Washington Insider -- Wednesday

By DTN's Washington Insider

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

TTP Talks Resume This Week; Japan, U.S. No Closer to Agreement on Agriculture

The 12 Pacific Rim nations negotiating a Trans-Pacific Partnership trade agreement are scheduled to resume formal talks tomorrow in Canada, but appear destined to do so without the United States and Japan first having agreed on how to handle their bilateral trade in agricultural products.

Sources in Japan have told media outlets that U.S.-Japan talks earlier this week have not produced an acceptable way forward regarding Japan's high tariffs on beef, pork and other U.S. farm exports. The United States has demanded that those tariffs be lowered to as close to zero as possible, while Japan reportedly has countered with an offer that would lower tariffs, but allow them to snap back if export volumes exceed a specified threshold.

The 12-member TTP talks in Ottawa are scheduled to run from July 3 through 12. Trade analysts give only slight odds that Japan and the United States will be able to make progress on their unresolved agricultural trade issues before the Canada meetings get underway.

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CBO Details Financial Needs of Highway Trust Fund

The Highway Trust Fund will need a $6.6 billion boost in money to carry it through the end of this year and thus avoid a shutdown in its payouts to states, according to the Congressional Budget Office (CBO). No one in Congress wants to shut down the nation's road building and repair activities, but no one in Congress has so far proposed a way to raise the needed money that can pass both chambers.

Actually, due to a separate shortfall in the transit account, Congress will need to raise a total of $8.1 billion to keep transportation projects funded through the end of 2014. After that, the next Congress will need to find a long-term source of money for the HTF, a prospect that many observers judge to be a heavy lift for the highly dysfunctional and partisan legislative branch.

As usual, Republicans are urging that the HTF funding come by cutting federal spending in other areas while Democrats are looking to raise revenue via taxes of one sort or another. Decades ago, the two sides would have been able to identify a middle ground that involved both funding mechanisms and that could make it through the legislative process successfully. Quaint.

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Washington Insider: Describing the Down Side of Global Warming

Global warming and its causes are still highly controversial, but a new campaign and new report is focusing on warming impacts. Called "Risky Business," the effort is funded largely by three wealthy financiers who are strong advocates of action on global warming. Part of the purpose of the approach used is to involve many political points of view, so as to avoid polarization.

Another part is to focus on economic and social concerns, and avoid statistical face-offs, so it uses a somewhat different approach than the unusual global warming studies that focus on causes and projections of climate shifts. Two steps were involved — including commissioning an economic modeling firm with credibility in the oil and gas industry, the Rhodium Group, a company that has unquestioned expertise on climate issues.

The second step was to assemble a team of experts with various experiences from different political backgrounds as part of a committee of leading climate scientists and environmental economists to review the work. These included heavyweight senior political and economic figures including Treasury secretaries from as far back as the Nixon administration — no lefty extremists they. However, each member of the committee endorses putting a price on greenhouse gases, most likely by taxing emissions.

So far, the effect has been dramatic. Strong statements from former officials, especially, are impressive. For example, "The big ice sheets are melting; something's happening," said George Shultz, who was Treasury secretary under President Richard Nixon and secretary of state under President Ronald Reagan. Former Bush Treasury Secretary Henry Paulson added, "I actually do believe that we're at a tipping point with the planet. A lot of things are going to happen that none of us are going to like to see."

Former Treasury Secretary Robert Rubin added that he wants the Securities and Exchange Commission to take a tougher stance and require publicly held companies disclose the climate-related risks they may face. He focused on companies that may have "stranded assets" in areas affected by climate shifts, and said he thinks those climate shifts are the "existential issue of our age." He wants such vulnerabilities detailed and disclosed.

The report itself goes into deep details by U.S. regions. For example, more than a million homes and businesses along the nation's coasts could flood repeatedly before ultimately being destroyed, it says. Entire states in the Southeast and the Corn Belt may lose much of their agriculture as farming shifts northward in a warming world. In addition, heat and humidity will probably grow so intense that spending time outside will become physically dangerous, throwing industries like construction and tourism into turmoil.

The report said the economic effects would vary by region, and while some colder states may actually benefit from higher temperatures in significant ways, including longer growing seasons, the warming will nonetheless impose huge costs, the report said. Coastal counties with some 40% of the nation's population, will take especially large hits from rising sea levels which could swallow more than $370 billion worth of property in Florida and Louisiana alone by the end of the century.

Since land is sinking in Louisiana now even faster than the sea is rising, 4.1% to 5.5% of all insurable property in that state will be below mean sea level by 2050, the report predicted. By 2100, that figure could reach 15% to 20%. In Florida, 1% to 5% of all properties could fall below sea level by 2100, the report said.

But long before homes and businesses along the coast are inundated, the researchers said, owners will face escalating damages from flooding, posing substantial risks to taxpayers, who subsidize the National Flood Insurance Program. That program already has been put more than $20 billion in the red by storms of recent years. Coastal property owners have fought attempts by Congress to charge premiums reflecting the true hazard.

The study projected complex effects on American agriculture and notes that while it is possible that farm output will continue rising as it has done for many decades, there may be huge shifts in where crops are grown.

With current agricultural practices, the losses could be substantial in the Southeast and even the Corn Belt as high temperatures and water stress take a toll on crops. That would partly be made up by an agricultural shift to the northern rim with states like North Dakota and Minnesota potentially being net winners — certainly, a startling projection for producers in the Southeast.

If greenhouse gas emissions continue apace, the combination of heat and humidity projected for some regions, particularly the Southeast in just a few decades could means that outdoor work at certain times will face a high risk of life-threatening heat stroke. Eventually, much of the eastern half of the country could face these conditions for weeks on end, the researchers predicted.

So, once again, beyond the statistics and estimates, experts are warning that warming trends are well underway and will affect the United States in dramatic ways — with few of those effects being positive. Its effort to link the projections to investment markets is a modestly new thing, observers suggest. Whether it clarifies or clouds the debate remains to be seen, Washington Insider believes.

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