“AI: Intelligent Machines, Smart Policies”: three conference takeaways

Clara Young, OECD Public Affairs and Communications Directorate

Listening to the radio this morning, I heard a story about a former FBI agent who had come out of retirement to reopen a very old case: who tipped off the Gestapo to Anne Frank’s whereabouts? There have been two investigations into the circumstances leading up to the arrest of the young diarist and her family on 4 August 1944 in Amsterdam, but this newest attempt is using artificial intelligence (AI). “The artificial intelligence programme will be able to make connections and associations of dates, persons and locations that would take a human investigator a minimum of 10 years to come up with,” lead investigator Vince Pankoke told the Canadian Broadcasting Corporation (CBC).

Artificial intelligence can solve the most intractable of puzzles. But with it come many new, possibly more intractable, questions. At a recent OECD conference “AI: Intelligent Machines, Smart Policies”, researchers, economists, policymakers, advisors, and labour and corporate representatives came to grips with the vastly different landscape AI is beginning to create. With their algorithmic ability to navigate through the noise of big data, machine-learning AI robots are commonplace in biotech labs. They formulate scientific hypotheses, devise and conduct experiments, and analyse test results, probing deeply and around the clock. AI can pilot vehicles, determine what your car insurance premium should be, detect malicious cyberactivity, improve medical diagnoses through image recognition like radiography and ultrasonography, and even compose music.

But will such tremendous computational and learning capacities upend human society? Stuart W. Elliott, who is Director of Board on Testing and Assessment at the US National Academy of Science, observes that AI currently has literal and numerical levels that are as good as if not better than 89% of adults in OECD countries. What implications does that have for competition in the labour market? How can policy makers and legislators plan for the magnitude of labour disruption automisation will bring?

Another conference takeaway is the need for transparency in AI decision-making. When software is making decisions on whether, for example, a driverless car should swerve away from an oncoming bicyclist and hit a pedestrian on the sidewalk, or if a job applicant should be hired or rejected, people should be able to look at the chain of reasoning leading up to an AI decision. There is also the concern that the algorithms in AI software distort natural biases implicit in data. For instance, Science reported that tests have shown that machine learning software absorbs societal racial biases in data, and makes stereotyped associations between European American names and positive or pleasant terms, and African-American names and negative or unpleasant terms. A related study showed that job applicants with European American names were 50% more likely to be accorded an interview by AI software.

But perhaps the biggest preoccupation at the conference is the data conundrum. In a forthcoming OECD interview, Dudu Mimran, CTO of Telekom Innovation Laboratories and Cyber Security Research Center at Ben-Gurion University in Israel, described the current data environment as the “…Wild West with all companies collecting any data”. Data is used to train artificial intelligence, and the more of it the better. But do we always know where it is coming from? And, who owns it? Digital advisor to the Estonian government Marten Kaevats stood up during a panel discussion and said, “The people own their own data.” In embracing digitalised government so early on, Estonia may be considered as a leader on data issues. Its citizens’ health and tax records are online, protected by a closed blockchain system. Online voting was introduced in 2005. But outside such digitally advanced regimes, most people do not know where their personal data reside, how it is being used, and whether its integrity is being safeguarded. One example of data carelessness is the discovery in 2016 that the UK’s National Health Service had given Google-owned AI company DeepMind access to the healthcare data of 1.6 million patients without adequately informing them.  

Safeguards exist against such errors. These include the 1980 OECD Privacy Guidelines revised in 2013, the EU’s General Data Protection Regulation, which comes into effect in 2018, and the 2016 signing of the US-EU data protection “Umbrella Agreement” which governs data-sharing in criminal investigations. But, AI raises potentially new and specific privacy risks that may not be covered by these data protection regulations and agreements.

In the case of Anne Frank, the data surrounding her and her family’s capture is 73 years old. Privacy is no longer an issue. For the rest of us, however, the ever-broadening and creative reach of data mining requires vigilance.

References and links

Bohan, John (2017), “A new breed of scientist, with brains of silicon”, Science. See: www.sciencemag.org/news/2017/07/new-breed-scientist-brains-silicon.

Hodson, Hal (2016), “Revealed: Google AI has access to huge haul of NHS patient data”, New Scientist. See https://www.newscientist.com/article/2086454-revealed-google-ai-has-access-to-huge-haul-of-nhs-patient-data.

Elliott, Stuart W. (2017), “Artificial intelligence and the future of work and skills: will this time be different?” at: https://www.oecd-forum.org/channels/722-digitalisation/posts/21601-artificial-intelligence-and-the-future-of-work-and-skills-will-this-time-be-different.

European Commission (2016), “Signing of the ‘Umbrella’ Agreement: A major step forward in EU-U.S. relations”, Brussels. See: http://ec.europa.eu/justice/newsroom/data-protection/news/160602_en.htm.

Caliskan, Aylin; Bryson, Joanna J.; Narayanan, Arvind, “Semantics derived automatically from language corpora contain human-like biases”, Science, 14 Apr 2017: Vol. 356, Issue 6334. See: http://science.sciencemag.org/content/356/6334/183.

Urgent action on air pollution in India makes economic sense

Elisa Lanzi and Rob Dellink, OECD Environment Directorate

©AFP Photo/Prakash Singh

Air pollution in Delhi has been so bad this November that the Indian Medical Association declared a public health emergency. At more than 25 times the WHO recommended level, the pollution peak in India’s capital has been extraordinary. This is becoming increasingly common in Delhi and other cities around the world due to emissions from biomass burning, coal fire plants, agriculture and especially agricultural burning and diesel transport.

Dangerously high concentration levels of air pollutants, and especially of fine particles, cause an increase in asthma attacks and lung conditions. Alarmingly, air pollution is tied to longer-term chronic health problems, such as respiratory and heart diseases, premature and underweight babies, allergies and increasing incidences of cancer. All these lead to a sizable–and increasing–number of premature deaths and illnesses. According to the latest Global Burden of Disease study published in The Lancet, outdoor air pollution caused more than a million premature deaths in India in 2016, whose cost, according to OECD estimates, amounts to more than USD 800 billion. But that is not all: there is a range of other social costs associated with air pollution, such as costs related to pain and suffering, and costs to biodiversity and ecosystems.

Air pollution also exacts costs on the economy with additional health expenditures as well as lost work days, which affect labour productivity. And, agricultural productivity can also be severely affected by air pollution as high ozone concentrations and slow plant growth reduce crop yields with important economic consequences.

Strong policy action must be taken. According to projections by the OECD the population-weighted average concentrations of PM2.5–the finest, most harmful particles–are projected to increase threefold by 2060 if ambitious action is not taken. Premature deaths from being exposed to pollution are projected to increase up to five times. This is a staggering number, and represents up to a third of global projected deaths in 2060. Incidences of illness will similarly worsen. Lost working days will increase significantly, to levels equivalent to more than six million people missing work on a daily basis by 2060.

Market costs to the Indian economy are projected to increase eightfold to over USD 280 billion by 2060–this is more than 7% of India’s current GDP (in 2005 Purchasing Power Parities exchange rates). The social costs from mortality due to air pollution would increase 15 to 33 times, as both the number of premature deaths and the value per death increase.

Click to enlarge

Air pollution is a global local problem: it is a global phenomenon with local environmental and human health impacts, particularly in high-density urban areas. As such, public policies to reduce emissions must be undertaken both at the national and local levels. International co-operation on limiting concentrations and implementing the best emission reduction technologies is essential for countries to put into motion solutions and policy tools to bring down air pollution. Urban planning and transport have a central role to play here.

Air pollution is also strongly linked to another global problem: climate change. This week at the 23rd Conference of the Parties to the UNFCCC (COP23) in Bonn, policymakers face decisions on their level of commitment in combatting climate change. Taking a closer look at its link with air pollution could provide impetus for immediate policy action. It would prevent higher numbers of premature deaths, and have a positive impact on the economy too.

References and links

Safi, Michael “Delhi doctors declare pollution emergency as smog chokes city”, 7 November 2017,The Guardian. See: www.theguardian.com/world/2017/nov/07/delhi-india-declares-pollution-emergency-as-smog-chokes-city?CMP=share_btn_link

OECD (2016), The Economic Consequences of Outdoor Air Pollution, OECD Publishing, Paris,
http://dx.doi.org/10.1787/9789264257474-en. See: http://oe.cd/26J

OECD (2017), “The Rising Cost of Ambient Air Pollution thus far in the 21st Century: Results from the BRIICS and the OECD Countries”, OECD Environment Working Papers, No. 124: http://dx.doi.org/10.1787/d1b2b844-en

See the latest Global Burden of Disease at http://www.thelancet.com/gbd

Carbon prices are still far too low to prevent climate change

Kurt Van Dender, Centre for Tax Policy and Administration

©Russell R. Scott/Citizenside/AFP

Pricing carbon is one of the surest policy means we know for curbing greenhouse gas emissions and meeting the targets of the Paris Climate Agreement agreed in 2015. Has there been any progress with its implementation since then? Not enough, is the verdict of some of the world’s leading experts.

Some 85% of global emissions are currently not priced, according to a report issued in May 2017 by a High-Level Commission on Carbon Prices, co-chaired by Joseph Stiglitz and Lord Nicholas Stern, both respected figureheads in the fight against climate change. Moreover, about three quarters of the emissions covered by a carbon price are priced below USD 10 per tonne of CO2 (tCO2).

That price is much too low, since according to the report, if we are to achieve the Paris temperature target the explicit carbon-price level should be at least USD 40-80/tCO2 by 2020 and USD 50-100/tCO2 by 2030.

One gap in these numbers is that they do not take into account excise taxes on the likes of transport fuel, heating and energy use more widely, that have virtually the same behavioural impacts as more narrowly defined carbon taxes, and should therefore also lead to reduced emissions.

If these rather commonplace excise taxes on energy use are added into the mix, we can form a broader view of how carbon emissions are currently being priced. To gauge this, we have developed “effective carbon rates”, which are made up of all specific taxes on energy use, carbon taxes, and prices of tradable emission permits. This database, which we presented in our 2016 OECD report on Effective Carbon Rates , calculates effective carbon rates for 41 OECD and G20 countries, covering 80% of global energy use and the associated carbon emissions.

In one sense, the picture that effective carbon rates depict is a little brighter than that presented by Messrs Stiglitz and Stern, as it includes a broader range of taxes, so higher rates. In another and more fundamental sense, the picture actually is a little darker, as effective carbon rates show the enormous size of the challenge we face in battling down greenhouse gas emissions, even when taking a broader view of carbon pricing.

Click to enlarge

Indeed, according to our database, 60% of emissions from energy use in the 41 countries are currently not priced (compared with 85% in the commission’s report). However, some 78% of emissions are priced at less that EUR 10/tCO2, which is no less discouraging. So while our more comprehensive estimates indicate that carbon pricing is more widespread than the High Level Commission’s report suggests, they nevertheless reinforce the Commission’s main point that carbon pricing still only plays a very limited role, and that we are a far cry from what is required to reach the Paris Agreement objectives.

The High Level Commission estimates that carbon prices should range between EUR 40 and EUR 80/tCO2 in 2020 for the Paris Agreement targets to have a chance of being met. Currently, effective carbon rates are below EUR 40/tCO2 for 93% of emissions, and are below EUR 80/tCO2 for 95% of emissions. Omitting road transport (where excise taxes are relatively high) from the calculation increases these shares to 99%.

In short, almost no emissions from energy use are priced at levels required to keep global temperature increases below 2 degrees Celsius limit, beyond which climate change could spin out of control. The world’s leaders understood the gravity of this prospect by signing up to the Paris Climate Agreement. It is now critical that they take the policy action needed to meet those goals, and that means increasing carbon prices now.

Related event

COP23 side event: Carbon pricing for the low-carbon transition, 15 November 2017, Bonn, Germany: http://www.oecd.org/tax/tax-and-environment.htm#COP23-tax-env-event.

More about the OECD at COP23: http://www.oecd.org/environment/cc/cop23.htm.

References and links

High-Level Commission on Carbon Prices (2017), Report of the High-Level Commission on Carbon Prices, World Bank, Washington, DC. License: Creative Commons Attribution CC BY 3.0 IGO, https://static1.squarespace.com/static/54ff9c5ce4b0a53decccfb4c/t/59b7f2409f8dce5316811916/1505227332748/CarbonPricing_FullReport.pdf.

Visit: https://www.carbonpricingleadership.org/report-of-the-highlevel-commission-on-carbon-prices.

OECD (2016), Effective Carbon Rates: Pricing CO2 through Taxes and Emissions Trading Systems, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264260115-en.

OECD (2017), Investing in Climate, Investing in Growth, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264273528-en.

Moving forward on climate: Looking beyond narrow interests

Anthony Cox, Director, OECD Environment Directorate

A brighter future for climate? The sun rises over Toronto’s skyline. ©Mark Blinch/Reuters

“National governments must take the lead and do so with a recognition that they are part of a global effort.” Speaking last week at the Munk School of Global Affairs in Toronto, OECD Secretary-General Angel Gurría urged countries not to retreat behind their national borders in dealing with climate change. A purely inward-looking approach to climate change is clearly inadequate as we see signs that short-term national self-interest is increasingly seeping into the global debate on climate action. This is especially a risk as a number of countries continue to try and escape from low growth traps. Effective climate action needs ambition and action at both national and global levels.

We are now in the middle of the UN COP23 climate conference in Bonn which aims for “Further, Faster Ambition Together”. Two years after the historic Paris Climate Agreement at COP21, there are encouraging signs of progress, but there is a huge amount left to do. We have known for some time that the commitments to Nationally Determined Contributions (NDCs) beyond 2020 made under the Paris Agreement would be insufficient in limiting temperature increase to below 2 degrees Celsius, and that more ambition and action would be needed. The Paris Agreement gives us an international legal instrument that measures up to the scale and urgency of the climate challenge, with mechanisms that can increase the ambition of action over time. The negotiators in Bonn are looking to refine and clarify the “rulebook” on how to achieve this.

Each country must do its part by implementing their existing climate change plans using the range of policy levers available to address climate change. But the politics of activating them are daunting right now as they compete with the pull of some countries to retreat behind national borders. And yet, strong climate action should not be seen as a threat to growth. Rather it is the foundation for our future economic well-being and prosperity. This point is backed by a growing body of evidence, as the OECD’s 2017 report, Investing in Climate, Investing in Growth clearly shows. Thinking of climate policy as an integral part of the policy landscape, alongside fiscal policy and structural reforms, is the only way forward.

A number of countries are leading the way and showing it can be done. Take Canada as a prime example. It is a major OECD country with its fair share of challenges in overcoming carbon entanglement and remedying the problems of limited progress during the last decade of climate policy. But Prime Minister Trudeau’s election in October 2015 and his progressive climate agenda has led to a political sea-change that underpinned the success of COP21. In a recent interview with the Financial Times, Environment Minister Catherine McKenna demonstrated not only Canada’s strong commitment to tackling climate change, but also a keen awareness of the transitional challenges that Canada faces.

The OECD will be launching its Environmental Performance Review of Canada in a few weeks’ time. The Review highlights the progress that Canada has made on its climate agenda. At the top is the carbon pricing mechanisms that four provinces have already implemented, as well as the new Pan-Canadian Framework on Clean Growth and Climate Change, which includes a proposal for country-wide carbon pricing by 2018.

There is no cause for complacency. Climate action needs to accelerate around the world. Without the vision, ambition and resolve demonstrated by countries such as Canada, more countries may pull up their national drawbridges, which would do nothing for climate change and, on the contrary, jeopardise human, fiscal, financial and environmental security. We have no choice but to work together towards the far more positive future of a sustainable, prosperous and inclusive world that still lies within our grasp.

References and links

To read the OECD Secretary-General’s lecture on Climate Action, see: http://www.oecd.org/environment/munk-school-climate-action-time-for-implementation-canada-2017.htm.

For more information on the report Investing in Climate, Investing in Growth, see: http://www.oecd.org/environment/cc/g20-climate.

For more information on OECD climate change work see: http://www.oecd.org/environment/action-on-climate-change.