Global warming matters. There is no doubt that mankind is increasing atmospheric concentrations of CO2 and that this will influence temperature. Yet too much debate is fixated on reducing emissions without regard to cost or to human welfare.
In the Kyoto Protocol, the world set itself the ambition of cutting its carbon emissions to 5.2 per cent below 1990 levels in 2010, or a reduction of almost 30 per cent compared to no intervention. It was the implementation of this deal that broke down in the Hague in November and Kyoto was further stymied by the Bush administration's near-rejection earlier this year. Next month, the world's governments will be back at the negotiating tables in Bonn, all facing intense political pressure. The Europeans want to find a way to save Kyoto even if it means sweet-dealing the Americans, whereas the Americans need to find a way to tackle global warming without being seen as irresponsible and uncaring.
However, it is not clear that carbon emission cuts are the best way for the world to ensure progress. Let us consider some of the macro-statistics of global warming. (For these purposes I will accept the scientific models of the UN Climate Panel, the IPCC.)
The IPCC tells us that the world might warm as much as 5.8OC over the coming century. Yet this high-end scenario is unlikely. Reasonable analysis suggest that renewables-especially solar power-will be competitive with fossil fuels by mid-century, and this means that carbon emissions are more likely to follow the low emission scenario, causing warming of 2-2.5OC.
Moreover, most experts believe that global warming will not decrease food production, will probably not increase storminess or the frequency of hurricanes, and will not increase the impact of malaria or cause more deaths. It is even unlikely to cause more flood victims, because a much richer world can protect itself better.
However, global warming will have serious costs-indeed, the total cost is estimated at about $5 trillion. Such estimates are unavoidably uncertain but derive from extrapolating the current cost of warming on agriculture, forestry, fisheries, energy, water supply, infrastructure, hurricane damage, drought damage, coast protection, land loss caused by a rise in sea level, loss of wetlands, pollution and so on.
Global warming will hit developing countries hardest; the industrial countries may even benefit from a warming lower than 2-3OC. Developing countries are harder hit because they are poor-giving them less adaptive capacity.
Despite our intuition that we need to do something drastic about global warming, economic analyses show that it will be far more expensive to cut CO2 emissions radically than to pay the costs of adaptation to the increased temperatures. Moreover, all current models agree that the Kyoto Protocol will have surprisingly little impact on the climate. One such model by a lead author of the 1996 IPCC report shows how an expected temperature increase of 2.1OC in 2100 will be diminished by the treaty to an increase of 1.9OC instead. Or to put it another way, the temperature increase that we would have experienced in 2094 will be postponed six years to 2100.
Yet the cost of such a Kyoto pact, for the US alone, will be higher than the cost of solving the single most pressing problem for the world-providing the entire world with clean drinking water and sanitation. It is estimated that the latter would avoid 2m deaths every year and prevent half a billion people becoming seriously ill.
If it only imposes controls on the industrial world the cost of Kyoto will approach $1 trillion, or almost five times the cost of worldwide water and sanitation coverage. (Total global aid today is about $50 billion annually.)
If the Kyoto ambition of curbing emissions to 1990 levels embraces developing countries too the cost rises to about $4 trillion-almost as high as the cost of global warming itself.
Most of the reporting and analysis on global warming tells us all the bad things that could happen from CO2 emissions, but few or none of the bad things that could come from the regulation of such emissions. Instead of using cool economic reasoning in the face of the global warming problem, the debate is more often carried out with a quasi-religious fervour.
Consider the new 2001 IPCC report. It tells us that we should build cars and trains with lower top speeds, and extols the virtues of sail ships and bicycles. To reduce demand for transport, it recommends that we shift to a more regionalised economy. Essentially, what the IPCC proposes is a radical change in lifestyles: we must share resources, choose free time instead of wealth, quality instead of quantity, and "increase freedom while containing consumption."
The IPCC acknowledges that such a change in lifestyle is difficult to achieve and blames media indoctrination for making it harder. Not surprisingly, it wants to recruit the media to its side: "Raising awareness among media professionals of the need for greenhouse gas mitigation... could be an effective way to encourage a wider cultural shift." Is it appropriate for an organisation which gathers scientific information about global warming to promote such a political agenda?
There are four important lessons from the above for the global warming debate. First, we have to realise what we are arguing about-do we want to deal with global warming in the most efficient way or do we want to use global warming as a means to realise a broader political ambition?
Second, we should not spend vast amounts of money in return for a tiny cut in global temperature; the money could improve human welfare far more effectively in other ways. When we spend money to mitigate global warming we are to a large extent helping future inhabitants of the developing world. But the choice may come down to this: do we want to help the inhabitants of today's developing countries 100 years from now a little (when they will be richer), or do we want to help the inhabitants of those same countries much more and now? To give a sense of what is at stake-the Kyoto Protocol will cost at least $150 billion a year, and possibly a lot more. Unicef estimates that just $70-80 billion a year could give the third world access to health, education, water and sanitation.
Third, since the costs of global warming and the costs of reducing emissions are both large, we should focus more effort on finding other ways of easing emissions. This means that we need to invest much more in R&D for solar power, fusion and other power sources of the future. Given a current US investment in renewable energy R&D of just $200m, a big increase would seem a promising investment. We should also be more open towards other techno-fixes. Suggestions range from fertilising the ocean to absorb carbon; putting sulphur particles into the stratosphere (thus cooling the earth) and capturing CO2 from fossil fuel use and returning it to storage in geological formations.
Finally, we must acknowledge that global warming is not the world's most pressing problem. What matters is making the developing countries richer and allowing the citizens of developed countries even greater opportunities.
According to the new IPCC report if we choose a world focused on economic development in a global setting (the most status quo of their four scenarios), total income over the coming century will be some $900 trillion. If we make our economies more green but remain global we lose some $107 trillion; and if we go for the green plus regional approach we could lose up to $274 trillion. Moreover, the loss will mainly be to the detriment of the developing countries. This should be seen in the light of a total cost of global warming of a mere $5 trillion.
If we want to maximise the possibilities for our descendants, in the developing and developed world, we must focus on economic development and solving our problems in a global context. To put it another way, what matters most to our children is the success of the WTO not the IPCC.
