hey, Tom DeLay finally got indicted. That should be of some proof that this world is not too unfair.

pp/s- Primate Noise posted an entry about SPCA’s effort to persuade the Malaysian government to amend Animal Ordinance 1953 into a tougher piece of legislation. Do your part by expressing your support for SPCA.

Categories
Economics Environment Politics & government

[599] Of fuel subsidy, tax reduction and Malaysian budget deficit

An awful lot of Malaysians are happy with the road tax reduction in the face of rising fuel cost. The government assures more is to come. The libertarian part of me jumps with joy. My green half however warns me that the government current policy might be unsustainable.

Fuel prices have been marching forward continuously for many months now. Give and take a jump of another USD20, crude oil price will be at an all-time high. The highest price in 2005 term is USD86 per barrel. Crude oil prices are currently around USD65 per barrel. Roughly a week ago, it was USD70 per barrel.

Consequently, all countries running gasoline subsidy are finding out that the program eats a lion’s share of their expenditure. Indonesia is a perfect example of this. Its subsidy program is so huge – a quarter of government expenditure in fact – that capitals are flowing out of Indonesia at a frightening rate. That capital outflow then forces Rupiah, the Indonesian currency, to plummet 10% against the USD this year alone. This could happen to Malaysia too and it’s crucial to reduce or even eliminate Malaysian fuel subsidy.

The Rupiah today rose after the Indonensian authority confirms that they will cut fuel subsidy further. Almost similarly, Malaysian government has allowed fuel price to increase step-wisely a few times this year. Three times if I’m not mistaken. That in effect reduces deadweight loss.

Despite so, the government has made several promises that are too bold.

First and foremost, the government promises that there will be no more price hike till the end of the year. There reason why this might be more than the goverment could chew is that there can be no guarantee how the global crude oil prices will react in the short term. The market is too susceptible to immediate events like Katrina, of which had forced the crude oil to break the USD70 benchmark. Not to mention, for the northern hemisphere, winter is looming in four months time. Given the no-hike promise, a too liberal price increase could match or even outdo the reduction in deadweight loss.

Second is the promise of more tax cuts. Bigger cuts mean lower revenue.

Combining possible fall in income from taxes with the inability to reduce expenditure, this is a formula only Republicans will endorse. It’s a recipe for budget deficit. A fall in income must be followed with a fall in expenditure if a budget is to be sustainable. Of course, economics allows greater expenditure against an inferior income but it must be noted that only in time of crisis should anybody allow that. This is where normative and positive economics diverge. On top of that, Malaysian 2004 budget deficit stands at 4.5% of its GDP. 2005 deficit is expected to stand at 3.8% of the GDP.

This is type of economics practices by Republicans – from Reagan to W. Bush – might increase the expected deficit for 2005. Our government is doing what an economic populist would do.

This might backfire soon – all the cheer might turn into jeer when the deficit swells in size.

p/s – even the World Bank is worried of climate change.

pp/s – fun flash animation. Don’t you love your SUVs?

Categories
Environment

[593] Of no, the Americans do not deserve it

I am probably one of many that are blaming Bush for Katrina fallout that is hitting New Orleans. Hey, Al Gore invented the internet and let’s blame Bush. What’s new?

But listening to Ray Nagin during a WWL interview on CNN makes blaming Bush more than a joke. It’s quite hard not to look at the federal government and Bush himself, eventually. The federal government has been slow in reacting and Bush was still on vacation a day after Katrina struck the American south.

However, I cannot take it when I hear some people mutter under their breath that “America deserves this”. Please do realize that not all Americans agree with those hawkish policies. There are innocent people down there regardless how many of us disagree with US foreign and environmental policies.

And no, it has nothing to do with god or some deity up in there sky. Not even some meatball monster with spaghetti all around it.

Today, it’s them. What if tomorrow’s our turn? How would you feel I say that you deserve it?

Please. Quit saying “they deserve it”.

p/s – Saw something like this on CNN news ticker: British Foreign Secy. Jack Straw: EU considering disaster relief, aid to U.S. rather than gasoline.

I’m not sure what to make out of that…

pp/s – New Orleans mayor Ray Nagin was calling for aid but the federal government said earlier that they had yet to receive formal request for help. Also on CNN, CNN International was interviewing Jan Egeland of the United Nations earlier and the United Nations say, they are ready to help but they have yet to receive formal request from the US.

I wonder if what seemingly to be a failure to mobilize rescue effort by almost everybody is actually due to red tape.

ppp/s – a Republican said New Orleans is not worth rebuilding. Something that might worth discussing but I don’t think that Republican appreciates the timing of his remark. He retracts his statement soon after several Democrat senators fired their free bullets.

Categories
Environment

[590] Of Bush declares war against planet Earth!

Hurricane Katrina has frozen New Orleans to a standstill. At first, it was suspected Katrina was an accident but it became clear later that this is a terror act.

Planet Earth has been identified as the mastermind of the dastardly attack. Words have it that al-Qaeda is working with the planet. Through satellite imaging, CIA has been able to prove that al-Qaeda is supplying planet Earth with the lost Iraqi weapons of mass destruction. However, skeptical foreign officials at the United Nations have expressed doubt. Fox News insists that these foreign officials know nothing.

An unidentified White House official informs the __earthinc that President Bush will be seeking the Senate’s blessing to declare war against the planet within the next 24 hours. Furthermore, unnamed source from the Pentagon hints that the name of the operation is Operation Earthling Freedom.

Across the Atlantic and the Pacific, Tony Blair and John Howard have expressed their willingness to join up and rid the world of planet Earth. Several others like Fiji, Malawi, Latvia and Maldives have promised supports.

p/s – Louisanans would probably want to thank President Bush for the New Orleans flooding.

New Orleans had long known it was highly vulnerable to flooding and a direct hit from a hurricane. In fact, the federal government has been working with state and local officials in the region since the late 1960s on major hurricane and flood relief efforts. When flooding from a massive rainstorm in May 1995 killed six people, Congress authorized the Southeast Louisiana Urban Flood Control Project, or SELA.

Over the next 10 years, the Army Corps of Engineers, tasked with carrying out SELA, spent $430 million on shoring up levees and building pumping stations, with $50 million in local aid. But at least $250 million in crucial projects remained, even as hurricane activity in the Atlantic Basin increased dramatically and the levees surrounding New Orleans continued to subside.

Yet after 2003, the flow of federal dollars toward SELA dropped to a trickle. The Corps never tried to hide the fact that the spending pressures of the war in Iraq, as well as homeland security — coming at the same time as federal tax cuts — was the reason for the strain. At least nine articles in the Times-Picayune from 2004 and 2005 specifically cite the cost of Iraq as a reason for the lack of hurricane- and flood-control dollars.

With increasing global temperature mean, some predicts there will be more monster hurricanes on the way. Well, actually, most climate models predict the same thing. So, is the ever increasing storms strength caused by climate change? I don’t know but last year was bad. This year is worse. Next year?

Pity the insurance industry. Estimated loss tops USD25 billion. Incidently, Jeremy Leggett in his book The Carbon War says climate change will affect the insurance industry