Offsetting Behaviour

New Zealand's Emissions Trading Scheme includes industrial allocations of carbon credits aimed at avoiding inefficient carbon leakage. But the formula is wrong. Imagine that you're a domestic firm producing stuff that generates CO2 emissions. You correctly have to surrender NZU - one for each tonne of emissions. But if competitors in foreign markets do not face a carbon charge, there's a problem.

New Zealand's electricity companies know how to stick a pipe into the ground in the Taupo Volcanic Zone and generate electricity. They've been doing it for decades, and there is enormous untapped potential. America's hyperscalers are currently willing to pay a large premium for immediacy. They are sticking expensive off-grid generators beside datacentres that would have to wait years for a connection.

A few weeks ago, I proposed some guardrails that I think would be needed if a future National-led government removes the option to opt-out of KiwiSaver. I don't think any guardrails are perfect, and I doubt that mine are even close to what is best-feasible, but they're a start. If Kiwis have no opportunity to opt out of putting more of their retirement savings into this regulated vehicle, the risks inherent in KiwiSaver go up.

The Wall Street Journal had an excellent two-parter on Mark Carney's handling of a rather difficult situation: a century-long ally and decades-long free-trade partner threatening to invade and annex your territory, and threatening to nullify the treaty that settled the border. Part One (ungated) goes through Europe's slow realisation of the nature of the Trump administration. Part Two (ungated) explains how Carney helped Europe realise the situation that we are all now in.

My column at Newsroom last week gave a roundup of the sessions I attended at the NZAE meetings where the results might be of interest to a broader audience. It's ungated now, so folks can catch it there. Along with the usual band of sad old grouchy leftists in the comments section who hate economics and economists. I think this was my favourite of all the sessions - but that'll largely be because of my own particular interests.

The Institute for Family Studies puts up a pro-natal proposal that I'd not seen before. Most of the literature I've seen on baby bonuses suggests that the amount on offer would have to be hefty to have substantive effects. This version could harness a bit of loss aversion: President Trump launched a small savings account seeded with $1,000 to give emerging adults a leg up in his “Trump Accounts,” passed in the One Big Beautiful Bill.

About a decade ago, Canada's Counsellor for Immigration at the High Commission in Canberra came to Wellington to explain how Canada's refugee sponsorship programme works. His discussion of it at The Initiative's event is here. The basic deal: whenever communities can get together to raise the funds necessary to support a refugee's start, Canada will open the door to another refugee.

About a decade ago, Canada's Counsellor for Immigration at the High Commission in Canberra came to Wellington to explain how Canada's refugee sponsorship programme works. His discussion of it at The Initiative's event is here. The basic deal: whenever communities can get together to raise the funds necessary to support a refugee's start, Canada will open the door to another refugee.

During the Commerce Commission's market study into groceries, Coriolis Consulting put up a chart with some thumb-suck order-of-magnitude estimates on costs here. I was reminded of that reading this BusinessDesk piece on on biosecurity rules around blueberry imports. Annual revenue for the sector is about $150m. Peru exports a lot of blueberries to the US. Wholesale prices there are around $6.60 USD/kg, so about $13 NZD per kilo if you include GST.

I've been following Kalshi for a while. I remember back in the iPredict days, Matt Burgess figured prediction markets were a billion-dollar idea. Kalshi's now attempting a capital-raise at a $40 billion USD valuation. Incredible. But it never could have happened here. Not at the sandbox-level scale authorised by the Securities Commission. I had a piece in the Herald on it a couple of weeks back. I'd there cited Kalshi's Series F that had a $22 billion valuation - and they're now pitching for $40b.