Tuesday, August 5, 2014

$37 Per Ton


By Joseph Sarkis

The title of this blog represents the social cost of carbon emissions as determined by the U.S. Government's Office of Management and Budgets in 2015, using a discount rate of 3%.  $37 per ton of carbon is the central rate that the government estimated to be the social cost in this report from November, 2013.

The government estimated the U.S. social cost of carbon increased $24 to $37 using three integrated assessment models (IAMs): DICE-2010, FUND 3.8, and PAGE09.
The average market rate for carbon emissions in public trading markets is around $10 per ton.  Thus, the government estimate is greater than the market rate.  Is this an indictment of the free market system or poor estimation all around? 

According to a report jointly supported by the Environmental Defense Fund, the Natural Resources Council, and the Institute for Policy Intergrity and authored by Peter Howard, the government's social cost estimate is too low.  The report identified a broad variety of impacts ommitted from the evaluation.  An excerpt from the report summarizes the breadth of impacts left out:

"These omissions include climate impacts on the following market sectors: agriculture, forestry, and fisheries (including pests, pathogens, and weeds, erosion, fires, and ocean acidification); ecosystem services (including biodiversity and habitat loss); health impacts (including Lyme disease and respiratory illness from increased ozone pollution, pollen, and wildfire smoke); inter-regional damages (including migration of human and economic capital); inter-sector damages (including the combined surge effects of stronger storms and rising sea levels), exacerbation of existing non-climate stresses (including the combined effect of the over pumping of groundwater and climate-driven reductions in regional water supplies); socially contingent damages (including increases in violence and other social conflict); decreasing growth rates (including decreases in labor productivity and increases in capital depreciation); weather variability (including increased drought and in-land flooding); and catastrophic impacts (including unknown unknowns on the scale of the rapid melting of Arctic permafrost or ice sheets)."

A single final cost estimate is not given in the joint 'rejoinder' report to the U.S. Government report.  Part of the complexity involves whether potentional benefits such as lessened fuel usage or shifts in energy requirements.  Yet, the U.S. Government report did show a 95th-percentile (simulated extreme) cost per ton was estimated to be $109 per ton.  The probability tail is long.  The question is whether the 95th percentile is the more legitimate value.

What does this mean?  It means that the free market emissions trading systems are underestimating the true cost of carbon emissions.

Many companies realize this underestimation and internally adjust the cost of carbon value for internal planning, risk assessment, and investment purposes.  The CDP (Carbon Disclosure Project) identified what many companies use as their internal price. 

In an article published by the Economist they reported from the CDP to show that internal carbon emissions prices ranged from $6-7 (Microsoft) to $60 per ton of CO2 emissions (Exxon-Mobil).  These values are also used in internal emissions trading systems where companies set up internal markets for managers to trade.

Although internal markets are still relatively rare (about 20% of companies reporting to the CDP), they do still exist.  The most famous and early internal market was set up by BP (British Petroleum) which is now defunct. 

Thus, the pricing and costing is critical for accurate internalization of carbon emissions externalities, but it is not an easy estimate to make.  Tools continue to be developed to help in this estimation.

Accounting colleagues and I have been considering how to simulate and estimate the values helping to identify appropriate 'implicit' costs that can be used by managers.  The field of environmental management accounting, with respect to carbon pricing, is still in its infancy. 

As academics, this is one inter-disciplinary effort integrating policy, economics, management accounting, and quantitative modeling that can provide some interesting investigation both to help managers and policy makers.  Given the breadth and complexities of the issues involved in this estimation, research may not arrive at a final answer, but investigation to help set some boundaries is still needed. 

Here's one last thought:  Given a conservative estimate of the social cost at $37 per ton of CO2 emissions, and given that global CO2 emissions were estimated to be about 36 billion tons in 2013, the overall social costs from CO2 emissions in 2013 was about $1.3 trillion.

Saturday, May 17, 2014

Is there a Gender Gap in Sustainability Research?

By Joseph Sarkis

This summer the EurOMA (European operations management association) will be holding its summer school in Lisbon for young scholars and Ph.D. students on the topic of sustainability and supply chains.  

Having received a listing of the participants (their sex identified in the listing), it seems that 30 participants are scheduled to attend.  Interestingly, 23 of these participants, about 77%, are women.  Most are from supply chain management and operations management fields.

Why is this gender imbalance interesting? Here is why.

Let us look at the overall gender distribution in the supply chain and operations management disciplines.  To arrive at a quick, unscientific, evaluation of the distribution of males and females in operations and supply chain management, I went to Google Scholar.  A keyword search under Google Scholar profiles for "supply chain management" and "operations management" yields a listing of scholars who have these terms as keywords.  About 900 scholars had supply chain management as a keyword, while about 500 scholars had operations management as a keyword.  Overall, about 10-20% (closer to 10%) of these scholars were women.  This result is not unusual for these fields. Although the even smaller percentage of women scholars in these Google Scholar databases may be due to self-selection. 

The summer school distribution may be due to the participants being younger scholars.  On average, younger operations and supply management scholars may naturally have a higher representation of women.  But these results from the summer school are clearly skewed toward women participants based on the Google Scholar numbers. 

The term gender gap has been used in American politics to show which sex favored a certain American political party or the gender gap in wages.  In politics it is well know that women supported the more liberal Democratic party while men tended to support the more conservative Republican party.

These gender gaps on environmental and sustainability issues are not new, but have evolved.  Over 20 years ago a study showed that although women had greater environmental concerns, men were more likely to be activists.  It may have taken these 20 years for women to have both greater environmental concerns and become more active as the research field has matured.  There are also issues of education and the more educated genders show a greater dichotomy.  Academic researchers are at the higher end of the education scale.

Recent books and papers have been written on this topic of gender differences on environmental sustainability concerns. And not surprisingly it is mostly women who are researching and writing on these gender concerns.  This topic definitely requires additional research. 

Currently, I am observing the gender gap in my specific research disciplines, which has been slowly evolving over the past quarter century I have been studying it.

Questions do arise.

What does this mean to our research areas?  Given the political gender gap, will the gender gap in organizations and natural environment be considered a biased perspective as the field emerges?  Given that men are still inordinately represented in the arenas of political and business leadership, how will they view the research? Is this happening across business disciplines?  Should other business disciplines embrace organizations and natural environment topics to help build greater gender balance to previously imbalanced disciplines?

As a closing, see this thoughtful video that exemplifies, a bit, the gender gap from a masculinity perspective.

Saturday, March 22, 2014

Changing of the Guard

The definition of sustainability implies a long term view that is caring of future generations. Are the practices within academia sustainable, in this sense? As the generations change over in academic departments within universities, it is interesting to think about how they are changing. Is the next generation being mentored and prepared for their future roles and responsibilities after tenure? Tenure still exists and we often hear about the new tenure track assistant professors wrestling for power with the old tenured guard. Understandably, the new professors would like opportunities to build on their careers. Is the old guard a set of mentors or oppressors? It is easy for them to be oppressors as they cannot be fired and they can threaten, with impunity, the younger generation with their livelihoods and careers. The next generation seems often to be in a state of quiet, submissive fear. On the other hand, perhaps many of the old guard simply do not care, and would just like to continue for a little while longer so as to have a large enough pension to support a decent retirement. Mentoring is exhausting and meaningless at such a stage in life. If they developed PhDs at any point, they are already satisfied that they have their prodigies in place.

Saturday, February 22, 2014

Skeptics and Scholars

By Joseph Sarkis

This week our institution (WPI) is hosting a talk by Bjorn Lomborg.  He was the invited Provost’s University lecturer.  Yes, it is viewed by the campus as a controversial decision.  Many of us view this as old news and wondered why the decision had made to invite such a contentious speaker.  It has certainly sparked a debate around campus, and maybe that was the intention.

Wednesday, January 22, 2014

We Don’t Believe the Numbers!

By Joseph Sarkis
For a number of years I’ve been investigating topics related to making the business case and justifying investments in environmentally conscious business practices, sustainability investments, etc.   These investigations focus on aiding organizations in evaluating various programs and investments to make themselves greener and more sustainable.  There have been many decision support tools.

Tuesday, December 31, 2013

Organizations and Climate Change: Planning for Today and Tomorrow

by Joseph Sarkis

This blog is my last for 2013, given that this is the last day of the year.

This blog focuses on three recent stories in Time Magazine and the New York Times, here, here, and here.  These series of stories exemplify how carbon emissions (climate change) and organizational responses are still at the forefront of the environmental agenda.

Friday, November 22, 2013

The Transdisciplinarity of Corporate Environmental Sustainability

By Joseph Sarkis 

This blog has no surprises.  Understanding corporate environmental sustainability, the natural environment and organizations, involves many disciplines and requires understanding and collaboration with practitioners.
Schaltegger, Beckmann and Hansen, 2013 have categorized corporate sustainability research and practice efforts into disciplinary, multidisciplinary, interdisciplinary and transdisciplinary categories.

Sunday, November 10, 2013

Designing Learning - A Process Approach

By Joseph Sarkis

When developing courses I begin by constructing a syllabus and then trying to structure the readings, topics, and supporting material.  Depending on the topic and level the design of the course, delivery and syllabus may be structured differently.  Even though I had done this many times, I never felt completely comfortable since some details were missing.  For example anticipating the time and effort for a student was not part of my class or course design.

Friday, October 25, 2013

Big (Green) Data

By Joseph Sarkis

There are data we would like to have and there are the data that we do have.  How to make these two congruent?  That’s where data analytics and ‘Big Data’ may play roles.  In this blog I seek to continue the discourse on big 'green' data.  Unfortunately, few answers are given.  Raising awareness and continuing the discussion is my major goal.

Sunday, October 13, 2013

Blue Skies Ahead? The UN Global Compact in 2013

By Joseph Sarkis

In September the United Nations put out its latest (2013) Global Compact report on corporate sustainability practices.  The UN Global Compact (Compact) program commenced  as a concept in 1999 under General Secretary Kofi Annan.