22 April 1998
Professor Wilfred Beckerman Economist and author of "Small is Stupid".
The argument in support of our taking any drastic action to deal with increased carbon emissions, in order to minimise the alleged danger, the threat of global warming, has to be built around four points:
- The scientific aspect of it, namely how much increase in global temperature will there be, over the next fifty to a hundred years, and how confident can one be about predictions?
- Even if one can accept the so-called mainstream consensus view on the predicted amount of global warming by that I mean the predictions made by the Inter-governmental Panel on Climate Change (IPCC) there is the question of how much harm does it do, how much damage does it do?
- How much will it cost to take effective action in order to reduce global warming?
- How are the costs and benefits of policies to reduce global warming actually distributed between poor people and rich people?
Now the debate tends to be dominated by the first point, and most of the literature one reads in the newspapers or environmental activists statements or politicians references are all about the predicted physical effects of global warming. There is remarkably little discussion of the second, third or fourth points, quite remarkable, since they are just as important.
Point one: I have my doubts about the consensus mainstream view about how much global warming there will be. Now it is true I am not a scientist, but I am in touch, in contact with recognised top world class climatologists, and I talk to them, and I understand what they tell me, I think, and some of the things they write. And I gather that the so-called mainstream consensus is not such a solid consensus as one is often given to believe.
Al Gore for example, the Vice-President of the United States, and other politicians, go on saying that it is definite, but it is not all that definite. And one can easily see reasons why many scientists are, no doubt subconsciously, influenced by the fact that they are running big research programmes into global warming which would not attract anything like the sort of finance they do get if people did not think there was a serious problem.
According to some people scientists in financially gigantic research programmes the world is going to face disaster.
So there is a lot of politics in this, a lot of scientific politics, also a lot of bureaucratic politics.
There are now vast bureaucratic institutional activities which get their finance on account of the global warming scare. There are international jamborees, conferences, going on non-stop. Government departments in a large number of major industrialised countries are now dealing with the environment.
I know this because I am in contact with some of them, in fact I am even on one of the committees of one of them. And these bureaucracies have their agendas.
If you can show that youre working on organising this or that conference, or supervising a few more research projects on the scientific affects of global warming, it will require you to have a larger staff and a bigger office, and you have a higher rank and all that sort of thing.
So you have a natural tendency to try to build on this. Then of course there are the politicians, for whom this has a popular appeal. If they can show themselves as being very concerned and caring people and worried about saving our grandchildren and future generations, then of course this is a bandwagon that they will jump on.
And some politicians are not only experts at spotting popular bandwagons, they seem to be experts at getting into the driving seat as well. So one should not think that the science of it is totally disinterested and objective. This is the sort of impression of the way science works that scientists like to cultivate.
Some of the best scientists in fact have gone on record as saying this impression is very misleading, and that there is as much politics in science, and the bureaucracy that is behind a lot of scientific research, as there is in most fields of human endeavour. So much for the science.
Nevertheless, let me say in spite of all that, for the sake of the argument, I am prepared to go along with the mainstream IPCCs predictions of how much global warming there will be. And in spite of the reservations I have just enumerated, in spite of the fact that the satellite observations of global warming, for which we now have quite a good run over twenty years, do not show the upward trend in the average global temperature level. In spite of all that, for the sake of argument, let us assume global temperatures up by something in the order of 2.5% (this is their mean prediction). No doubt an exaggeration, but let us accept that.
Point two, what are the effects of this? For some reason or other, many seem to think that the effects are going to be catastrophic. But of course there are good reasons to think that they might, on balance, be beneficial. And so for theoretical reasons, namely vast potential agricultural areas, actual as well as potential agricultural areas, like the northern states of the USA, most of Canada, vast areas of the former USSR, northern parts of China, and so on, will find it much easier to expand agricultural production. They will have longer growing seasons, they will have far less frost. So agricultural production will be helped by climate change on that account.
Secondly, they will be helped because increased carbon concentrations, theoretically, will improve crop yields I will come onto the practical and empirical verification in a minute but just theoretically, crop yields should improve because that is how crops grow. They absorb carbon from carbon dioxide. They use carbon to grow and they give off oxygen. That is the way the process of photosynthesis works.
Thirdly, something that everybody in the business agrees on is that climate change predictions entail an increase in precipitation, in most parts of the world that is rain, in some it is snow, but let us say increased rain.
Theoretically then, there will be three variables that should increase food production or make it easier to increase production. Now there is also already some evidence that this is probably happening scattered bits of evidence as well as detailed studies. For example, in the course of the last six months or so, very careful detailed studies, in New Zealand and in Australia, attribute improved crop yields to global warming. And there have been other recent studies carried out at an environmental institute in Oslo reporting results, not from Norway but from studies made from lots of stations in Mexico. There are these odd little studies here and there; there are studies showing increased soil moisture in the main growing states of the USA. Whether these are anything to do with climate change one cannot be sure.
I think people talk a lot about greater incidence of storms and hurricanes. It is clear now that in fact this is far from true. Over the whole of the past century the incidence of hurricanes and storms on any standardised measure has not increased at all. In fact it has probably slightly decreased.
And this again is what one would expect theoretically, because a main cause of instability and storms and hurricanes is what is known as temperature gradient. That is the difference between temperature in one part of the earths surface and another part. And the climate models all predict that most of the warming will be near the Poles, and the least near the Equator, which means that the difference in temperature between the upper latitudes and the Equator will be much less. So theoretically there should be a reduction in storms and hurricanes. The evidence is that there has really been no change at all over the last century. Depending on exactly which statistical series you look at, some of them actually indicate that there has been a slight decline. So what are the effects?
There have also been some international conferences of agricultural experts, who predicted on the basis of what has happened to agricultural output in the regions on which they were experts. Overall, the results are that in the world as a whole there had been no significant change.
The predictions about the amount of sea level rise have been going down remarkably over the course of the last few years. Originally they started off with the prediction of eight metres, which quickly came down a few years ago to about one metre, then to 60 centimetres, and some of the latest predictions are that it will be between 30 and 40 centimetres. And if you went on extrapolating predictions, you would find that you were predicting that sea levels would fall, which is theoretically possible.
That may seem ridiculous, but its very simple: if there is more precipitation as the climate gets warmer there is more evaporation from the seas and this comes down somewhere; over the Antarctic it will come down as snow. In other words, what you are doing is taking water out of the sea and plonking it down as snow over the Antarctic.
Now I am not saying that this is realistic, I am just saying that it is a theoretical possibility. But let us assume that the sea level will rise somewhat. Now of course sea levels all over the world, in a sense have been going up and down for centuries, and how much is the sea level rising and how much is the land going down we cannot be sure. These great geological shifts are difficult to sort out, over the last few centuries. But they have been happening all the time. They do not happen overnight. And there is no doubt that some areas will probably be adversely affected, and others may actually benefit. The point I want to make is that for the world as a whole there is no reason why the total effects should be harmful. For some areas they no doubt will be.
When I said for example that the total rainfall will increase, where it comes down nobody really knows. I suppose, you know, Murphys Law might operate, it would all come down in Oxford where I live or in the west of Ireland where they do not need it. You cannot be sure that it is going to come down in the Sudan. But nobody really knows, and it is quite possible, although the world total rainfall should go up, in some parts of the world it might actually fall off. In some parts of the world the rise in sea level might be harmful.
But my point is that, since for the world as a whole, the effects will be, on balance, negligible and possibly favourable, it would be theoretically possible for those who gain to compensate those who lose and still be no worse off themselves. This jumps ahead to my fourth point, namely, how the gains and benefits will be distributed. Its also linked to my next point.
Point Three. What are the costs of reducing or preventing global warming?The costs of preventing global warming are very great the costs of effective action I mean, not all this nonsense about putting up a few more windmills and that sort of stuff. That is a drop in the ocean, that is just political rhetoric, it sounds as if you are doing something and in fact you are not doing anything.
Let me give you a few simple facts.
In China and India, the total population is about two billion and still rising. Their energy consumption per head is about one tenth of that of the United States. One tenth. Now if it only rises to one half of that of the United States, unless there is a total transformation in the way they produce energy, this is going to mean a significant increase in carbon emissions.
So there is nothing that can be done effectively to reduce the rate of increase of carbon emissions, unless the rich countries, the industrialised countries, were to carry out vast reductions in their own emissions. In fact, there are well-established documented estimates showing the requirement for the advanced countries, how much carbon they would have to emit in order to reach alternative targets as set out by the IPCC, on the assumption that the Third World countries are not doing anything special or anything significant to reduce their own emissions.
If you look at these figures, on targets holding carbon concentrations in the atmosphere at about 550 parts per million as compared with 350 parts per million as they are now, it would mean that the industrialised countries would have practically to stop using energy by the year 2050, if not earlier. Now of course that is not going to happen. Its just inconceivable.
Let me just give you an idea of the order of magnitude involved if you want to do anything effective about global warming. Given that the Third World is not going to do much, and given that the Third World is bound to increase its energy consumption and hence its carbon emissions considerably, effective action in the rest of the world would be economically disastrous. Our burden would be enormous. So how does this link up with my previous point, that some countries will no doubt lose by global warming but not the world as a whole?
The point is this. Let us consider a simple arithmetical example. Suppose that it would cost the world $100 billion to take any significant action to reduce global warming. Effectively it would be much more than that, but just to illustrate the logic of the argument, supposing it would cost $100 billion to reduce global warming. Suppose that the harmful effects - if we do not do anything about global warming - on a few places, Bangladesh, the Maldives, places one usually talks about in connection with sea level rise, were $20 billion. In fact it might be a lot more than that, but again I am just illustrating the logic of the argument. What would be the rational policy?
The rational policy would obviously be to say, well chaps, it will cost you $20 billion in building dykes and sea walls and moving people to higher ground, etc, etc. It can be successfully done. Amsterdam is about 5 metres below the sea level. It would cost you the damage to you would be $20 billion but if we try to stop global warming, it will cost us $100 billion. So it makes much more sense for us to compensate you, maybe give you twice $20 billion, give you $40 billion, to help you do these things, to help you emigrate perhaps, and so on. And we still gain $60 billion. That would be the sensible policy. In other words, if for the world as a whole the economic effects are not likely to be significant, but the costs of effectively reducing them would be astronomical, the sensible policy is to accept that, instead of incurring these astronomical costs, we ought to be ready to help countries adapt to global warming. The winners, in other words, should be ready to compensate the losers.
Point Four. The distribution effects. It is not simply a question of distribution between winners and losers at any moment of time, or between rich countries now and poor countries now how far the burdens of any effective action would have to fall on poor countries, for the simple reason that the rich countries are no way going to reduce their energy consumption to zero in the next few years, or fifty years. It is not just that. It is also a question of redistribution between poor people now and far richer people in fifty or a hundred years time.
People underestimate the effects of compound interest. If you take very conservative assumptions about long term rates of economic growth, I calculate that one has to assume that national income or GNP per head is going to rise over the next 100 years by at least 1.5% per annum. Now what is my basis for that assumption?
Over the last 50 years, it has risen by an average of 2.1% per annum. This is real national income per head, adjusted for price changes and so on. Why should I think that it will carry on at 1.5 per cent. Actually I think it will carry on faster than that. The reason being that economic growth in the long run is a function largely of scientific and technological progress. The number of people who have scientific and technical qualifications now is of course incomparably greater than, say, fifty years ago, even twenty years ago. I am sure somebody has estimated that there are probably as many now as there have ever been throughout the whole of human history before. This is continually expanding as countries get richer. They realise the importance of scientific and technological knowledge. More are getting it, and this is the basis of long run economic growth.
So I think that the prospects for continual economic growth in the long run are even greater than they have been over the past fifty years. Of course there are going to be short run blips, five years, even ten years, some countries go through a bad phase, like Latin American countries did for a bit, and Asia is at the moment. But these are blips on the long run. So I think in fact in the next hundred years growth will be even faster than it has been over the last fifty years. But let me take the conservative figure of 1.5% only.
If 1.5% is compounded in a hundred years time the average income real income of the world will be 4.14 times as high as it is now. I recently published an article in The Times, last December, on this issue, criticising the speech that Prime Minister Tony Blair made about the Kyoto conference. And I said the economic effects are not going to be all that serious anyway.
Somebody wrote to The Times pointing out that recent estimates by the IPCC suggest that global warming could reduce world GNP in about a hundred years time if carbon concentrations are allowed to double by then, by about one to two per cent. In other words, instead of being 4.14 times as rich as they are now, people living then would only be about 4 times as rich as we are now. I am sure that by then they will have accustomed themselves to their terrible disappointment; that in the year 2100 they will have to wait another year before they are 4.14 times as rich as we are now, because their GNP will be 1 or 2% below what it would otherwise be if there had not been any global warming. In other words, it is all ridiculous.
The burden on people in a hundred years time, even according to the IPCC, is absolutely trivial. Compared with today they are going to be incomparably richer. And one has to ask oneself, why should one impose a much higher burden on present generations in order to reduce carbon concentrations significantly, in order that future generations, who are going to be far richer anyway, should be one or two per cent richer by then than they would otherwise be. A special aspect of this point is that you have to ask yourself who exactly is going to be affected?
So far I have been talking about the world as a whole. Who exactly is going to be affected?
The main effects of global warming are going to be on agriculture. For reasons Ive given earlier, in many parts of the world this will actually be beneficial. In some parts of the world it may be harmful. But the countries that are going to be adversely affected are of course countries heavily dependent on agriculture. Not Britain, where agriculture is about 2% of GNP, or even less, or the United States where it is less than 3%. It is not going to be the advanced countries of the world, it is going to be the poorer countries that are heavily dependent on agriculture. So if we spare them the harmful effects of warming, the people who are going to gain are people in poorer countries, in fifty, a hundred years time, like Chinese peasants. And of course China is one country where the economic rate of growth is extremely fast, for obvious reasons, starting at a very low base, and when I said that the world as a whole will be over four times as rich as they are now, China is probably going to be ten times as rich.
The people youre helping, if you take action to reduce global warming, are going to be, say, Chinese peasants or ex-peasants in a hundred years time who will be ten times as rich as their ancestors living today. Now why should one try to impose heavy burdens on these poor countries today, which you have to do if you want to have effective reductions in carbon emissions, in order to improve the economic situation of their descendants in a hundred years time who are going to be ten times as rich?
And that just simply doesnt make sense. If you are really concerned with equity and equality and that sort of thing, then the distribution aspects of the costs and benefits of global warming and policy to prevent it have to be taken into account.
So it seems to me, to run over the whole thing, the science is uncertain but, OK, I will give you that. The economic effects seem to be peanuts. Even on the IPCCs own estimates, the costs of taking effective action are quite unacceptable and it is just not going to happen. Even the Chinese at Kyoto made it perfectly clear. They said No to practically everything. They are not going to carry out any reduction now, they will not commit themselves to doing anything in the future, they would not have anything in the agreement about voluntary reduction. They were absolutely clear about this.
The United States Senate passed a unanimous resolution (Byrd and Hagel) in July of last year, to the effect that it would not ratify any treaty imposing carbon emission reductions on the United States, which did not require Third World countries also to reduce their emissions. Since Third World countries are not going to reduce their emissions, at least not significantly, they may take token steps here and there, that means the United States will not either, the whole thing is hot air. So it is not going to happen, which follows the fact that any effective action would be astronomically expensive, and so unacceptable.
Finally, if they did take any effective action, it would be very inequitable and regressive as far as its distribution effects between poor and rich people are concerned.
What would you say to those who advocate the disbanding of the carbon state in favour of a totally green regime, in the belief that this will come good in the medium term and actually economically advantageous over and above what we could have ever had from oil?
There are various levels at which one can discuss that. At one level of course the whole idea is totally Utopian. I am just against Utopianism, by which I mean espousing ideals which are obviously totally unrealistic, given any reasonable assumptions about peoples motivations, about preservation of democratic institutions which reflect peoples preferences and so on, which I happen to wish to sustain and do not want to see replaced by people who adopt extremist policies on the grounds that they know best, saying it is too bad for everyone else if they want to go around driving their cars and heating their homes by conventional means. I am very hostile to this sort of Utopianism which has led to more human suffering and disasters than any other form of ideology.
Anyway, apart from that general political position, on the actual details of it, the real price of oil, as you probably know, has actually fallen over the last 25 years.
People have been predicting that were running out of fossil fuels for hundreds of years. An illustrious predecessor of mine in the Chair of Economics I used to hold in University College London, the great economist Jevons, published a book in 1865 called The Coal Question, in which he showed that we only had coal supplies for another ten years. The latest estimates are that we have supplies for about 700 years. So I do not believe that we are going to run out of anything. What happens is that if some materials are in short supply for a while their prices rise. As prices rise, all sorts of feedback mechanisms are set in motion. People start exploring more, incurring more costs and looking in more difficult places, finding better ways of extracting minerals, better ways of processing them and purifying them; find ways of economising in their use, in all sorts of intermediate products. Even if, at the end of all this, the prices of the goods in which they are finally embodied rise a bit, so consumers finally will gradually substitute away from them.
So we will never run out of anything at all. Anything. If we are using up the 700 years supply of coal, as we are running short of coal what will happen will be that the price of coal becomes so high that it will only be used for earrings and jewellery like gold and diamonds are today. You do not actually run out of these things, the price will just go up. So this is nonsense. We are not going to run out of any fossil fuels. If we do run short, the prices will go up, and this will set off a corrective mechanism. So there is no need to rush into some draconian action to force people to do something they do not want to do, namely switch over to a carbon-free economy.
Now of course it is true that we use more energy than is economically desirable because there are a lot of subsidies all over the world. Very large amounts billions of dollars are spent on subsidising uneconomic uses of energy and we should do what we can to stop those. Secondly, there is probably some of what economists call market failure in the market for renewable energy or less carbon intensive forms of energy insofar as markets will not always ensure that the socially desirable amount of investment and research is carried out into substitutes for conventional energy. Insofar as there is this sort of market I am all in favour of government or anybody doing research to develop and promote new technologies, and I understand there are promising signs here and there. For example, off-shore windmills are being developed there are Danish scientists and engineers doing some very interesting work on this - which can help supply a little bit of energy without mucking up the environment too much by having the countryside covered in these ugly windmills. You can do a little bit here and there. The efficiency of photovoltaics is improving which will be useful in conjunction with solar energy in many developing countries.
So there are all sorts of possibilities. I would have thought the scope for any effective action that is beneficial to people is marginal, and one should not exaggerate it and one should not be seduced by utopian dreams of carbon-free economies.
Can we refer to the history of innovation in which something starts off appearing to be very expensive and soon becomes relatively cheap. We can see that with the computer or television or any number of things. What do you say to those who predict that this is going to happen with solar energy?
Of course the trouble is with these global warming scenarios, there is bound to be more precipitation and as there will be cloud cover the prospects of more solar energy in many parts of the world is not all that good. They are better in tropical areas, parts of Africa. The trouble is though that it is not easy to store it, and so you would have to rely on great improvements in the technology of photovoltaic cells which is happening but all these things are going to be marginal.
Subject to certain reservations, I am not a believer that the market solves everything, but it is pretty good on the whole at spotting where there are opportunities and I do not think that any serious scientists think that contributions from these other energy sources can effectively be an economically viable replacement for fossil fuels in the foreseeable future. It may well be that in a hundred years time there will be some breakthrough with other forms of energy fusion energy is conceivable, but I cannot say that there is anything to suggest that it will make a contribution in the foreseeable future.
I hope that in ten, twenty, thirty years time it will be possible for it to make a modest contribution to energy production, but it will not be more than that.
Reply to Wifred Beckerman