Sunday, September 28, 2008

What to do about Climate Change...

The 'natural resources' tag encompasses everything from oil to water to the earth itself. This is a large area to canvas, and I'll focus specifically on international and national proposals to "green" our development. Once again I've taken much of the language in this digest from the sources linked to at the bottom of the piece, and while this post is quite long, I wanted a comprehensive take. I will note that I left out the many legitimate criticisms of environmental modeling and forecasting in the first place. There are many reasons to be suspicious of all of the forecasts that essentially "predict" the weather in a hundred years. This post will ignore these concerns, however, and concentrate on the data that is put forth by the UN and the UN's Intergovernmental Panel on Climate Change (IPCC).

High Cost

Three examples of these environmental proposals are the Kyoto Protocol, Al Gore's plan, and T. Boone Pickens' plan. All three are costly. Pickens plans to generate 20% of America's power through wind, and he estimates it would cost $1 trillion to build that capacity and another $200 billion to update our electrical grid. Gore wants the US to "produce every kilowatt of electricity through wind, sun, and other Earth-friendly energy sources within 10 years. This goal is achievable, affordable, and transformative."

Environmental economist William Nordhaus ran the numbers on Gore's idea to reduce carbon emissions by 90% by 2050. He found that such a plan would reduce the maximum increase in global temperatures to between 1.3 and 1.6 degrees Celsius, and it did so at very high cost of between $17 trillion and $22 trillion over the long term. Even at a very, very low estimate, Gore's plan would cost about $300 billion per year for the next ten years.

Meanwhile, the Kyoto Protocol is estimated to cost around $165 billion annually.

The costs of these plans are large (and I ask that you compare them to the costs of different types of interventions I will raise later), and I will contend they are not worth it, and that lower-cost R&D and "focused adaptation" plans would be far more sensible.

But how do the proponents of these plans justify these massive interventions?

Super Ultra Emergency?

Thomas Friedman justifies massive green spending by explaining that humans are an "endangered species" and none of us "are going to make it" as we experience disasters "of a biblical scale." Friedman trumps Gore five-fold, coming to claim that sea levels might rise a hundred feet, whereas the UN expects between six inches and two feet this century. Friedman says that in 22 years the evening news will feature 'weather, other news and sports' - in that time sea levels will have risen fewer than three inches.

If you buy in to the rhetoric of humans being "an endangered species" with disasters of "biblical scale," then we should start shutting down power plants and confiscating cars tomorrow. We have no good evidence that such a disaster scenario is imminent, but nobody can conceivably prove it to be impossible. Once you get past the table-pounding, any rationale for rapid emissions abatement is really a restatement of the precautionary principle: downside possibilities are so bad that we should pay almost any price to avoid almost any chance of their occurrence. Of course, this same principle would justify spending trillions on countless other "possibilities."

I disagree with those who view global warming as a super-ultra emergency, and agree with those view warming as a problem, one that must be managed via greenhouse-gas restrictions and a weaning away from fossil fuels.

Putting the Benefits of Mitigating Climate Change in Context

Most scientists warn that a temperature rise of 2 degrees Celsius (3.6 degrees Fahrenheit) could have serious consequences. How serious? Well, according to the UN IPCC a 4C increase – twice this amount – would reduce global economic output by 1% – 5%. That’s in the world of the 22nd century which is expected to have per capita consumption of something like $40,000 per year versus our current consumption of about $6,600 per year. So we are condemning future generations to be only 5.7 times richer than us.

But global warming isn't just about wealth reduction -- it's about the death and disease that would hit already at-risk populations. But even using the IPCC's warmest scenario - increased global temperature of 4°C between 1990-2085, climate change will contribute ~10% of the death toll from hunger, malaria — a surrogate for vector-borne diseases in general — and flooding. Thus, eliminating climate change completely would reduce annual mortality by 2 million to 6 million in 2085, depending on the IPCC scenario employed.

That's the potential upside of completely stopping climate change. Of course, the initiatives we are talking about don't even pretend to make such claims. The Kyoto Protocol would reduce climate change by less than 10% in 2085-2100, while costing $165 billion annually.

I mentioned initially the idea of "focused adaptation," which amounts to dealing with the symptoms of potential climate change, such as hunger, malaria, and coastal flooding. For instance, by 2015, malaria could be reduced by 75% for $3 billion per year, hunger by 50 percent for $12-15 billion per year. Please take a look above again to see how small these costs are in comparison to the efforts to mitigate climate change. Climate change will contribute ~10% of the death toll from these causes and look at the amount of spending it will take to even reduce 10% of climate change. Meanwhile, we can reduce 75% of Malaria for $3 billion per year.

My beef with the Environmental Movement

The environmental movement has welcomed a flurry of, at best, benign and wasteful, and, at worst, destructive movements and legislation - all in the name of "green." For instance, Al Gore, among others, pimped ethanol hard, and the government policies that followed made it harder for people to eat -- accounting for as much as 75% of the global increase in food prices since 2002.

These same folks want us to commit enormous amounts of resources to ideas like the Kyoto Protocol, Gore's Plan, and Pickens' plan, as they attempt to win support for these ideas with exaggerated doomsday scenarios and refusing to acknowledge the immense opportunity costs of their plans.

Environmentalists such as Friedman respond that we should still help the poor, for instance, but instead of giving them diesel, we should give them solar panels to power their lives.

That's a nice thought, but not relevant to the question of opportunity costs. If the investment cost for solar power is 14 times more expensive than diesel, the money spent on helping the poor will simply not go as far -- instead of 14 kids getting power you help just one. The large-scale emissions abatement central to Gore and Friedman's strategies would carry astronomical costs, and they would carry real tradeoffs that its proponents should acknowledge.

It's time to quit endorsing every lame-brained environmental strategy lobbyists dream up.

Ideas I'll get behind

Contrary to popular belief, many of us who are 'skeptics' of the environmental movement's claims don't believe in doing nothing at all. The harshest critics of Gore's plan still believe that global warming is real and poses a serious risk, and agree that an R&D program is a component of a solution. We also support adaptation to weather problems (disease, hunger, flooding mitigation), and believe ongoing efforts to analyze physical and economic trade-offs involved in various proposals through the IPCC and similar bodies are valuable and should be supported.

The government has no business picking winners in the alternative-energy competition (sorry, Illinois constituents and T. Boone Pickens), but augmenting basic research spending (as it is does in medicine) makes sense. And, again, taking steps to deal with hunger, disease, and flooding will do much more to help poor people, whether the climate change predictions come true or not.


Thomas Friedman sums up the environmental position when he equates spending trillions of dollars on greening with "training for the Olympic triathlon. If you make the Olympics and you run the race and do the whole triathlon, you may win. But if you don’t, even if you come in second or third, you’ll still be so much fitter, so much stronger, so much healthier, so much more respected, so much more secure. Which part of this sentence don’t you understand? Why would we not want to run this race?"

To continue with his analogy, my response is that while in 100 years you are much more toned and fit, your wife has left you, and your kid dropped out of school to sell drugs. But hey! You are in TERRIFIC shape. No denying that. The point of the analogy is that our resources are not unlimited, and that you concentrate them on one area (climate change mitigation) to the detriment of other areas (UN's Millenium Development Goals).

Attempting to be an Olympic gold medal winner in "greening" isn't the smartest use of our limited resources. As I've argued above, we can do much more to help both ourselves and the poorest people in the world by using some of the resources (that would otherwise be sucked up by the cost of olympic training) on other things we care about.

We live in a world abundant with poverty, disease, dictatorships, terrorism, nuclear proliferation, lack of girls' education, and more than 1 billion people without cleaning drinking water or electricity.

These people would likely be better served if Daddy ditched the Olympic medal delusion, and started acting like a rational adult. That doesn't mean he shouldn't stay fit; but maybe instead of buying muscle milk he gives the kids some clean drinking water.

1 comment:

Alex said...

You've raised some interesting points as well as some excellent criticisms of the three huge (and hugely expensive) programs currently on the table. Although there are many points to discuss here, I'll raise just one now.
One flaw I see is the false dichotomy this post presents of money spent on aid to the poor vs. aid spent combating global warming. Yes there are opportunity costs, but the idea that poverty and global warming can't be tackled together strikes me as wrong. The US spends almost twice as much in foreign aid as the next closest country (Germany). However, as a percentage of GNI, the US spends a paltry .16 of a percentage point on aid. When you look at a map of the countries that have signed and ratified the Kyoto Protocol, it is striking that the US is the only country that has failed to ratify the agreement (the mighty- and impoverished) Lesotho and Ethiopia are 2 of the roughly six countries that have not yet decided to ratify the Protocol). Meanwhile, the 20 countries that spend a greater percentage of their GNI on foreign aid have ALL signed the Kyoto Protocol. This suggests that the US need not chose which challenge to confront. The US has the resources and capabilities to do both.