Cars, cows and carbon sinks

An externality, to an economist, is^[1] "a side-effect or consequence ... which affects other parties without this being reflected in the cost of the goods or services involved". Externalities take all sorts of forms, and can be positive or negative, but over the past half century industrial pollution of the environment has become the primary exemplar.

More recently still, the focus has narrowed down to carbon based compounds whose costs are paid in a number of ways. The crudest direct health effects are usually localised, and become a matter for local legislation or lack of it; the atmospheric greenhouse effect is a global issue with no respect for human jurisdictional boundaries.

Attempts to deal with pollution almost always come down to mechanisms designed to convert an externality into a direct cost paid by the polluter, and carbon is no exception. A number of schemes exist to license carbon emission, with a market in which those who emit least sell permissions to those who emit most, thus exerting a direct proportional cost pressure on producers.

Whether this method is effective, and if so to what degree, is a subject of considerable political argument; but it remains the principle approach. Its use depends on quantification of emissions, which is neither simple nor straightforward. In practice, output is usually simplified from the full gamut of emitted substances (not all of them carbon based) to a single carbon dioxide equivalence figure, the product of mass and a radiative forcing factor which varies from substance to substance. But that still leaves an impractically large data acquisition and monitoring task.

The essence of statistical data analysis, always and everywhere, is generalisation from sample to population with a quantified level of confidence. Sometimes, as with extraterrestrial exploration in the last issue, this is because only tiny amounts of data can be captured and the maximum information must be squeezed from it. In the case of planetary emission levels the opposite is true: the available data volume is huge, and only a small fraction of it can be manageably handled. [more]

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1. Oxford English Dictionary, Oxford University Press.