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.

Conclusion

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.

Read more!

priorities for helping humanity

Bjorn Lormborg isn't against reducing man's carbon footprint, but -- like me -- he just thinks that the proposals bandied about cost too much given other available choices for helping the world's worst off. The Copenhagen Consensus ranked a list of solutions to the world's problems based on their cost and estimated benefits. The Copenhagen Consensus was originally sponsored by the Danish government and The Economist to assess proposals to advance global welfare under the stewardship of Lormborg, a Danish economist. There have been two rounds of discussion by the group -- which invites the world's top economists to participate (five Nobel laureates this year) -- the most recent in the spring of 2008.

Lormborg recently penned an opinion piece for the WSJ answering the Copenhagen Consensus' question, "How to get the biggest bang for 10 billion bucks." You can also watch his past Ted talk below for an introduction to his work, and read more (link also appears below the video) for a few select factoids from his work. Lormborg is something of a controversial figure, because of his skepticism regarding the global warming movement, but if you watch the Ted talk and read what he has to say, I think you'll agree that he is very intelligent and very reasonable.





Of Lormborg's top five priorities to improve global welfare, three address malnutrition, one disease, and one trade. At the bottom of Lormborg's list (of 30 priorities), two fall under global warming, two under pollution, and one under disease.

What's number one?

"Providing micronutrients -- particularly vitamin A and zinc -- to 80% of the 140 million or so undernourished children in the world would require a commitment of just $60 million annually, a small fraction of the billions spent each year battling terrorism or combating climate change. The economic gains from improved productivity and a lower burden on the health system would eventually clear $1 billion a year. Every dollar spent, therefore, would generate economic benefits worth $17."

I'll leave you with Lormborg's take on the current environmental proposals, which I largely agree with:

"If mitigation -- economic measures like taxes or trading systems -- succeeded in capping industrialized emissions at 2010 levels, then the world would pump out 55 billion tons of carbon emissions in 2100, instead of 67 billion tons.

This is a difference of 18%; but the benefits would remain smaller than 0.5% of the world's GDP for more than 200 years. These benefits simply are not large enough to make the investment worthwhile.

Spending $800 billion (in total present-day terms) over 100 years solely on mitigating emissions would reduce temperature increases by just 0.4 degrees Fahrenheit by the end of this century.

When you add up the benefits of that spending -- from the slightly lower temperatures -- the returns are only $685 billion. For each extra dollar spent, we would get 90 cents of benefits -- and this is even when things like environmental damage are taken into account.

A continued narrow focus on mitigation alone will clearly not solve the climate problem. One problem right now: Although politicians base their decisions on the assumption that low-carbon energy technology is being rapidly developed, that is not the case. These technologies just do not exist. Wind and solar power are available -- at a high expense -- but suffer from intermittency. Researchers need to develop better ways to store electricity when those renewable sources are offline.

If we took that $800 billion and spent it on research and development into clean energy, the results would be remarkably better. In comparison with the 90-cent return from investing solely in mitigation, each dollar spent on research and development would generate $11 of benefits."

As Lormborg emphasizes in the Ted talk above, it's time to stop conflating goals and proposed solutions. You can believe that it's important to save the environment and still think the Kyoto Protocol is a waste of resources. Pumping funds into R&D will be a lot less visible and might give us a less fuzzy feeling than taking Hummers off the road, but that doesn't make it the wrong choice.

Returning to Lormborg's number one priority, if anyone has information on well-run programs to distribute micronutrients (e.g., vitamin A) I would love to check it out. Read more!

hillary makes play for stupid, selfish vote

Hillary Clinton's campaign has clearly segmented the voters and focused on the population who likes to whine about energy prices and will embrace any plan, no matter how inane.

UPDATE: Hoping for that last-second push in Indiana, Hillary busted out this gem at a minor-league baseball stadium, “We're going to knock balls out of the country's park, for the home team, which is America."

There are no typos in that sentence.

Credit must go to John McCain for getting the ball rolling on this stinker, but Hillary gets big points for not only supporting a stupid idea, but digging in against the entire economics profession when asked why her proposal could not find one_single_economist to endorse it: "I'm not going to put my lot in with economists. ... We've got to get out of this mind-set where somehow elite opinion is always on the side of doing things that really disadvantage the vast majority of Americans."

Apparently, Hillary is going with her gut on this own instead of listening to high-minded, so-called experts, with their "facts" and "years of study." Remind you of anyone?

As Arnold Kling wrote, "Soon I expect to hear the Senator from New York promise to jump out of a tenth-story window and fly, to demonstrate defiance of "elite" physicists who doubt the feasibility of the project. "
Read more!

rash decision-making: environment edition

Well, here's a prime example of "moralized" decision-making where the perceived importance of global warming/climate change made it seemingly every intelligent person's duty to support all initiatives aimed at limiting future warming. Al Gore, among others, pimped the ethanol hard -- which makes sense, since it has a ready-made farming lobby that loves subsidies -- and now biofuels are making it harder for poor people to eat.

Now, I'll be forthright, I am not convinced that man has had, or can have a significant impact on the atmosphere, though clearly he has a direct impact on the Earth's ecological systems (hence, methinks the environmental lobby might be a little lost...). Still, given the potential catastrophe if I am wrong, I am open to efforts to curb our atmospheric impact. Of course, if you think it's the US that's holding back environmental progress, you're kidding yourself. Sure, Europe makes a lot of noise, but they still love dirty energy just as much as the next American. Of course, all this is dwarfed by the two big-boned elephants in the room -- China and India. The US makes a convenient focal point for environmental, anti-corporate ire, but with weakened prestige and limited influence, I'm not quite sure what the US can do besides parrot the party line and flap its wings obnoxiously.

Yet many still think we should be trying every lame-brained environmental strategy lobbyists dream up, wasting precious political capital, and in this case, the meager amount of food of the poorest people in the world.

Also, if you'd like a summary that shows why I am still straddling the skeptic line, click here.
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Technology to save the world

A recent Salon article claims that concentrated solar power could be the solution to our energy woes.

"The key attribute of CSP is that it generates primary energy in the form of heat, which can be stored 20 to 100 times more cheaply than electricity -- and with far greater efficiency.
...
CSP costs have already begun to decline as production increases. According to a 2008 Sandia National Laboratory presentation, costs are projected to drop to 8 to 10 cents per kilowatt hour when capacity exceeds 3,000 MW. The world will probably have double that capacity by 2013.
...
Solar thermal plants covering the equivalent of a 92-by-92-mile square grid in the Southwest could generate electricity for the entire United States. Mexico has an equally enormous solar resource. China, India, southern Europe, North Africa, the Middle East and Australia also have huge resources."

Sounds great, but I'm a little skeptical. Still, relative to the politically-tenable options, CSP sounds waaaaay better than ethanol (hat tip, pete). I will be on the look out for corroborating research papers and articles in support of CSP. Who knows, maybe CSP cities in the Southwest will be the new coal towns...
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Prescient big picture stuff: H20 Edition

Tyler Cowen, over at Marginal Revolution, is reading Jeffrey Sachs' new book, and is providing some thoughtful commentary on Sachs' less-than-impressively-thoughtful text.

You can jump over to his blog post to read all of his thoughts, and I'll just include an excerpt of Cowen's thoughts on what should be done as water becomes increasingly scarce.

I might add that national governments are the ones that subsidize the price of water to ridiculously low levels, most of all for agriculture. My first step is to remove all these water subsidies, allow water prices to rise, institute more water trading, and then see which innovations the private sector decides to finance (hmm...those are my first four steps). One role for government would be to ensure that patent law does not hinder international transfer of worthwhile innovations, a point which Sachs makes in other contexts. That sounds less glamorous than a big international plan, but I think it has a better chance of succeeding. Read more!