Seeking the Signal in the Noise of Environmental Performance Metrics

This week CIESIN released, with its colleagues at Yale University, the 2012 Environmental Performance Index (EPI).  Wherever possible we collected and processed data in time series, to permit not merely comparisons across countries but also consistent comparisons over time. This has made the EPI a much more powerful diagnostic tool because trends are often much more revealing than static patterns.

To take one illustration, consider overfishing. Globally, the picture is not pretty. On our 0-100 scale, the world average went from 34 in 2000 to 29 in 2010—twice as many countries got worse than got better.

One of the real pleasures of producing the EPI is the chance to work with fellow data geeks who help guide us to the most suitable information and help us structure it into meaningful indicators. For overfishing we turn to the Sea Around Us group at the University of British Columbia, led by Daniel Pauly and backed by a talented, hard-working team. They have done incredible work collecting all the available fishery statistics, uncovering and correcting major errors, making the numbers as comparable as possible, and putting together compelling, informative time series that reveal where overfishing is running rampant and where it is under control.

Map of waters of Namibia. The top two panels show landings by species; the bottom two panels show stock status (click to enlarge). Source: Sea Around Us Project

I asked the people at Sea Around Us where these numbers show meaningful success brought about by deliberate policy efforts. They pointed to Namibia as a clear example. In our 2000-2010 trend analysis, Namibia’s score rises 34 percent. The policy success is even more dramatic when looking at the full time series assembled by Sea Around Us, which reveals that things were extremely bad in the early 1990s, with about 80 percent of the stocks in a collapsed state. By 2000 they had already improved considerably, and that improvement has continued to the present. A major driver of this change has been the elimination of foreign fishing fleets from the Namibian EEZ. Until Namibia established its EEZ in 1990, South African, Russian, Spanish, and Ukrainian vessels took the bulk of the catch (see figure, top). After 1990, Namibia restricted the access to its EEZ (NMFS, 2009), and was able to enforce restrictions.  Consequently the catches of horse mackerel, chub mackerel, hake, anchovy, and monkfish declined briefly and can be attributed to the dramatic decrease in fishing effort expended in the Namibian EEZ by foreign fleets, rather than an actual decrease in the biomass of these species (see figure, second from top).

Being able to see such trends and link them to policy efforts makes possible the identification of leaders and laggards and holds open the promise of accountability and progress.

Marc A. Levy is deputy director of the Center for International Earth Science Information Network (CIESIN), a research and data center of the Earth Institute of Columbia University. He is one of the authors of the 2012 Environmental Performance Index. This post originally appeared on State of the Planet, the Earth Institute's blogspot.

2012: The International Year of Sustainable Energy for All

The United Nations has named 2012 the “International Year of Sustainable Energy for All,” setting three goals: ensuring universal access to modern energy services, doubling the rate of improvement in energy efficiency, and doubling the share of renewable energy in the global energy mix.

Possibly the greatest area of opportunity for achieving these goals is the developing world, where low electrification rates mean great potential for improving access, efficiency gains from switching to modern energy from traditional fuels can be significant, and expanding populations and standards of living drive demand for new generation facilities, which can take advantage of recent advances in renewable energy technology.

The aforementioned goals are driven not just by environmental sustainability targets, but also by recognition of the significant negative impact that energy poverty has on billions of lives. While a majority of earth’s population lives with critical goods just out of reach—poverty that frequently takes the form of a lack of food, clothing or shelter—a lack of these goods insufficiently describes the full spectrum of poverty that these individuals endure. Many throughout the developing world also experience energy poverty, lacking access to electricity and the light it provides.

According to the IEA, 1.3 billion people lack access to electricity, and 2.7 billion to clean cooking facilities, mostly in rural areas in sub-Saharan Africa and developing Asia. For these populations, productive activity is limited by available energy sources: many clinics close at sundown, vaccinations cannot be refrigerated, and children study by the light of kerosene lanterns. Electrification can improve lives and promote environmental sustainability here not just by providing light and power for a greater range of activities, but also by encouraging a shift away from the traditional energy sources thatcontribute to millions of deaths annually via indoor air pollution.

To provide modern energy, many countries have invested in large-scale primary generation facilities—hydroelectric dams, for example. But the infrastructure necessary to deliver electricity to the entire population is frequently lacking. It’s too expensive to build when the customer base is diffuse and much of the population served cannot afford to pay unsubsidized prices for electricity.

In the coming years, forward-thinking countries will explore strategies to increase renewable primary energy generation in order to provide modern energy access while protecting the shared environment for increasing populations with climbing standards of living. In addition, decentralized electricity generation and transmission—in the form of community mini-grids, for example—can help overcome cost issues in traditional grid expansion and provide modern energy access to alleviate energy poverty. By developing strategies to increase electrification rates efficiently and expandingrenewable energy, countries can both pursue reductions in energy poverty and work toward environmental performance goals.

China’s Long March Towards Better Environmental Conditions

This post originally appeared on Columbia University's Earth Institute blog, State of the Planet.

Given its burgeoning economic growth, its rapidly expanding industries, large population, and growing consumer class, many in the environmental field have an intense interest in how China will address its environmental problems.  The country has made some impressive energy and resource efficiency gains, and environmental issues are an important part of the government’s efforts to build a “harmonious society.”  Yet, as evidenced by the recent air pollution events in Beijing, there is a lot of progress to be made, and the government has yet to fulfill its commitment to data transparency.  China’s Regulation on Environmental Information Disclosure, which took effect in May 2008, represents a major step forward, but implementation is still at early stages and much remains to be accomplished to tap the full power of public participation in environmental protection as embodied in the Aarhus Convention, the US government’s Right to Know provisions, and the recently developed Access for All initiative.

It is in this context that a team of researchers (myself among them), jointly led by CIESIN at Columbia University and Yale University, have released the report, Towards a China Environmental Performance Index, that takes a first cut at assessing China’s environmental management and performance at the provincial level. Working closely with colleagues at the Chinese Academy for Environmental Planning (an arm of the Ministry of Environmental Protection) and City University of Hong Kong, we held three expert workshops over the course of two years, analyzed China’s environmental laws, and compiled the best available data. In the end, we determined that it was not possible to produce an aggregate index by province – but the process revealed the steps that would be necessary to fulfill that vision.  The bulk of the report provides a component-by-component analysis of China’s policies and measurement practices. Charts and maps illustrate the issues for 33 indicators, relying entirely on official provincial statistics.

Our decision to stop short of producing an aggregate index was based on concerns over data quality (to use statistical parlance – we had concerns over validity and reliability) and a lack of official policy targets for a number of the indicators we developed. Although we could have proposed interim targets, the crux of the matter was that we could not access raw monitoring station data that would have helped to assess data quality.  This led us to have concerns about how much the official statistics reflected on the ground realities. For our global work (see the 2010 Environmental Performance Index (EPI) and the forthcoming 2012 EPI) it is true that we were unable to validate all data sources (especially those derived from official UN publications – which are becoming fewer in number); but in our recent work with countries we have sought to achieve a higher standard.

What we did produce is a model framework for environmental performance indicators to assist the Chinese government in tracking progress toward policy goals, as well as recommendations for how the Chinese government can apply more aggressive performance metrics to environmental decision-making. China is making good faith efforts to raise environmental standards, partly due to the outcry of its increasingly affluent citizens for better air quality.  Yet the government is also seeking to lift millions more out of poverty, and to do so at a pace that has rarely been witnessed. It seems clear, however, that China’s quest for economic development at all costs will create a legacy of environmental damage that will be costly to repair – unless action is taken now. To avoid the worst impacts, the government needs to have policy tools that are adequate for guiding and prioritizing action, and that is what an EPI would provide.

The report is available in English here; a Chinese version will be available shortly. For more information, visit the Yale Center for Environmental Law & Policy website.

Bridging Gaps in Durban: What Can China do?

The following post is republished from China FAQs: The Network for Climate and Energy Information.

One of the most persistent themes so far at Durban has been how to bridge gaps - the divide between the developed and developing countries, many of whom disagree about whether the Kyoto Protocol should be extended into a second commitment period; the hole in climate finance pledges from developed countries; and the ambition or emissions gap between the Copenhagen pledges and the stabilization of global temperatures below a 2 degrees Celsius increase from pre-industrial levels.

These three major gaps must be addressed in Durban. One major question will be whether developing and some developed countries, Europe in particular, can work together to find a solution that enables the Kyoto Protocol to be extended. When it comes to money, there are questions about where some $2 billion USD out of the $30 billion promised to developing countries at Copenhagen and Cancun to assist them in mitigation and adaptation efforts will come from.

Perhaps the most prominent issue being discussed in Durban is the emissions or ambition gap between Copenhagen emission reduction pledges and the goal to limit global temperature rise to 2 degrees Celsius. To help facilitate the negotiations, the United Nations Environment Programme (UNEP) released a report Bridging the Emissions Gap which concludes that even if countries fully implement their Copenhagen commitments, the world would only be about halfway towards the emission reductions necessary to ensure global temperatures do not warm more than 2 degrees Celsius. However, the good news is that we have the technological and financial capacity now to achieve the emissions reductions necessary to avoid such an increase. Focusing on projections of global greenhouse gas emissions in the year 2020, the report looks at the “emissions gap” between:

1. the level of emissions needed to ensure an average global temperature increase below 2 degrees C; and
2. the level of global emissions in 2020 we’re likely to see given the voluntary emission reduction pledges in the Copenhagen Accord.

The report finds that even if all Copenhagen reduction pledges are met, total emissions would still exceed the level necessary to prevent a 2-degree increase by 6 to 11 gigatonnes. This is about 1 gigatonne greater than last year’s gap, an increase brought about by some countries such as Australia and Brazil having clarified how they calculate the baseline emissions from which their reductions would be made - effectively weakening their Copenhagen pledges.

But on the bright side, the full implementation of current technologies could more than make up for the gap, and at an economically feasible price. Existing energy efficiency technologies, renewable energy sources, and agricultural practices will be enough to put us back on the right track. In other words, we no longer need to wait for the next great technological breakthrough, just the next great policies to deploy the technology we have now. The report also emphasizes the need to improve measurement and accounting for market-based incentives such as the carbon reduction projects through the Clean Development Mechanism and from land-use, land-use change and forestry (LULUCF).

Negotiators here in Durban have been actively discussing the report and referencing the emissions scenarios that show global emissions must peak sometime before 2020 if temperature rise is to be contained below 2 degrees C. Delegates have been referring to the 6-11 gigatonne gap on the plenary floors and in the working groups over the last week.

We had the opportunity to speak with Dr. Kejun Jiang of China’s Energy Research Institute and a lead author of the UNEP report, about their analysis and what China can do here in Durban to help bridge the gap.

The Gap

Q: The UNEP report concludes that global emissions will need to peak before 2020 if the “emissions gap” is to be closed. How likely do you think it will be for countries to agree on this here in Durban and what about the time frame for when China’s emissions will peak?

A: It’s necessary for the world to see emissions peak by 2020. We can get there supposing China’s emissions peak in 2025, and developed countries will have significantly reduced emissions by 2025. This way, it’s still possible to control global average temperature rise below 2 degrees Celsius. It’s not quite possible to observe the global peak before 2015. For China, emissions are expected to peak around 2030. However, if we look at clean tech development in China now, the speed is very fast and it’s still possible to see major changes coming from China in 3 to 4 years to help close the gap.

Q: So is China’s Copenhagen pledge to reduce carbon intensity 40-45 percent enough to help bridge the emissions gap?

A: Actually, the 12th-Five Year Plan was made according to a target of 45 percent carbon intensity reduction. There are a lot of policies and actions in the plan on energy efficiency and non-fossil fuel energy. If all this work could be done well, it is possible for China to do better than the target.

Clean Tech

Q: Technology transfer continues to be a very hot-button issue in the UN climate negotiations. Will China be pushing for technology transfer to contribute to their ability to help close the emissions gap?

A: There is much capital from China looking for investment opportunities, however domestic investment has been pretty much saturated, and they are now looking at overseas investments. Clean tech investment is a good choice because China has the most competitive technologies that can bring down the cost of wind and solar power. So this is what we want to convey here in Durban: it’s not just emission reductions, it’s also about the country’s future competitiveness in the clean tech sector.

China will have a lot of capital in the future, like I just said, and China is not really in need of CDM money, which is only a tiny little part of GDP. What China needs is high-end technology.

The Durban Agenda

Q: What do you think can be accomplished here in Durban?

A: So here are my suggestions for us observers this time in COP-17. First, we want to leave some more room for the negotiators. Copenhagen was about debating; Cancun was about moving forward, and Durban is a working conference where countries don’t really want to fight each other but to finish the “homework” left from Copenhagen and Cancun. Also, countries in Durban want to nail down some technical details. For example, the EU wants to promote a “road-map” this time, and countries like China are waiting for that proposal to see how much it can be promoted. If Durban fails again, then countries will start to doubt UN’s capability.

Also China is changing very fast, and the negotiators need time to follow up. For example, China expected financial support in Copenhagen, but this time, this is not a major issue for China.

Q: If Parties fail to decide on a second commitment period before the Kyoto Protocol expires next year, what do you think China’s response will be?

A: I think this [failure to agree on the Kyoto Protocol] would be unimaginable. Without the KP - the minimum-level of agreement - it would be a mess. Ideally, we should have an improved KP, both considering the needs from G77+China and developed countries. China can also compromise on some issues here in Durban.

Q: If a new agreement can only be made for 2020, do you think that would be too late?

A: Certainly too late. There is possibility for some countries to make new adjustments to their 2020 emission goals. So I think countries should start to make targets for 2025 and 2030. If those targets are made very clear, then we can start to place less emphasis on emission targets for 2020.

Angel Hsu is a PhD candidate at Yale School of Forestry and Environmental Studies and a contributing expert to ChinaFAQs.org; Max Song is a MEM student at the Yale School of Forestry and Environmental Studies; and Jonathan Smith is a JD/MEM candidate at Yale Law School and the Yale School of Forestry and Environmental Studies. They are all attending COP-17 in Durban.

Propelling the Durban climate talks - China announces willingness to consider legally binding commit

The following post is republished from China FAQs: The Network for Climate and Energy Information.

When China launched its first official pavilion at a UN climate conference last week, UN Framework Convention on Climate Change (UNFCCC) Secretariat Cristiana Figueres was there alongside China’s NDRC Vice Minister Xie Zhenhua to cut the ribbon. Swarmed by journalists in the standing-room only conference center of the China pavilion in Durban, Figueres applauded China for being a “trend-setter” in global renewable energy, resonating around the world and during the first week of climate negotiations in Durban.

“As I look at what has happened here at Durban in the negotiations this past week, what I see is a sailboat that has been sailing over very difficult waters, but with the wind blowing the right direction. And now that you have arrived, that boat now has a powerful motor behind it,” she said. The motor propelling talks forward into the second and final week of negotiations here in Durban may be developments in China’s negotiation position that emerged last week. An announcement that made waves was with regards to China’s willingness to consider signing on to a legally-binding agreement with binding climate targets after 2020 for the country.

Lead Chinese negotiator Su Wei told media last Friday that, “We do not rule out the possibility of legally binding. It is possible for us, but it depends on the negotiations,” Su is quoted as speaking in English rather than Chinese, presumably to make his point clear.

Although China made similar noises in Cancun, Su’s statement is the first time in the international climate negotiations that China has made this type of overture so clear with regards to a willingness to consider placing its post-2020 action into a legally binding instrument. This willingness to discuss the legal nature of post-2020 targets comes directly counter to the United States’ position put forth in Durban last week in which Jonathan Pershing, Deputy Envoy for Climate Change, said that a legally binding post-2020 agreement would be unacceptable unless other major economies also agree to be legally bound. Indeed it would seem to fulfill one of the US’ main conditions for moving forward.

If China is indeed open to placing its post-2020 commitment into an internationally legally binding instrument, it has just opened a pathway forward to both securing the Kyoto Protocol for the post-2012 period and building a bridge, with all Parties, to a legally binding regime in the near future. The impact of this is not to be underestimated.

Vice Minister Xie Zhenhua confirmed China’s stance when he spoke at a briefing for international NGOs immediately following the China Pavilion’s launch. “We can start the process for a legally-binding framework for issues after 2020,” Xie said, clarifying five conditions that must be met before China can make its commitments legally binding in an international agreement. These conditions are:

1. Parties must continue the Kyoto Protocol through a second commitment period;
2. Developed countries must meet financial commitments to provide developing countries $30 billion in fast-start financing and $100 billion per year by 2020 through the Green Climate Fund;
3. Institutionalization of consensus on finance, technology transfer, REDD+, adaptation, and transparency measures;
4. Commitment to completion of the review of adequacy of long-term goals scheduled to take place between 2013 and 2015.
5. Define a framework for a post-2020 agreement that upholds common but differentiated responsibilities, equity, respective capacities, and environmental integrity.

If all conditions are met, Xie says, “We are open to the process.”

Implications – Will China’s move bolster the EU mandate?

The question remains as to whether these major developments in China’s position here in Durban will have a significant impact on the negotiations in Durban. The European Union has stated its openness to placing its 2020 targets into the legally binding Kyoto Protocol if it is part of a package. The package includes a roadmap that would clearly show the way forward for all major economies to be in a binding regime in the post-2020 time period, the negotiations for which would end in 2015. China’s statements agreeing to internationally-binding emissions limits in a post-2020 framework might galvanize other major emerging economies such as India and Brazil to do the same.

Jennifer Morgan, the Climate and Energy Program Director at the World Resources Institute, explained the significance of China’s new posture:

“If China is indeed open to placing its post-2020 commitment into an internationally legally binding instrument, Europe and the most vulnerable countries are now its key allies. If these Parties can work together this week, Durban has a good chance of success,” Morgan added.

It is not yet clear what kind of commitment China would be willing to bind, and that level of specificity does not appear to be part of the current discussion.

Jonathan Smith (JD‘12/MEM’12) and Max Song (MEM’12) contributed to this piece.

Angel Hsu is a Phd candidate at Yale School of Forestry and Environmental Studies and a contributing expert to ChinaFAQs.org; Max Song is a MEM student at the Yale School of Forestry and Environmental Studies; and Jonathan Smith is a JD/MEM candidate at Yale Law School and the Yale School of Forestry and Environmental Studies. They are all attending COP-17 in Durban.

Chinese experts discuss absolute emissions limits in Durban

The following post is republished from China FAQs: The Network for Climate and Energy Information.

The idea of a total cap on energy consumption in China, first suggested last March before the National People’s Congress, has reemerged in Durban -- and surprisingly there are now suggestions that China might consider some kind of a cap on carbon emissions. This has been suggested apparently as part of domestic policy rather than as a negotiating position, but details are very sketchy.

Over the last week, we have been witnessing an active debate amongst Chinese academics and researchers on energy and carbon caps, although these discussions have taken place separately, from outside the plenary floor and in the multitude of side events the Chinese delegation has been hosting. Chinese negotiators have been careful to not muddy the waters in Durban, especially after making such a loud splash late the first week of negotiations by supporting a legally-binding treaty after 2020. Read more.

What senior government researchers have been suggesting, however, is that China is considering an absolute rather than an intensity-based emissions target that is more restrictive after 2020. Statements by senior researchers from the Energy Research Institute - a high-level government think tank associated with the National Development and Reform Commission (NDRC) - are the first time that China has suggested they might soon be ready to set a timetable and limit for its emissions, at least in the context of domestic policy.

This idea first emerged prior to the March release of the Five-Year Plan. Senior representatives of the Chinese government suggested that an energy consumption cap of 4.1 billion tons coal equivalent might be included in the Plan. Since then we understand the question of a total energy cap has been hotly debated within the Chinese government. Now its advocates are speaking fairly forcefully in Durban and going beyond the energy cap to suggest a carbon cap as well.

At a side event on local pilot carbon trading schemes on Dec. 1 organized by Tsinghua University and the Institute for Global Environmental Strategies, the debate of absolute versus intensity emissions targets was prominently mentioned. Tsinghua University professor Teng Fei emphasized that whether these preliminary carbon-trading schemes will cap emissions on an absolute or an intensity basis is the biggest issue for government leaders in deciding how to roll out these programs to the four cities and two provinces selected as pilots. Lead Chinese negotiator Su Wei was also present and added, “It’s very clear in China’s Five-Year Plan that it’s our objective to gradually establish a national system on carbon emissions trading. Certainly the pilot system is still in the design stage but we have more or less set the direction of piloting market mechanisms.” It certainly could be the case that experience with regards to the design of caps (i.e. sectoral or provincial basis; baseline calculations, etc.) in these local pilot projects may eventually inform a national level cap on emissions.

One reason for a possible shift to an absolute target is because an emissions cap may spur growth in alternative energy sectors – such as natural gas, renewables and nuclear – according to Yang Fuqiang, Senior Advisor on Energy, Environment, and Climate Change for the Natural Resources Defense Council.

While Chinese experts and delegates have not suggested what kind of carbon number they are considering, Jiang Kejun of NDRC’s Energy Research Institute noted, “If you add up the coal consumption cap, the target for non-fossil energy consumption, and the natural gas target, you can basically calculate what an emissions limit for China might be.”

At this point this discussion mainly concerns domestic policy, but its active airing in Durban suggests the scope for Chinese policy development in the next several years.

Angel Hsu is a Phd candidate at Yale School of Forestry and Environmental Studies and a contributing expert to ChinaFAQs.org; Max Song is a MEM student at the Yale School of Forestry and Environmental Studies; and Jonathan Smith is a JD/MEM candidate at Yale Law School and the Yale School of Forestry and Environmental Studies. They are all attending COP-17 in Durban.

Demystifying China’s Controversial Air Quality Measurements

Beijing’s air quality dominated international headlines when discrepancies arose last month between official monitoring data and U.S. Embassy measurements.

Pictures of stifling haze and smog posted and circulated online by netizens depicted extreme pollution. The U.S. Embassy’s monitor indicated that the air quality was “hazardous” and “beyond index, but “the Chinese government’s official Air Pollution Index indicated that the air was only “slightly polluted.[1]”

Why the inconsistency? To start, the U.S. Embassy’s monitor, which was originally put in place in 2008 to record air quality during the Olympics, measures finer particulate matter with a diameter of 2.5 micrometers or less (PM 2.5) and ozone. These particulates are more relevant for human health because of their ability to penetrate human lung tissue and lead to asthma, lung cancer, and cardiovascular disease. The Beijing measurements, however, don’t include these pollutants and instead take an average of measurements from monitoring stations from around the city. 

Many people are asking which measure is more accurate. This is a difficult question to answer because it’s almost like comparing apples and oranges. The two systems are measuring different pollutants, and the U.S. monitor is only looking at one point source compared with Beijing’s 27 monitoring stations. The accuracy the U.S. Embassy’s monitor – and how often the instruments are calibrated – is also unclear. Granted, Beijing’s system has its flaws, which the government has acknowledged and is working to improve. As a sign of good faith, the Beijing Environmental Protection Bureau announced that it would allow public tours of its air monitoring facilities to show that they aren’t trying to hide behind the data.

These efforts come in conjunction with several important policy developments regarding air quality in China.  Last month I wrote about new efforts to pilot PM 2.5 measurement in model environmental protection cities in China. Last week, the Chinese government announced new ambient air quality standards for PM 2.5 and ozone levels (link available in Chinese only). While still slightly below WHO recommendations, these new standards are a significant step in the right direction, particularly when diplomatic cables suggested that PM 2.5 data were deemed too politically sensitive to measure and report. These new standards will likely not take effect nationally until 2016; however, major cities like Beijing and Shanghai, which already measure PM 2.5 but do not publicly release the data, likely will roll them out sooner. Officials from the Ministry of Environmental Protection have already noted that there will likely be a binding national target for PM 2.5 in the next Five-Year Plan.

LinkAsia recently asked me to discuss Beijing’s controversial air quality data and some of the measures the government is taking to address citizen concerns over poor air quality. You can view the interview here: http://www.linktv.org/linkasia/linkasia2011111119/understanding-chinas-deadly-air.

Metrics and Measurement of Sustainability Performance

The selection of sustainability performance metrics in a company’s sustainability or corporate social responsibility (CSR) management system is dependent on the relevant issues facing that specific firm, the issues facing its stakeholders, and the context of the company’s industry. CSR metrics are crafted to report on performance in the environmental, social, and economic contexts. Since the issues underlying CSR are complex, selection of particular sustainability metrics involves value judgments about their importance and the measurement methodology to be used. I offer below some issues to consider in developing sustainability metrics and reporting systems. This is by no means an exhaustive list, but rather a menu of issues to think about that are relevant to CSR measurement systems.

First, one sound business philosophy that I learned a long time ago from a college professor was: “you get what you measure and reward.” This philosophy has rung true over the years and I’ve seen it play out at many different firms. Any metric that the firm sets out to produce and track should somehow be weaved into the performance management and bonus incentive scheme of the company in order for it to have the greatest impact. If employees are not trained to consider CSR metrics as part of the results they manage to, and if they are not somehow directly incentivized based on CSR performance, they will focus and prioritize other areas outside of these metrics. In such a case, improvement to areas tracked by the CSR metrics will likely be incremental or nonexistent altogether.

Second, practically every individual metric has benefits and drawbacks involving tradeoffs of incentives or measurement goals. It is easy to create perverse incentives one way or another with any given individual metric. For instance, using an energy intensity metric (energy usage/output or revenue) has the benefit of factoring in the effect of more production by the firm, but has the drawback that the company’s absolute energy usage—and thus its total impact—can be increasing, while being masked by the intensity metric. Using absolute energy usage has the opposite effect, as it masks improvements in efficiency when the firm’s growth outpaces the related efficiency gains. These optical effects make it difficult for either metric to provide an accurate picture on its own, and it can result in employees managing to one performance indicator at the expense of the other. Often, good metric systems are designed to use sets of counterbalancing metrics whose effects cancel each other out. This helps provide a balanced performance picture and reduces the possibility that employees or managers will have incentive to improve in one area at the expense of another.

Third, when working with any type of metric, it is very important to develop benchmarks against which to compare the results. Such benchmarks need to be relevant to the objectives of the CSR metric system. When the desired objective is improvement over a prior year, then the benchmark is simply the prior year quantity. However, how do we determine benchmarks to achieve sustainability? One vocal sustainability researcher and metrics expert, Mark McElroy, holds that many CSR metrics in use today are lacking because they do not have a benchmark measure to compare against that represents the truly “sustainable” level of use for that resource for that company. In other words, if a firm states that it used 1.0 million (M) gallons of water in the current year as compared to 1.1 M gallons in the previous year, we can only say that this was an improvement over the prior year. However, what does it say about whether the 1.0 M gallon result is “sustainable,” meaning a rate that doesn’t deplete the resource beyond its capacity to regenerate? To know if that firm’s water use is sustainable, a more detailed assessment would need to be made about water availability and use in the firm’s geographic region, and such an analysis would require allocations of the resource base amongst industries and companies. It is, to be sure, a formidable undertaking, but Mr. McElroy’s point is well taken that CSR metrics reported without context stand little chance of achieving their objective of reporting on sustainability, as defined.

Finally, for companies wishing to report sustainability metrics externally, there are additional considerations of how to frame and execute such external reporting. Currently, many companies use annual CSR reports as a primary vehicle to communicate their environmental, social and economic performance. Such CSR reports are often complemented by press releases and other ongoing external communications. Surely there are good reasons to adopt this approach to external reporting, but it is worth considering whether it is a good idea to separate the company’s CSR reporting from its financial reporting. A public company in the U.S. files annual financial reports (Form 10-K) and quarterly financial reports (Form 10-Q) with the Securities Exchange Commission (SEC), and those are very likely the reports that 99 percent of investors pay most attention to. In that context, do companies risk creating the perception that CSR reports are a side dish when they divorce sustainability metrics from financial ones? As companies refine their CSR measurement and reporting systems, they may want to consider ways of unifying communications so that users of reports are not left feeling like there are double standards.

Designing and implementing any form of performance measurement system is indeed a challenging task, and it is no less so for a CSR measurement system. Organizations need to make sure their metric systems are tailored to the challenges of sustainability measurement and are set up to succeed.

Rafael is a 2nd-year MBA/MEM joint degree student focused on energy policy and strategy. Prior to Yale, Rafael worked almost 10 years as an external financial auditor, including as manager at Deloitte & Touche LLP. Rafael is a licensed Certified Public Accountant (CPA), and holds other financial certifications.

Clearing the haze

The news late last month from China’s environment ministry that it plans to bring one of the country’s most destructive and widespread pollutants – tiny particulates widely known as PM 2.5 – into national air quality standards suggests that attitudes to pollutant data, once deemed too politically sensitive to gather, may be shifting. 

Air particulates with a diameter of 2.5 microns or less (hence “PM 2.5”) have serious health implications. Small enough to penetrate human lung tissue, they can cause asthma, lung cancer and cardiovascular disease. In most parts of China, PM 2.5 has beenfound to account for more than half of air particulate pollution.  But despite these serious pollution levels and impacts, national air-quality standards in China have lacked requirements for monitoring PM 2.5, or specific reduction targets – until now.

Speaking at Seventh Environment and Development Forum on September 22, China’s pollution control secretary Zhao Hualin announced that the Ministry of Environmental Protection (MEP) intends to revise its national ambient air quality standards to include PM 2.5 measurements. Recognising the contribution of PM 2.5 pollution to poor visibility and air quality, Zhaotold the audience, “We have now started to address the haze problem, which is precisely a PM 2.5 problem”. 

The idea is for China’s so-called “model cities” to pilot particulate measurement, themselves something of a shifting phenomenon. In late August, the MEP made revisions for the second time as to what criteria are necessary to qualify as a National Environmental Protection Model City – a title given to cities to reward special efforts in the green sphere – and PM 2.5 measurement is among the requirements. 

Under these new standards, only 11 cities now qualify as model cities, vastly fewer than the 77 reported to have carried the title before the changes. They are: Wujiang, Liaocheng, Qingpu District of Shanghai, Linyi, Dongguan, Xuzhou, Yinchuan, Yichang, Linan, Huai’an and Foshan. Three more have undergone review and are in the process of being designated as model cities, while the remaining locations previously considered model cities are under review. 

The strengthening of air quality metrics suggests that the political tides surrounding pollutant data may be changing. When the MEP released draft amendments to its Air Pollution Index (API) in late February of this year, the inclusion of PM 2.5 was notably absent, despite the addition of ozone and a number of other considerable improvements.  

The omission was criticised as a political maneouvre rather than a decision stemming from a lack of technical capacity in Chinese cities to measure the pollutant. Ma Jun, who directs the Beijing-based Institute of Public and Environmental Affairs, told the Global Times, “Government agencies feel the [inclusion of PM 2.5 in the] index may hurt the image of many cities that want to attract investment or that they may not be able to improve PM 2.5 pollution in a short time.”  

Secret US diplomatic cables, released by Wikileaks, further corroborated such suspicions, reporting research by local scientists that revealed PM 2.5 levels five to 10 times higher than World Health Organisation guidelines was deemed “too sensitive” for authorities and therefore not systematically measured in major Chinese cities. But just months after the release of draft API revisions and the diplomatic cables, secretary Zhao has claimed that measurement of PM 2.5 is “technically no longer a problem”. So, how big a step is this?

The first thing to make clear is that Zhao was most likely referring to the question of technical capability to measure PM 2.5, and questions remain as to whether political sensitivities around environmental data still exist. The memory of a failed attempt to quantify economic losses attributable to environmental harms is still fresh in the MEP’s memory. In 2007, the conclusions of China’s “Green GDP” project met stiff resistance from provincial leaders who feared yet another performance metric, and the results of the report were never officially released. The then-State Environmental Protection Agency and National Bureau of Statistics were left quibbling over data and methodology – a testament to how contentious attributing numbers to pollution can be.  

However, recent signs that China is embracing a more transparent approach to its environmental challenges are evident. In early June, the MEP released a franker assessment of China’s environment than seen previously in the latest annual State of the Environment Report. Vice-minister Li Ganjie stated that while some aspects of the environment showed modest improvement, “the overall environmental situation is still very grave and is facing many difficulties and challenges”. Only 3.6% of the 471 cities monitored in the most recent report garnered top ratings for clean air. 

Deborah Seligsohn, principal advisor to the World Resources Institute’s Climate and Energy Program, has also noted a dramatic shift in language since the 1990s when the annual reports claimed that China’s environmental situation was “basically good” or, later, “basically unchanged”. Not until the State Environmental Protection Agency achieved ministerial status in 2007 did the reports become more critical, describing the environment as “not inspiring”.

Including the politically sensitive PM 2.5 in air-quality standards signals a push for greater transparency in China’s environmental governance. Over the course of a few months the MEP has already taken significant strides to improve air quality measurements and standards. This will bring China’s policies closer to international best practices for air quality monitoring.  

Piloting measurement in model cities makes political sense as a way of easing China into eventual binding PM 2.5 targets for all provinces – a mandate that will likely be included in the 13th Five-Year Plan. By first signaling that PM 2.5 is an aspiration for “model cities”, the government is taking an important step toward lessening political stigma surrounding the pollutant: instead of being punished, cities will be rewarded.

PM 2.5’s inclusion is also indicative of a broader trend: China’s transition to a political culture that is more open about environmental conditions. Importantly, if it continues, this openness will allow greater public access to data and information, in turn spurring better results for the environment.

Angel Hsu is a doctoral student at the Yale School of Forestry and Environmental Studies and project director for the 2012 Environmental Performance Index.

This piece was originally posted on the China Dialogue website on October 19th.

The Klamath River: How the 100-Year Old Crisis is Finally Coming to an End

In a recent Yale Environment 360 video, photographer Pete McBride navigates the Colorado River from its source in the Rocky Mountains to its historic mouth in Mexico. It’s a sobering account. The Colorado River, Pete says, has become a “dry river cemetery.”

Over 20 dams were installed along the Colorado River to divert water for industrial, agricultural, and urban life. These ever-increasing demands exceed the river’s capacity, and droughts are spreading throughout the basin. Similar water management problems exist worldwide, but another example close to home is California’s Klamath River. Officials recently announced that four of the major dams along the Klamath will be removed in the coming years – and the situation there may offer some hope for the Colorado.

In 1909, developers installed the first of four major dams on the Klamath River as part of the PacifiCorp Klamath River Hydroelectric Project. The installation of these hydroelectric dams had a number of negative effects: Coho salmon and steelhead trout populations throughout the Klamath River Basin declined, migratory salmon were kept from reaching spawning grounds up river, and algal blooms developed behind the dams, creating an additional source of stress for fish populations.

Stakeholders – including Indian tribes, the US Department of Interior, farmers, environmental groups, and private citizens – called for improved management strategies and, in 2003, the National Research Council (NRC) released a set of recommendations for overhauling the Klamath River, including a call for dam removal. The NRC based its decisions on data and risk analyses, and provided stakeholders the indicators they needed to analyze potential effects of various water management strategies.

The inclusion of indicator data allowed stakeholders to come to an eventual agreement on how to best manage the Klamath River’s water resources; the various groups signed the Klamath Restoration Agreement and Klamath Hydroelectric Settlement Agreement in 2010 and are waiting approval from Congress. The dam-removal project is expected to begin in 2020, allowing PacifiCorp time to raise money for the project without increasing power rates to its customers.

The Klamath River Restoration Agreement offers a successful example of social learning through adaptive management and stakeholder involvement – and it underscores the importance of metrics and data in environmental decisionmaking.

For more information on the Klamath River restoration visit http://klamathrestoration.org/

The Environmental Performance Index Enters the Next Generation

On September 26 and 27 experts from around the world gathered in New Haven to review the preliminary analysis on the 2012 Environmental Performance Index. Difficult questions about making data criteria more stringent, including time series analysis, and issues around aggregation were debated as investigators move the EPI into the next generation. As organizations and countries around the world construct environmental indicators and aggregate environmental data, the Yale Center for Environmental Law & Policy and Columbia’s Center for International Earth Science Information Network are continuing to innovate research and communication of policy-relevant environmental data at an international scale. Stay tuned for the release of the 2012 EPI in January 2012.

Related Links:
2010 Environmental Performance Index

China’s 12th Five-Year Plan Lays Out Ambitious Blueprint, but Data Challenges Remain

In March, China released its 12th Five-Year Plan – a blueprint outlining the key economic and development targets for the country over the next few years.  Unlike previous Plans, climate change and energy are featured prominently, and a strong emphasis is placed on a slower, more sustainable growth trajectory.[1]  Not only is the 12th Five-Year Plan the first to mention climate change, but it adopts as part of national, binding law the climate pledges China first made at the United Nations Framework Convention on Climate Change (UNFCCCC) Copenhagen climate summit in December 2009.  Binding targets for a range of other environment and energy issues are also included in the Plan, including important air and water quality pollutants that were previously absent.

Part of the country’s ability to achieve these targets will be in its capacity to measure and track progress toward its goals.  The Chinese government has pledged implementation of “well-equipped and statistical and monitoring systems” and “index evaluation systems”[2] in the 12th Five Year Plan, indicating an increasing awareness of the importance of data, information and robust infrastructure to ensure targets are met.  However, while there are signs of China’s move toward a more “data-driven” approach to decision-making in the formulation of the latest Plan, political sensitivities around pollution information still persist, meaning China may still confront challenges when trying to improve environmental conditions.

The 12th Five-Year Plan comes at a time of growing recognition from the Chinese government regarding the importance of information for environmental decision-making. In 2010 the Chinese government completed its first national census of pollution, requiring more than $100 million U.S. dollars, 570,000 staff and nearly two years to complete.[3]  The survey mapped more than 6 million sources of residential, industrial, and notably agricultural pollution, which had been previously absent from measures of water contamination.  The survey found that previous measures of water pollution – specifically chemical oxygen demand – had neglected to include non-point agricultural sources of pollution, from fertilizer and pesticide effluent as well as landfill leakage.[4] Including these non-point sources of discharge meant that prior measures of water pollution had been missing over half of the baseline data for chemical oxygen demand – from 13.8 million tons in 2007 to 30.3 million.  At the time, Chinese officials noted that the targets would not be revised based on the new data, while still touting China’s success in meeting COD reduction targets in the 11th Five-Year Plan. However, the findings from the survey did lead to the adoption of a binding reduction target for a critical water pollutant – ammonia nitrogen – and continued reduction goals for Chemical Oxygen Demand (COD) in the 12th Five-Year Plan. The adoption of these new water pollution targets were largely due in part to the survey results, which allowed for the government to set new targets and refine previous ones based on this new information. 

While this example speaks to the progress China is making in terms of measurement and performance tracking, political sensitivities surrounding other environmental data still prove to be barriers to policy changes.  Earlier this year, the Chinese Ministry of Environmental Protection (MEP) released draft proposals to amend its Air Pollution Index (API) [5] to an Air Quality Index (AQI) that more closely resembles the U.S. version [6]. While the proposed amendments include significant improvements – such as including ozone measurements, improved calculation methodologies, and standardizing color-coding schemes – PM 2.5 [7] is notably absent.Experts, such as Ma Jun, Director of the Institute of Public and Environmental Affairs (IPE), a Beijing-based NGO, and former Yale World Fellow, have suggested that leaving out PM 2.5 is due to political rather than technical concerns. “Government agencies feel the index may hurt the image of many cities that want to attract investment or that they may not be able to improve PM 2.5 pollution in a short time,” Ma told the Global Times. U.S. diplomatic cables have also revealed that lack of measurement of PM 2.5 and other dangerous air pollutants could be due to fear of political consequences.

So while we can see evidence that China is embracing improved data-based decision-making, the results are mixed because political vulnerability toward environmental pollution is still a serious concern amongst Chinese leadership who fear citizen unrest and social instability.  What China must realize are the benefits from knowing risks and exposures to environmental harms and pollutants, which is not possible without measurement.  Failing to incorporate critical pollutants in national environmental policies only pushes serious concerns under the rug, in a type of “act now, apologize later” mentality that in many cases have led to dire political ramifications for Chinese government officials when harmful pollution disasters surface [8].

Therefore, while the 12th Five-Year Plan makes important inroads in establishing more comprehensive environment and energy-related targets, equal progress needs to be made in terms of data transparency and a shift toward a government culture that doesn’t fear data and numbers.Only then can the Chinese leadership expect to formulate sound policies and robust systems to drive environmental results.

Defining Terms for Empirical Research

A basic part of research often taken for granted is the simple definition of a term.  There is a global understanding of what is measured by GDP, for example.  However, there are many terms for which there is no internationally accepted definition -- "environmental goods and services" is one of these because environmental impacts are highly context-specific. This poses difficulty and adds contextual nuance when undertaking a study such as ours on the linkages between trade and the environment.

The distinction between production and/or consumption poses particular difficulties with such research projects. For example, a bicycle manufacturer may spew noxious gases and deplete non-renewable minerals in the production process.  However, the use of bicycles may reduce fossil fuel use by end-users as they bike rather than drive to work. These are just a few of the complexities that organizations like the WTO, the World Bank, the OECD, and others are trying to resolve so that trade statistics can inform more sustainable trade policies.

Another major hurdle for the integration of environmental concerns into trade policy is the accounting of the environmental impact embodied in trade ­in the modern global economy. One of the best-known examples on the world stage is the carbon content of trade: how much carbon dioxide is emitted in the manufacturing of a product that is consumed abroad? And is it fair only to include that in the accounting of the country in which it was manufactured?  Several research institutions are working to develop comprehensive input-output tables that account for environmental impacts and resource use; however, none are yet sufficiently adequate accounting tools.

While there is neither a clear definition of environmental goods and services nor a sufficient accounting tool for environmental trade impacts, empirical analysis, such as that in our "Exploring Trade and the Environment" report, offers some insight into the complexities of the relationship between trade and the environment.

Quantifying Environmental Indicators and Trade

Some of the most influential institutions in the international trade realm are integrating environmental concerns into their trade-related work. Groups such as the WTO, World Bank, United Nations, OECD, and various multilateral trade groups, have convened workgroups to flesh-out definitions of ‘environmental goods and services.’ The challenge, as is usually the case with environmental data, is how best to quantify the associations between trade and environmental conditions.

This is a difficult challenge. The world of environmental metrics is young and evolving (unlike the longstanding world of more traditional trade statistics). And connecting quantifiable environmental values to quantifiable economic values (or the narrower subset of quantifiable trade values), and vice versa, is particularly problematic.  There is, for instance, currently no internationally recognized system of environmental accounts. There is also no universally-agreed-upon environmental equivalent to GDP, or the stock market, and so different organizations have developed their own frameworks for assessing relationships between environmental conditions and trade.

Our latest report, “Exploring Trade and the Environment,” is one attempt to connect quantifiable environmental values to quantifiable economic values. Building on eleven years of research in environmental metrics, and the resulting Environmental Performance Index, the report explores ways of assessing quantifiable associations between environmental factors and trade statistics. One of its more straightforward, yet still significant, findings is a strong correlation between high levels of trade and low environmental impacts on human health (see the ENVHEALTH category in the figure below).

To appreciate what this really means, it’s important to understand the data underlying the terminology we use. ‘Environmental impacts on human health’ comes from the World Health Organization’s ‘Disability-Adjusted Life Years’ (DALYs) measure, and ‘levels of trade’ refers to the percent of a country’s GDP that is generated by imports and exports. The DALY metric is composed of, among other things, measures of infrastructure, such as access to improved drinking water and sanitation sources. The variable itself has a strong correlation with GDP. The finding of a ‘strong association between trade levels and environmental impacts on human health’ is thus hardly surprising: countries with more robust trade also typically have better water and sanitation infrastructure.

On a deeper level, perhaps what is most interesting about this finding is that it demonstrates the interconnectedness of policy problems and solutions. For policymakers in the developing world, for instance, our analysis suggests that improving human health means not only the obvious actions of increased water and sanitation infrastructure investments, but it also means putting in place policies that increase overall national trade levels.

Time trends in trade and CO2 emissions: digging deeper

In a recent study on trade and the environment, the Yale Center for Environmental Law & Policy conducted a pilot time trend analysis, painting a clearer picture of the complex relationship between country-level CO₂emissions and trade intensity. The analysis examines changes in trade intensity (as seen through trade as a percent of GDP) alongside two measures of CO₂ emissions—CO₂ per capita and CO₂ per GDP. The former CO₂ measure indicates emissions intensity per person, while the latter indicates the emissions intensity of the economy.

Time trends show that the most common phenomenon is a decline in emissions per GDP with increasing trade intensity, an indication that economies become more carbon efficient as trade becomes a greater portion of GDP. However, the data also reveal a troubling trend among countries: emissions per capita most commonly increase with increasing trade, an indication that trade might be harmful in terms of emissions.

The exciting news—at least for those interested in trade and environmental quality—is that this trend is by no means universal. Many countries have managed decreasing emissions per capita with increases in trade intensity. This elite group includes many European nations—Germany, France, the UK, Sweden and Denmark—as well as several countries in the Americas—Belize, Colombia, and Cuba.

While considerable work is still needed help deepen understanding of the complicated relationships between trade and the environment and while the statistical findings do not support drawing conclusions about causation, it is interesting to pose the question - what are these nations doing differently?

Downloads:
Executive Summary.
Press Release.
Full Report.
Data (Beta Version).