What Should We Be Doing About Global Climate Change?

There are lots of fake disputes over global climate change. Does carbon dioxide in the atmosphere act like a giant blanket warming the earth? (Yes.) Does uncertainty about global warming mean that we should delay action? (No.) Should we be spending a much bigger fortune than we are on research: research into carbon-neutral power technologies, research into carbon-sequestration technologies, research into albedo-increasing technologies? (Yes.) Should India, China, and company have to bear a substantial part of the medium-term burden? (No: the rich countries got to take an easy carbon emissions-intensive path to industrialization and riches; theirs is the medium-term responsibility for dealing with the problem.) Should we be building or blocking the formation of the international institutions that will manage our reactions to global climate change over the next several centuries? (The first.)

There is, however, one real dispute: what else, besides research, should we be doing over the next decade or two? We economists like to think of things in terms of prices. And when we economists see something going wrong in the sense of having destructive side-effects, we like to tax it. Taxing it makes the individuals who are undertaking actions feel in their wallets the destruction they are causing elsewhere. Maybe the action is still worth doing, and maybe not. Imposing a tax--imposing the right tax--on those who are, say, driving low-mileage SUVs is a way of harnessing the collective intelligence of humanity to deciding in which case the bad side-effects are a reason to stop. But it needs to be the right tax.

An SUV going ten miles in the city and burning a gallon of gasoline pumps about 3 kilograms--6.5 pounds--of carbon in the form of carbon dioxide into the atmosphere. Should the extra tax on this--and on all carbon emissions--appropriate for global warming be on the order of five cents a gallon, fifty cents a gallon, or a dollar fifty a gallon? Our views will change as we learn more, but at the moment whether the tax should be five or fifty cents a gallon hinges on a question of moral philosophy: how much do we believe that we owe our distant descendents?

Australian economist John Quiggin has a very illuminating discussion on his website http://johnquiggin.com/wp-content/uploads/2006/12/sternreviewed06121.pdf. The Stern Review on Global Climate Change (on the internet at http://www.hm-treasury.gov.uk/independent_reviews/stern_review_economics_climate_change/sternreview_index.cfm) which comes down more on the side of fifty cents a gallon, immediately, does so because they project that spending today to reduce carbon emissions is a very good investment for the future. If the world grows in per capita income at about 2% per year, a marginal expenditure of roughly $70 today in cutting carbon emissions would be worth it if it were to enrich the world of 2100 by about an extra $500 of year-2006 purchasing power, once all the damages to the world economy and environment from global warming, costs of adjustment, and so on are taken into account. This looks like a very good deal to Nick Stern and his team.

On the other hand, critics point out that the world today is poor: average GDP per capita at purchasing power parity today is roughly $7000. We expect improvements in and the spread of technology to make the world of 2100, at a 2% per year growth rate much richer than the world of today: $50,000 per capita of year-2006 purchasing power. We today can use the marginal $70 per capita, critics say, much more than the richer people of 2100 will need the $500 or so they would gain from not having to suffer from the effects of global climate change.

What critics don't often say is that the same logic applies to the world today. The U.S., Japan, and Western Europe today have average incomes of roughly $40,000 per capita. The poorer half of the world's population today have incomes of less than $6,000 per capita. The same logic that says that we today need our $70 more than the people of 2100 need an extra $500 also tells us that we ought to tax the world's rich in the OECD more and more to fund world development as long as each extra $500 in first-world taxes generates even as little as $70 in extra poor-periphery incomes. If we in the world's rich now are stingy toward the (likely to be much richer) future and want to leave them our environmental mess to deal with, we should be lavish toward our poorer brothers and sisters today. If we today are stingy toward our poorer brothers and sisters now, we should be lavish toward our descendents.

At least, that is what we should do if we want to fulfill our part of Edmund Burke's great worldwide social contract between the dead, the living, and the unborn. If we

Comments

[J Wagner]

A tax to discourage oil use wouldn't fly, but pricing oil to cover the externalities - specifically the military in the middle east - would add enough to the cost of oil to discourage use and make alternatives practical. The idea of paying the whole cost of oil should be more palatable to conservatives than subsidizing other's oil use (externalities) through the income tax.
Regards,
Jim

[Bruce Wilder]

It is insane to simply assume 2% per annum growth in this context.

Economic growth (per capita) implies productivity growth implies increased energy consumption implies increased entropy implies increased pollution.

we are hitting a ceiling. We may be able to raise the ceiling; that remains to be seen. Or, as seems more likely, we may be above the ceiling.

An economics, which has no theory of production -- or no theory of production adequate enough to identify energy, pollution or control of error -- really should just pack it up and go home.

[Cranky Observer]

> Economic growth (per capita) implies
> productivity growth implies increased
> energy consumption implies increased
> entropy implies increased pollution.

This directly contradicts the experience of Japan in the 1970s: the more energy-efficient they made their industries the better their economy did. Just one example: the laptop on which I am typing this (72 watt power supply) has more computing power than a typical 1970 mainframe (50,000 - 100,000 watt power supply). I am not sure if IBM even has a water-cooled mainframe in their catalog anymore.

It is true that there is a limit to this, and in any case the principle isn't always intelligently employed (witness the vast datacenters full of x86 pizza boxes now straining the electrical distribution infrastructure in Silicon Valley - all so that no techoexecutive born after 1970 ever has to learn anything about mainframe computers and their tremendously higher efficiency). The the US economy in particular has a loooong way to go before it gets to the wrong side of that curve.

Cranky

[Mads Keller]

Thank you. That was much better than anything I could have said my self.

[Econ Neophyte]

What is the cost of a tax if it displaces another tax? If a gas tax increase is offset by an income tax cut (and in the US we defacto already have the income tax cut) what is the cost to the economy?

[EthanS]

Brad, I do not think that post ends how you think it ends.

[RedCharlie]

I don't know that mainframes are more efficient than a server framework, but otherwise Cranky has a very good point.

A perennial argument against conservation is that we can't afford it. This sort of "parks or butter" choice between environmentalism and economic growth is a false dichotomy.

The real question is efficiency. As efficiency increases, waste (and thus pollution) declines, but output increases too! The incredible progress made in computer technology that Cranky cites is a great example (if you want to make a processor go faster, you have to decrease power consumption by lowering the voltage and increasing the overall efficiency) but it extends to other industries as well.

For example, Ray Anderson of Interface has become famous as an environmentally aware CEO. But he also discovered that minimizing pollution helped his bottom line too. It requires a certain discipline to constantly perform environmental and efficiency audits, but Anderson is very quick to point out that it has only helped, not hurt, the profit margins of Interface.

The "parks or butter" thinking creeps into DeLong's writing when he posits that China, India, and other fast-developing countries should not bear a large "cost" of decreasing pollution because, well, the rich countries already had the chance to pollute and it just wouldn't be fair to not let China and India have their chance to do the same.

This is like saying, "Well, we shat in our beds, it just really wouldn't be fair unless we let China and India have their shot at fouling their own nests as well..." This makes sense only if you actively hate Indians and Chinese (Why should we share with them the benefit of our experience? Let them learn it the hard way like we did.)

The opposite of efficiency is inefficiency. Waste is the opposite of profit. Too much inefficiency not only means pollution, it also means economic death. They can only get so far with cheap labor and fixed exchange rates before their underlying inefficiency kills them. (Krugman has written something pertinent to this, on how the amazing growth in Indian and East Asian economies lose their bloom when one realizes that their growth depends on investing increasingly large shares of GDP back into the economy.
http://www.pkarchive.org/global/AsiasGrowthFuturePromising.html)

So the question is not how much "of the medium-term burden" that China and India can bear, but rather, what is the necessary increase in efficiency that will allow them to survive and grow, and avoid the economic (not just environmental) perils of dust bowls, droughts, soil salinization, heavy-metal contamination, acid-rain, smog, rising seas, etc. Sure, there are costs involved, just as in retooling a factory costs money. But it's not just a cost, it's an investment, just as the investment in robotics by Japanese auto manufacturers helps them produce cars with fewer hours of labor than US manufacturers.

[Robert Waldmann]

Very good general discussion of the topic and very good question critique of money metric silliness. I chimed in on Quiggen's side on the pure rate of time preference (imoral). Now I will say that I think 1% of world GWorldP growns is less and less important the greater is per capita GWP, that is, ceteris my subjective social welfare function is more concave than logarithmic ceteris paribas.

I might add that this is not due to pure egalitarianism, but, because I think indirect utility functions are more concave than logarithmic supported by all the evidence in a massive massive literature.

I praise most highly your point that this means that advocates of a low tax on gasoline should advocate a manyfold increase in foreign aid.

It is also relevant to immigration policy. Free immigration will cause massive disruption as well as being a transfer of wealth from workers in rich countries and firms in poor countries to immmigrants and firms in rich countries. Allowing more immigration and tax profits in rich countries more (or just allow more immigration) is good policy even if the deadweight loss due to social conflict is huge.

And don't get me started on cotton tariffs.

Your deeper point is that almost no one thinks this way (including professional economists). I really don't understand why.

[Cranky Observer]

> The real question is efficiency. As
> efficiency increases, waste (and thus
> pollution) declines, but output increases
> too! The incredible progress made in
> computer technology that Cranky cites is a
> great example (if you want to make a
> processor go faster, you have to decrease
> power consumption by lowering the voltage
> and increasing the overall efficiency) but
> it extends to other industries as well.

Thanks RedCharlie - your thoughful discussion was much better written than my cranky rant.

I would make two points: First, since many people recoil from examples involving computer/chip technology (perhaps rightly so), is that this applies to many areas of wealth/energy consumption, not just computers. When automobiles were forced to pollute less by fiat, they became more efficient as well. Much as I loved my Rocket 350 of the 1970s, the fact is the engine in my current car gets 3x the gas milage and puts out 2x the horsepower. Best of both worlds. I have seen the same thing in several heavy industries as well; it will be interesting to see what happens when the electric power industry finally starts large-scale construction (as it soon must) for the first time since the real Clean Air Acts were passed.

Second: I do acknowledge that there is a limit to this process. But the United States in particular is nowhere near that limit. Energy efficiency and standard of living could be made to increase side-by-side for quite a while - possibly long enough to get us through the oil fixation.

Cranky

[Randolph Fritz]

"The long run is a misleading guide to current affairs."

Three thoughts:

1. Perhaps, before taxation, we had best consider abandoning the subsidies we have in place, like the depletion allowance in the US tax code.

2. Economists are, I think, making an unreasonable assumption of linearity here; if a fifty-cent tax doesn't do the job, and a five-dollar tax does, the difference in the future outcome would be the difference between future death and future growth.

3. I am generally cynical of using direct taxes to control carbon emissions; I think there's a good chance of corruption, where governments end up treating carbon emissions as a source of revenue, rather than a destructive practice to ultimately be outlawed.

[Winston]

This is just a thought, and probably an evil one which I, as a civilized, caring individual shouldn't share, but here it is:

As a resident of a rich country, I am very well equipped to deal with the the impacts of global warming. In the event of food shortages, I will not suffer, I'll just spend a bit more at the supermarket. If there is flooding, my government has the ability to build better dams and levees (and is aggressively doing so (sometimes California does something semi-rational)). In general, I am unlikely to be harmed much by global warming.

People in poor countries are not so lucky. They are likely to die and be significantly impoverished due to the results of global warming. I also know that happiness (and evolutionary success) is correlated to relative, not absolute wealth. So, since the impacts of global warming will be disproportionately felt by poor countries, it seems it is in my interest to do everything I can to encourage global warming to give myself a bigger advantage over potential competitors in Bangladesh.

Also, since other rich countries are willing to take the expense to reduce emissions yet will still face the cost of dealing with global warming, not doing anything to fight it should give me an advantage over them too.

But, I'm not cynical enough to actually think these things.

[yave begnet]

People are ok with transferring wealth between generations within a citizenry, but not ok with transferring wealth oustide the citizenry. Hence the stark fear that surfaced in the recent election that illegal immigrants are sneaking into the country to get on the dole rather than to work 70 hours a week for peanuts.

When most people talk about whether or not to transfer more wealth to future generations or keep it for ourselves, they assume that the current national boundaries (and possibly wealth disparities) will still then be in effect. Part of the calculus should involve a determination of whether wealth will be more equitably distributed in the future. If you assume, as I do, that it will be, then it makes more sense to transfer more wealth to future generations. It's not really $70 now vs. $500 later, it's more like $5 now goes to people who need it most vs. some greater proportion in the future.

[yave begnet]

Winston said: "since the impacts of global warming will be disproportionately felt by poor countries, it seems it is in my interest to do everything I can to encourage global warming to give myself a bigger advantage over potential competitors in Bangladesh.

Also, since other rich countries are willing to take the expense to reduce emissions yet will still face the cost of dealing with global warming, not doing anything to fight it should give me an advantage over them too."

That holds as long as you assume that all those other countries don't get royally pissed off at your transparent selfishness (hypothetically speaking, of course) and exact some political price which translates into an economic detriment for you and your descendants. I think inaction by the US now on global warming will translate to a weaker US vis-a-vis the rest of the world in the future.

[Taylor Fife]

Very nice post. Are you already a member of the pigou club?

Don't forget about pollution and traffic congestion for reasons to have a gas/carbon tax. It's great to think about posterity, but these kind of corrective taxes work for us now too!

[kharris]

Winston's tongue-in-cheek (I hope) analysis carries a seed of truth. Brad offers a list of what he considers non-debates, into which he sneaks one of his own normative views. We can't anticipate a good outcome from economic analysis based on assessing blame for past behavior. We need to look for tools that are likely to get good results. Look at opportunity costs. Think about equilibrating risk adjusted returns.

Winston's point, facetious though it may be, has a stronger foundation in standard analytic practice than Brad's normative prescription.

India, China, Indonesia, and other relatively poor, high-population countries represent an huge potential source of greenhouse gasses. We can't afford to give them a free pass. Saying problems to date are not of their creation ignores completely that any future benefit they enjoy from growth will impose externalities on the rest of the world, as well as on their own people. Leaving that out of the analysis may seem just, but it is unlikely to lead to a good outcome. If you don't internalize the cost of externalities, how you gonna get the job done?

Rich countries represent the greatest opportunity for abatement right now, and that opportunity should not be missed. Large, poor countries represent the likeliest source of large incremental additions to greenhouse gas emissions, and cannot be granted a free pass.

[Paul Reber]

If the U.S. was able to invest heavily in creating industries that manufactured carbon reducing/eliminating devices and then was able to export these to China & India, would this not help with a number of important problems?

I suppose you could argue endlessly about whether this should be (could be) supported/initiated via gov't policy (tax & spend) or simply let the free market run its own course (it seems like incentives already exist for creating this market). The concept seems like it ought to be universally favored, though.

P.S. In addition to the question of discounting, isn't a critical part of the decision whether to spend 1% of GWP on carbon control based on the probability of a new technology being invented within 20 years than halves the cost?

[Slocum]

"A perennial argument against conservation is that we can't afford it. This sort of 'parks or butter' choice between environmentalism and economic growth is a false dichotomy."

"The real question is efficiency. As efficiency increases, waste (and thus pollution) declines, but output increases too!"

If it were true that conservation measures generally improved the bottom line, then we'd have no need for Kyoto, or to even consider carbon-trading schemes, carbon-taxes, etc, because companies would continually reduce their emissions as a way of improving their profitability (and any that shortsightedly failed to do so would eventually be driven out of business by smarter competitors).

But unfortunately, it's just not so. Yes, there are some measures that can be taken that both conserve and help the bottom line. But this 'low hanging fruit' is quickly exhausted, and it becomes harder and harder to find changes that pay for themselves.

On the other hand, if carbon taxes are imposed, then many measures that cannot be justified based on the old price of energy *do* makes sense when the price of energy includes the carbon tax.

[Dean Baker]

I have been casually following this discounting of the future debate between Stern,Brad, Hal Varian (my former micro professor) and others. I would suggest a somewhat different approach. Instead of trying to give people the right number to use as a discount rate, and therefore how much they should be willing to tax themselves today, why don't we (economists) focus on telling them the tradeoffs.

In other words, why don't we try to be clear on what our best estimates of the lost output due to global warming will be in 2050, 2100, etc. and how much it would be necessary to spend at present to prevent these losses.

This seems appropriate to me for two reasons. First, much of the potential harm will be very poorly quantified. We can assign a dollar value to a island being submerged under the ocean (possibly with great historic significance), but do any of us attach much confidence to that number? The same applies to evacuations of lands that will be flooded or the loss of animal and plant species that we may prize. If we just bury all the negative effects of global warming in a single number, have we really done a public service?

The second reason that I don't consider the debate over the proper discount rate useful is that it is not evident to me that people do or should apply a single discount rate to all future goods and bads. It is possible that people would apply a lower discount rate to the prevention of a nuclear holocaust 50 years from now than to the propsect of a severe and longlasting economic slump beginning 50 years from now. If that turned out to be the case, I would not say that they are being irrational.

It seems to me that the question of how much we should spend to slow global warming is fundamentally a political question. Economists can best serve the debate by describing the costs of not taking action as well as the costs of taking action. We are not better situated than anyone else to decide whether the benefits are worth the cost.

(On the last point, why isn't every economist in the country backing the proposal by Brad's colleague Aaron Edlin to adopt pay-by-the mile auto insurance policy? It can give the same disincentives to drive as a $2 a gallon gas tax, without raising average insurance prices at all. This is a very useful economist's contribution to the debate.)

[Bupa]

50 cents and some subsidies into technology and a free pass to the 2 billion people living in China and India is a bit of a pathetic offer Brad, given what's at stake.

How long do you think we have?

Lovelock is certainly an outlier. He thinks we're already too late to stop global warming. He places the costs a bit higher than the Stern report. He thinks the human species will soon be reduced to about 200 million people living around the artic. Certainly he's an outlier. Maybe he's a bit senile by now...and he's certainly been wrong before...but he's also been ahead of the curve before.

The scientific consensus is less gloomy. Jim Hansen is still firmly in the consensus. He thinks we have til 2015 to reverse the flow of carbon into the atmosphere before we cross a threshold and create a "different planet." Sounds like we might be up against something a bit bigger than 2% per capita growth per year.

Do you really think 50 cents and a free ride is the right way to get us on the right track by 2015?

The scientific consensus is getting gloomier and gloomier. They keep discovering nasty feedback loops like methane being released from the thawing Siberian tundra, a trickle now could be a massive release at some point soon.

50 cents and a free pass doesn’t sound like a sufficient insurance premium against such risks.

Just think how fragile our civilization is Brad. A dozen nuts kill 3,000 Americans in one morning and for several years the only superpower in the world loses an opposition party, a free press, and a sane public at time that it is run by brain-numb fratboy who thinks he is God’s instrument on Earth. At one point the worst president in American history had an 80 percent approval rating. As bad as Iraq is, we could be in much deeper shit than we are under such circumstances.

Or take a micro example. One storm swipes a major American city (New Orleans) and with in 24 hours there is virtually no police force and for days vast swaths of the ruins of the city are in the hands of roving gangs of armed angry young men.

What’s going to happen if the bulk of Bangladesh, Vietnam, chunks of India and China sink under water?

I suggest you start thinking a bit bigger on climate change. Think of it as insurance Brad against the end of civilization as we know it.

How large is the Pentagon’s budget? Might be time to start diverting it to other important matters. How much do Europeans and Japanese already pay in gasoline taxes and how much more fuel efficient are there vehicles on average? Well their gasoline prices are more than twice the level of current American prices, and guess what? Their average fuel efficiency is twice the American average. 50 cents in America would be a small down payment on moving in such this direction.

I'm writing from the Austrian Alps which is within a day of two of ending the warmest Autumn in 1200 years.

[Cranky Observer]

> If it were true that conservation measures
> generally improved the bottom line, then
> we'd have no need for Kyoto, or to even
> consider carbon-trading schemes,
> carbon-taxes, etc, because companies would
> continually reduce their emissions as a way
> of improving their profitability (and any
> that shortsightedly failed to do so would
> eventually be driven out of business by
> smarter competitors).

Inertia, corporate politics, industry standards, industry gentlemen's agreements, discount-rate-based strategic planning that devalues all time horizons past 3 years, sunk cost fallacy, conservatism, conflicting agendas, fear of new technology, fear of change, fear of being labeled an environmentalist hippie (very strong one), political payoffs...

Those are just _some_ of the reasons I have seen operate from inside large-scale production enterprises to prevent bottom-line-improving conservation techniques from being implemented.

Toyota is laughing all the way to the bankruptcy of GM on this one.

Cranky

[bigTom]

Well there are both cost effective, and cost ineffective things to do. Increasing research funds into efficiency and renewable-energy and sequestration could have a big effect for a relatively modest price.
We can currently buy carbon offsets for as little as $5/ton. Thats about $50/year for an SUV. I think that works out to a lot less than 50cents/gallon.
In micro-electronics we have Moores law, which essentially had performance/cost double about every 18months. We've all seen what exponential improvement like that can accomplish over time. Currently Wind turbine technology is improving at about 5% per year, solar at maybe twice that rate. A modest increase in research budgets might be able to increase these rates of improvement. Things will look a lot different if in twenty years solar power becomes too cheap to meter. But of course to any technology there are inevitable limits, so we don't know how far we can push these sorts of tech. The uncertainties as to what sort of technology, and economics regarding energy use/production are much greater than even the large spreads in climate system response.
Making moralistic statements about rich country poor country issues doesn't help things. Our current politics has a lot of climate-change deniers motivated by fear of a left wing wealth transfer plan, as a promary motivation. Besides when the currently advanced economies developed, the general state of science and technology was quite primative. Countries like China, and India how vibrant high tech capabilities, and will likely surpass our capabilities in the near future -so they should also be part of the solution. But, we have to break the bottleneck. Doing nothing because China and similar countries aren't ready yet, is a poor excuse fopr delaying action, but its worked politically so far. I suspect they will come around within a few years after we have.

[Bernard Yomtov]

Dean Baker has it right on discount rates.

[piotr]

"How large is the Pentagon's budget?"

One number was mind boggling. It was an estimate that due to extortion and various other activities, insurgency in Iraq is "self-supporting" on the revenue estimated ca. 200 M. We spend ca 100 G to deal with that "self-supporting activity". 500 hundred times more. Pentagon is a good contender for the least economically rational institution in the history, just next to the pyramids of Egypt.

We spend 400 G per year on defence with nary a discussion, but much smaller proposed investments in energy efficiency are subject of howling outrage. Wasteful prescription bill is a subject of mild interest. But almighty forbid that we can raise money for a good reason and for something useful!!

I say, instutute 20c/lb carbon tax, or some such, and fund universal health care, subsidies for higher education for lower income students, subsidies for exchanging gas-guzzlers for very efficient vehicles etc. Regressive tax, progressive distribution of benefits. VAT in Europe operates roughly like that, if you did not see VAT in action, you have no idea what a high regressive tax is.

About India, China etc.: I would consider massive investments in nuclear electricity generation, plus all major alternatives (wind, solar, hydro, geo). Developing viable technologies should be disproportionally the task of most technologically advanced countries, but then ALL countries should be encouraged, and helped, to apply them. If WE walk the walk, developing countries may follow. Developing countries can also impose duties on countries that fail to make desired energy savings -- indirectly, we would tax ourselves, because avoiding duties would entail passing increased costs to us in the form of import prices. It is a hard issue, but not that hard. Slowly developing countries do not contribute that much to global warming, and the "tigers" invest so much that modest re-direction can make huge structural changes. In other words: is is cheaper to build new non-carbon electricity generators than to build them and throw away the carbon-based ones, the the market in those economies can bear modestly higher electricity costs.

One aspect of global warming is that coal power in China and many other places is cheap, and VERY dirty. In general, no-carbon energy sources are non-poluting (in case of nukes, polution can be transported away from human habitation). Slower economic development and less diseases like asthma is not such a bad bargain.

[RedCharlie]

Winston said, "I also know that happiness (and evolutionary success) is correlated to relative, not absolute wealth."

But my dear Winston, when the plane crashes, those in first class have no greater chance of survival than those in tourist. And I think that you would agree that even on the Titanic--where those in first class had a somewhat better chance than those in steerage--everyone would have been better off if they had dodged the 'berg to begin with.

And to Cranky, you and Slocum have illustrated the difference between "externalities" and internal costs. Slocum is right in the limited sense that the direct costs of air pollution are not born by electricity generators in the current market. I'd say that's a problem with the market (and a good argument for cap-n-trade).

But if Ray Anderson realizes that he can make a carpet with 50% fewer raw materials, he's reduced his ecological footprint as well as improved his bottom line. So we can say the market works better in the case of carpet manufacturers than it works in the case of electric utilites.

I would agree with Cranky that we haven't come anywhere close to exhausting all the "low hanging fruit". But I also agree with Slocum that in the cases where the market is broken, i.e, the pollution or inefficiency results in costs currently external to the producer, we need to fix the market. I do not share the utopian faith of the far right in the free market as a panacea. If pollution is profitable, it's usually the market's fault, not nature's.

The point I'd like to add is that the prospect of additional profits is not what led Ray Anderson to being green, but vice-versa. First he became aware of his company's ravenous appetite for natural resources and aware of the enormous environmental impact it has. Then he looked for ways to improve the situation, and that led him to changes that improved efficiency and profitibility.

This is to say that the "low hanging fruit" is there, but we have to change our way of thinking if we are to see it.

Cranky also points out that a little forward thinking goes a long way. Gradual improvements in manufacturing efficiency has put Toyota and Honda ahead of GM and Ford. Compared to the former pair, the latter two would be hard pressed to make a profit even without the much lamented cost of private healthcare that they bear. But the difference in thinking extends beyond mere person hours per vehicle.

Toyota and Honda have succeeded where GM and Ford have failed, and that is in making money on efficient cars. Detroit has pushed the gas-guzzling SUV with such ferocity because it made them money. The econo-box end of the market, the Geo Metro's and Ford Escort's of the fleet, lost them money and served mostly to meet C.A.F.E. standards. I mean, I had a Geo Metro in the early '90's and it got almost as good as mileage as the Prius. So, how did Toyota and Honda contrive to make super efficient cars super sexy? And how come Detroit failed at this?

The answer is largely in marketing. I remember having a lengthy email exchange with a hybrid cynic who thought it was all hype. He pointed out that most of the efficiencies of a Prius come from design changes that can be implemented on a car with a conventional engine and drive-chain. The additional cost of adding a rube-goldberg hybrid powertrain overwhelmed any additional MPG gained.

In my reply, I realized that of course he was right, and that was why the Prius, the Insight, the Hybrid Accord, etc, are such watershed vehicles.

You see, Toyota and Honda use efficiency to help market vehicles, whereas GM and Ford endeavored to sell vehicles despite their being cheap but efficient econoboxes. For example, VW makes a 70 mpg diesel called the Lupo, but no one wants it even in Europe as it is made of tin foil, has no power nuthin' much less AC, and rides like the sardine can that it is.

In contrast, the Japanese figured out that with hybrids, you can have your cake and eat it too (well, eat it more sparingly). This isn't to say that hybrid technology is fake. On the contrary, it's delivering results right now and promises even better in the near future. But my sceptic correspondent was right in that the benefits of hybrid technology would always be outweighed by the costs in any 1st or even 2nd generation hybrid car. It's just that Toyota and Honday have figured out a way to sell cars that get 40+ miles to the gallon, to make people want to buy efficient cars. GM, on the otherhand, is almost overweening in its pride in Hummers and Cadillac Escalades.

So, my question is, is the difference between selling a Hummer and selling a Prius one of profitability, or more a difference in thinking, a difference in length of horizons? I'm with Cranky here, this is a difference in thinking. The Japanese are awfully clever, but Detroit is not physically incapable of making money on efficient cars.

The closest Detroit ever came to doing this was with the Saturn (remember "A different kind of company,a different kind of car"). Unfortunately GM has come to regard Saturn as just another brand, and although GM pays homage to the brand by annoucing that some future hybrids will carry the Saturn imprimatur, it seems more like a marketing afterthought than an marketing forethought.

Meanwhile, Toyota and Honda are perfecting 3rd and 4th generation hybrid or pure electric powertrains that will be worth the effort. But we'll never get there if we don't get beyond our next-quarter mentality that discounts the future so heavily (last ditch attempt to keep this comment on the same topic as the thread).

[RedCharlie]

Hey Bupa,
It's not all bad news. The planet may have lung cancer, but scientists like Lowell Wood and Paul Crutzen believe there is a potentially effective chemotherapy available. It might keep us alive long enough for us to make it thru detox and kick the habit.

http://www.rollingstone.com/news/story/12343892/can_dr_evil_save_the_world
http://www.alertnet.org/thenews/newsdesk/L14558285.htm

[derrida derider]

I'm not as gung ho about technological fixes as RedCharlie - you'd want to think long and hard (ie have a long term and large scale research progam) before you tried any of the ideas being floated, because geoengineering is likely to carry a high risk of unintended consequences.

That said, I really think that all players (including the Stern report) aren't giving the idea enough attention - there may be a relatively cheap, painless and safe fix available that will let us all have our cake and eat it too. But if not, I think the arguments for heavy carbon taxes are unanswerable.

[George D]

Is the presumption of 2% compounding growth for the next 100 years realistic?

Given that we are exploiting many essential ecosystem services near or past their limits, I fail to see where that extra growth will come from.

[CapitalistImperialistPig]

Brad: "The U.S., Japan, and Western Europe today have average incomes of roughly $40,000 per capita."

Of course the median income for a family of four ($65K in 2003) works out to about $16K per capita, at least in the US, so you don't have to go all the way to Africa to start seeing some inequality.

[grinch]

"India, China, Indonesia, and other relatively poor, high-population countries represent an huge potential source of greenhouse gasses. We can't afford to give them a free pass."

No, but rich countries need to pay for a large part of the cost of the expensive pass themselves. That is Brad's point.

Several posters above believe in the tooth fairy. I have bad news for you...

[John M 307]

Consider the worst possible outcome of global warming: the Earth turns into another Venus, with its heavy (90 atm) CO2 atmosphere blanket, all life permanently gone. Using a cost-benefit analysis, at what cost would preventing this outcome be not worth it?

Now consider the probability of another Venus emerging. Presumably, that probability is a tiny number, close to zero. For a given cost, what probability would be sufficiently low that the cost of insuring against the outcome would be not worth it?

How would we estimate such a probability?

[wkwillis]

You are mixing moral and technological goals. Taking money away from the upper five percent of Americans (like you, because working class people don't have any spare money) to give to the bottom 95% of third world residents makes some kind of Christian or Humanist sense, but carbon sequestration should be done where it is cheapest, in the third world countries themselves.
Here are three suggestions on how to do this.
Give them excess income to buy fertiliser and irrigation pipe to make their farms more efficient if they refrain from cutting down their forests. This is cheaper than virtually any other alternative.
Give them your excess income to replace their coal burning power plants with fast breeders. This works almost as well and is the second wave of expenditures if you go that path.
Give them your excess income to replace their coal burning power plants with wind power where they have enough hydroelectricity already installed (because new hydroelectricity is a huge CO2 generator) to regularise their power supply. That helps, too.
Unless you have a better idea than these three, and I certainly hope you do, you are part of the problem, not part of the solution. We don't need pious wishes, we need valid ideas and the political support they can generate.

[andres]

Aaah, the ghastly, soul-shaking naivete of the apolitical, technocratic economist:

"And when we economists see something going wrong in the sense of having destructive side-effects, we like to tax it. Taxing it makes the individuals who are undertaking actions feel in their wallets the destruction they are causing elsewhere. Maybe the action is still worth doing, and maybe not. Imposing a tax--imposing the right tax--on those who are, say, driving low-mileage SUVs is a way of harnessing the collective intelligence of humanity to deciding in which case the bad side-effects are a reason to stop. But it needs to be the right tax."

I'm not a big fan of public choice theory, but its proponents at least try to answer in their way the question that Brad's passage above begs unashamedly--why on earth haven't such taxes been imposed yet in any meaningful way? The idea that the biggest players (ie the players whose behavior has the most destructive side effects in the economy) will also have the political clout to block any legislation mandating such a tax is not mentioned either in the above passage or in any other part of Brad's post.

Brad needs to put his economist pointy hat headgear aside and put on the hat of the political consultant. How does the reality-based community obtain enough political power where it matters to pass Pigovian legislation? "I'm an economist; that's not my job," just won't cut it anymore.

[Bruce Wilder]

My understanding of what the climatologists are telling us, is climate change is a sum of forcings (man-made additions of greenhouse gases to the atmosphere, changing irradiance of the sun, etc.) and feedback (both negating and reinforcing).

Projects of man-made forcings like the production and release of greenhouse gases have the error bands typical of demographic projections.

Feedback is a different problem, because 1.) all the feedbacks and their timing and proportional effects may not be identified or well-understood. 2.) generally, while some feedback, especially relative to smallish forcing, is likely to be negating, very large forcing have the potential to trigger very large reinforcing feedback, which results in runaway climate change.

The climate appears relatively stable because, most of the time, negating feedback keeps bringing things back toward a chaotic equilibrium.

So, part of what needs to happen is that we identify the point of no return and avoid it. The costs of crossing a point of no return, essentially, go very high, with no subsequent opportunity to correct.

In the present context, the future generation is precluded from acting, should the present generation fail to act to keep things under some threshold.

[CapitalistImperialistPig]

Tim Curtin,

Your numbers are nonsense. If you would like to get a look at how much radiation CO2 traps take a look at MODTRAN at the http://geosci.uchicago.edu/~archer/cgimodels/radiation.html

Look down from 20 km or so up and put in 0 CO2 and compare to the present 380 ppm or so. A little non-transparent gas can have a large effect.

Notice the big bit out of the radiation at the center of the CO2 band (670/cm). That's the effect of CO2, no feedback and no tricks.

BTW: The all-caps bit does not make you look any smarter.

[CapitalistImperialistPig]

Another little clue for Tim. Nitrogen and oxygen have essentially no absorbtion in the thermal IR (or the visible - that's why the air is transparent). their concentration is essentially irrelevant. CO2 has a strong absorbtion feature right in the middle of the thermal infrared - you can see it in the MODTRAN figures.

[a]

Dean Baker: "The second reason that I don't consider the debate over the proper discount rate useful is that it is not evident to me that people do or should apply a single discount rate to all future goods and bads."

Exactly. This is an enormous simplification - perhaps necessary to make the mathematics work and get a solution - but as near as I can tell, unjustified.

[RedCharlie]

I agree with Derrida Derider, I'm not as gung-ho about techno-fixes as I appear to be. It's just nice to know that if the methane clathrates in Siberia start to go, we're not totally out of options.

We shouldn't dismiss the "Dr. Evil" sulfur-in-the-stratosphere option just because it's unnatural, or smacks of geo-engineering. Geo-engineering is very scary and has a lot of potential downsides. But like taking chemo, it may beat dying. We need to research this option.

And to Grinch, I don't object to us rich countries chipping in to improve the efficiency of China, India, et. al. Of course we need to help. Like wkwillis suggests, if we can provide power to N Korea in exchange for mothballing their breeders, why not a Green Marshall plan for developing countries to mothball their coal burners instead and replace them with windmills and breeders (Kim Jungle will be miffed, but hey)--note that I'm not exactly enthusiastic about nuke power, primarily because nuclear waste is forever. The best solution to nuke waste is not to make it, or make as little as possible, so breeders may be our best bet there.

No, my objection is to how we think about this. Brad posted that China and India won't think it fair if we demand they clean up their emissions, since us rich folk already had our chance to stink up the joint. But this is like saying it's unfair to stop your teenager from smoking since you've already had your turn with addiction and chemotherapy. Nope, just wouldn't be fair to let your kid miss out on that.

Telling some one or some country to do what's in their best interest is of course the right thing to do. For China and India to clean up their emissions is in their best interest. Just like with your kid and cigarettes, however, we have a much better chance of success if we follow our own advice and kick the habit, and also provide some help.

I imagine something like the IMF, except specifically for energy development and CO2/CH4 offsets. (And it would differ from the IMF in that conditions imposed on aid would actually help and not worsen the problems ;-)

[grince]

Re:

"But this is like saying it's unfair to stop your teenager from smoking since you've already had your turn with addiction and chemotherapy. Nope, just wouldn't be fair to let your kid miss out on that."

I'm sorry, but no, it is not like that. High pollution technology is usually cheaper than the low pollution alternatives. From the original post:

"...the rich countries got to take an EASY carbon emissions-intensive path to industrialization and riches" (emphasis added).

The Chinese et. al. aren't idiots. If it really were cheaper in terms of the balance sheets of those actually paying to use low-emission technology they would do it (pointed out above by Slocum). Hence the problem. All the single-instance counterexamples in the world won't make it go away.

[RedCharlie]

Dear Grince,
"High pollution technology is usually cheaper than the low pollution alternatives"
is not the same statement as
"cheaper in terms of the balance sheets of those actually paying to use low-emission technology"

Two different things. As I've written above, where the cost of emmissions is external to the emmitter, I think the market is broken and needs to be fixed. This generally means a governmental response.

But the true cost, the long term cost, of inefficiency is greater than the cost of efficiency. In the short term, with short-sighted managers and short-sighted markets, yeah, sometimes the balance sheets look better with pollution than without. My overall point is that this is a problem with our balance sheets and our thinking, not the underlying economics.

Yeah, smoking one cigarette can make you feel good. But if that's all one's teenager is thinking about, then I think you would agree that they don't have a proper understanding of the long-term cost of their actions.

Or in other terms, America, Western Europe, and Japan didn't take the easy way to industrialization and riches. We took the easy way to acid rain, dust bowls, smog alerts, lung cancer, lead poisoning, mercury poisoning, Love Canal, nutrient pollution dead zones, ozone holes, global warming, etc. If we had known better, we could have avoided a lot of that.

We really have to get our heads around the fact that the first world hasn't had an easy time of it. Have you ever read of the "Great Smog of London" in December of 1952? (http://en.wikipedia.org/wiki/Great_Smog_of_1952)
12,000 people died from a smog that lasted 4 days in one city. That's easy? The main difference between 1950 and now is just that the stakes are larger.

When we tell our kid to stop smoking, we're trying to make life easier for them, not harder. Despite what our teenager might think, we're not actually trying to impose a punishment or deprive them of fun. Of course, it is tough to convince them of this, and it will generally not work unless we follow our own example and take our own medicine. If we don't lead the way to efficient green energy, we surely have no right to expect China and India to do so.

China and India aren't idiots and neither is our teenager. And efficient green energy is cheaper than polluting forms, just like not smoking is better for you than smoking. But just as in the case of our teenager, it may take some effort to effect the proper change in thinking.

Raising the cost of a pack of cigarettes, so that they cost $20 instead of $4, for example, would certainly help, as would taking them to the hospital to look at lung biopsies from victims of emphysema. Both methods have the same goal of convincing our teenager that smoking is really expensive. Our own continuing to smoke would obviously contradict our own advice and doom the whole endeavor from the start. Offering them help in kicking the habit, paying for therapies or counseling, etc. would probably increase our chances of success.

We differ not over action, but sales-pitch. You think we need to impose a cost on India and China, BUT help them pay for it. I think we need to sell them great new efficient technologies that will increase their wealth and help the environment AND we'll help them pay for it.

(I don't quite understand what you mean by "all the single instance counterexamples in the world". I mean, how many data points does it take to make a trend? I'd also argue that Ray Anderson and the failure of Detroit to compete with Toyota and Honda are more than just "single-instance" counterexamples. But what about Dow and DuPont cutting CO2 emissions by upwards of 50% this decade? What about Wal-Mart committing to selling 100 million compact fluorescent lights in one year? How many examples does it take?

Please understand that I'm not a Dr. Pangloss or Tom Friedman on this. I'm not saying that we can just sit back and wait for coroporations to suddenly discover their inner tree-hugging selves. I'm much more with Teddy Roosevelt than with Calvin Coolidge on this. It's just that with our big stick we have to speak softly and consistently about how much more profitable it is to stay alive than it is to die.)

[RedCharlie]

To Neil Craig,

Your equating a "relatively short half life" and a "few hundred years" is, frankly, humorous. I beg to ask, short relative to what? The average lifespan of a mammalian species in the Cenozoic is 1.5 million years. A few hundred years is short relative to that. But the industrial revolution is only about 200 years old and we're already on the verge of killing ourselves. So you think we're ready to handle large quantities of a pollutant of unyielding toxicity for at least 50% longer than we've even had steam engines...yeah.

But more to the point, you neglect the presence of heavy nucleus actinides like 243Am (7,380 years), 238Pu (87 years), and 241Am (432 years), which tend to dominate as sources of radiation in spent fuel after your magical few hundred years have passed.
(http://www.npl.washington.edu/AV/altvw79.html)

I would also ask you, if nuclear waste is so short lived, why did the EPA originally mandate that Yucca mountain have to be safe for 10,000 years after it closes? Why did it propose in August 2005 to extend that to a million years?

Nuclear waste is a "non-problem"? Oh, please. If you don't want to be considered a troll, you'll have to do better than that. And BTW, uranium mine tailings are an environmental hazard same as tailings from any hard rock operation. Sure, replacing coal fired plants with nukes would reduce the volume of tailings, but coal tailings aren't, you know, full of uranium either.

[Hal Varian]

I completely agree that the welfare function used in the Stern Review implies that the rich people/countries should transfer a lot more to poor people/countries than they do.

The conclusion that I draw from that is that the welfare function doesn't do a good job in describing actual behavior. Of course, that certainly isn't a requirement of a welfare function -- what we ought to do is often quite different than what we actually do.

Still it should give one pause, particularly since the Stern Review argues that we should be making transfers from relatively poor people to relatively rich people (our descendants).

Of course there is some rate at which this would be welfare enhancing, but is giving up 1% of today's $7000 per capita GDP in exchange for 1.01% of $94,000 really the right thing to do?

In any event, I would like to see a more detailed sensitivity analysis. Since the report was issued, a followup sensitivity analysis has been posted, but there is still more work to be done.

[RedCharlie]

With apologies to Keynes, you're saying that since life is a succession of short runs, most people regard $70 in the hand now worth more than $940.1 in the future?

[Ken Muldrew]

RedCharlie,
Neil Craig wasn't talking about mine tailings but raw ore. The long-lived transuranics can be removed, the poisons taken out, and reprocessed as fuel. The rest will decay quickly and in about a century will be no hotter than various places that exist naturally on the surface of the earth.

BTW, coal burning generating stations are currently pumping hundreds of tons of uranium, thorium, radium and other actinides into the atmosphere. So if you accept that as current practice, one solution to nuclear waste is to simply ash it and pump it into the air. That's a pretty awful solution, but really one should be more concerned with the radioactive waste that is currently being put into our breathing space than the waste that is being stored under Yucca Mountain (thus one must question the integrity of the EPA).

100 years is much shorter than forever, even if technology has advanced significantly in the past century.

[RedCharlie]

And the difference between tailings and ore is?...tailings are leftover ore that has been disturbed and now rests on the surface. If anything, it is less radioactive than the ore, assuming that the miners are competent.

But it's still dangerous (largely due to being disturbed and on the surface). Just because something is "natural" doesn't mean it's a valid baseline for safety. Just because a given amount of spent fuel has decayed to a level of radioactivity comparable to natural ore does not mean it's harmless. Just as the heavy metals and naturally occuring radioactive elements in coal aren't harmless either, especially when spewed into our air.

And you are still making the same argument as Neil. Firstly you hold that a time frame on the order of a hundred years is a short time for human beings who have trouble planning further than a few months ahead (especially economically). Secondly you state that the high level waste from fuel will be safe after such a time frame.

You still haven't convinced me on either point. I'm not a nuclear physicist, but nothing I have read suggests that spent fuel can be rendered harmless--with current technologies--in as little as 100 years.

Yes, the fuel should be reprocessed, "the poisons removed" as you so confidently write. (BTW, the link in my reply to Neil actually detailed a novel way of using accelerators to "burn" the actinides in a manner similar to a fast breeder without all the technical difficulties of actually running a liquid sodium cooled breeder). But that still leaves a host of problems, especially transport of the waste from reactors, to processing facilities, and to final disposal sites. If I recall correctly, the Kiwis and Ozzies aren't too happy about Japan sending its nuclear waste to France for reprocessing via the Tasman Sea.

But here in the US we don't even have the technology to chemically remove the actinides. The Europeans and Japanese are ahead of us on reprocessing fuel, but even there what I've seen suggests time frames more on the order of thousands of years, not hundreds, for spent fuel to cool to levels of radioactivity comparable to natural ores.
(http://www.uic.com.au/nip09.htm) Then there is the whole "natural isn't necessarily safe" issue.

And yes, I am concerned with the nuclear waste that powerplants put into our air, but I will really need to see some numbers if you're going to convince me that replacing coal fired plants with reactors will reduce our production of radioactive waste. (The nuclear advantage, of course, is that the waste is concentrated, so that hopefully we can manage it properly).

Coal can be very dirty, but I don't think that wholesale adoption of nuclear power is our silver bullet. I am particularly amused when nuclear boosters say that solar and wind power technologies are not mature enough yet they are confident that the current problems of nuclear power are minor technical issues that can be solved readily with a bit of research.

So, color me sceptical. Again, I think that nuclear power does have a great deal of potential, but it has downsides too, and we have to be exceedingly careful with it.

[Ken Muldrew]

RedCharlie wrote:
"I think that nuclear power does have a great deal of potential, but it has downsides too, and we have to be exceedingly careful with it."

Full agreement. Nuclear waste is a serious issue but not one that cannot be managed if the will exists to do it. There are human institutions that have lasted for centuries; consider the U.S.A as one example.

As for coal fired plants, I think it is crazy not to sequester all the emissions (save water) immediately. The demonstration sites suggest that it can be done now with no more than a doubling of the cost of the generated electricity. That gives an incentive to increase wind and solar (and nuclear if people really want it) and it gets rid of the CO2 problem. That doesn't solve the problem of transportation fuels but it would still be valuable.

[bigTom]

Well to be more mathematically correct, the effect of CO2 is proportional to the logarithm of the concentration. That means if at 280PPm (pre-indistrial) 2.8tons has X amount of warming effect, today we have to add 3.8tons to cause the same increment of warming. This doesn't really help us all that much, but it is always better for folks to know the truth.
When you start discussing Nuclear, and waste, a lot depends upon the technology used. Different reactor/fuel cycles have been proposed, some of which leave no actinide waste. You still have the fission products, but they decay much quicker.
I think it is correct to consider the geo-engineering approaches as insurance policies. Even if humans weren't dramatically changing the chemical balance of the autmosphere/oceans it is only a matter of time until the climate state changes away from the remarkably stable state it has been in the last few thousand years. Geological evidence for Pliocene climate, shows that dramatically varying climate is the NORMAL state, not the steady slow varying stuff that our civilization has taken for granted. Its also pretty good evidence that a some strong positive feedbacks exist.

One component of the solution is "clean" coal, where the CO2 is captured and injected into some long term storage resevoir. Of course such power will be more expensive than the cleaner variety. The problem right now is that no mechanism exists to compensate the owners of a "clean" plant for the sequestration. We have various forms of Green power, whereby the small premium over prevailing power costs paid by the customer is used to subsidize alternative energy. Clean coal, needs some sort of subsidy. It would be nice if some sort of semi-green premium power -which subsidizes this were created. Unfortunately I suspect that its not sexy enough to sell. In which case government subsides -or carbon taxes are needed to bridge the gap.

[Jacob T. Levy]

"Worldwide?" Oddly, that crucial word seems to be missing from my copy of Burke.

Burke was a moral cosmopolitan and universalist of a particular sort-- but it wasn't that sort. The intergenerational contract was, unambiguously, within one political-cultural society.

[Why then the impeachment of Warren Hastings?]

[zinc]

When x-rays were first introduced, there was hysteria over the fact that people could look through other peoples clothing and view their sexual organs. Pons and Fleishman discovered cold fusion which was quickly followed by verification of the results from several nationally recognized research labs as well as academic papers on bosun theorey that completely explained the observed the phenomena.

Thank goodness the economists have concluded that carbon dioxide from internal combustion engines are causing the earth to warm. Now if the scientific community could reach consensus we would be in good shape.

In the meanwhile, before we destruct our national standard of living, and we really need government action, let's pass laws that all traffic lights will be synchronized to minimize unnecessary stopping and starting of automobiles. Estimated reduction in greenhouse emmissions ~ 15 %.

All unneccesary traffic lights and stop signs be removed immediately. Estimated reduction in green house emmissions ~ 10 %.