Brian Fallow: The stonethrower in the greenhouse

COMMENT

Since Danish statistician Professor Bjorn Lomborg published The Sceptical Environmentalist he has been demonised by the Green movement and at the same time lionised by those predisposed to believe that global warming is a myth and that the Kyoto Protocol will be the ruin of us.

His position is more subtle, more principled and more challenging than that.

But his bottom-line conclusion is that Kyoto is a thoroughly bad deal - "simply because the cost is now and the benefits are way into the future and very small".

The moral argument for Kyoto goes like this:

Our emissions of greenhouse gases will lead to climatic changes, some of which will prove costly.

But those costs are not sheeted home to those responsible for them. They are diffused over the whole planet and accumulating.

The result is a free ride, in effect a subsidy flowing from poor countries to rich ones and from future generations to the present. Kyoto would begin to give us energy prices that tell us the environmental truth.

Lomborg's response is that future generations will be richer and technologically better-armed than we are to deal with this problem.

And if the concern is for the Third World, it has more pressing problems, more urgent claims on the developed world's resources than climate change.

"It's true that we are leaving future generations with environmental problems," says Lomborg, who visited New Zealand as a guest of the Business Roundtable.



"But we are also leaving them with an immense amount of technology which enables them to be much richer. We are, in that sense, the poor generation.

"It's bizarre to worry so much about future generations which are likely to be much richer and to care fairly little about those in the present generation that we know are poor."

He questions some of the climate modelling underpinning the conclusions of the Intergovernmental Panel on Climate Change, the United Nations body which tries to make sense of the current state of climate science for the guidance of policymakers.

Some of the models may assume too fast a rate at which greenhouse gases are accumulating, he says, or give insufficient weight to other possible contributors to global warming, such as sunspots.

But Lomborg does not challenge the proposition that humanity's activities are contributing to global warming and that that process incurs costs.

His point is that we are going to be stuck with those costs anyway, while the costs of largely ineffectual measures to mitigate those effects will be high and wasted. The money would be better spent elsewhere.

In The Sceptical Environmentalist, Lomborg draws on economic modelling by William Nordhaus at Yale, which puts a present-value price tag of US$4.8 trillion ($8 trillion) on global warming under a business-as-usual scenario.

The cost of stabilising emissions at 1990 levels (a world-wide Kyoto) would be US$8.5 trillion, while the cost of limiting the temperature increase to 1.5C would be an eye-watering US$37.6 trillion.

A sceptic might wonder why we would give any credence to any of these figures.

Ask a dozen economic forecasters what New Zealand's economic growth over the next year will be and they will come up with a range of numbers clustered around 2.5 per cent. But history suggests the margin of error around that figure is 1.3 percentage points. Just for little old New Zealand, just one year into the future.

How much weight, then, can we rest on modelling that looks decades ahead and requires assumptions about world population growth, world economic growth, the emissions-intensity of that growth and the rate at which new technologies will be taken up?

But Lomborg says the conclusion that there is a wide gap between the costs and benefits of Kyoto is a consistent result from a range of models embodying different assumptions.

"It's a bit like, we can say all global climate models show the climate is going to warm. So I would feel very confident in saying, 'Put out more carbon dioxide and it's going to get warmer'.

"Likewise we can say, 'Do Kyoto and it is going to be a fairly bad deal because the cost is now and the benefits are way into the future and very small'."

One reason benefits from Kyoto are small is the fact that it imposes no constraints on developing countries' emissions, which are expected to exceed those of the developed world within 20 years.

And it would limit developed countries' emissions only to a little below what they were in 1990. We would still be emitting greenhouse gases, continually adding to the concentration of those gases in the atmosphere. To stabilise greenhouse gas levels would require deep cuts in emissions.

The result of Kyoto, even if the largest emitter of all, the United States, had not pulled out, would be to retard only by a few years - maybe three, maybe six - the amount of global warming that would occur over the next century.

Hence the conclusion that we are stuck with the costs anyway.

The costs of meeting Kyoto's target of stabilising developed-country emissions around the 1990 level would be on top of that and they would rise relentlessly, Lomborg argues, as the wedge between that level and business as usual widened.

"We have just got to face up to the fact that even if we did a vast amount over the next 20 or 40 years it would matter very little, as long as we are not going to get the developing world in there."

One problem with this line of reasoning is the question of room for regret.

Policymakers routinely have to make decisions in the face of uncertainty about the future.

They don't just have to decide which alternative scenario they believe. They also have to decide how sorry we will be if they go one way and get it wrong, compared with going the other way and getting it wrong.

In the case of climate change, there would seem to be a major asymmetry in the risks. If the current orthodoxy turns out to be unduly alarmist, but we have acted on it, we may regret some loss of allocative efficiency - building wind farms where coal-fired generation would have been cheaper.

But suppose it is not unduly alarmist and we have done nothing. If the effects are seriously bad it will be too bad because the extra momentum imparted in the meantime will take a long time to wear off.

The asymmetry arises partly because of the importance of the climate to us, but also crucially because of the enormous inertia of the physical systems involved and the long time-lags that result between cause and effect.

We know that we are pumping greenhouse gases into the atmosphere (the argument is only about how much) and that because of the greenhouse effect, energy which would otherwise radiate out into space is bounced back into systems such as the oceans, which drive the climate.

Heating up the Pacific is not like heating a suburban swimming pool. A lot of energy can go in before anything appears to change.

But the effect is cumulative. That marginal energy will not disappear of its own accord.

We are pumping more and more energy into climate systems we do not understand very well, and we cannot be sure of the effects.

Can this be wise?

Lomborg's response is not so much optimistic as fatalistic. "Yes, there is an asymmetry," he says.

"But it is not as big as you might imagine because most of this is going to happen anyway. So it is not that in 20 years [if we do Kyoto] we will be much better positioned not to feel regret. We only will be slightly better off."