Haste or Hardiness?

Global Warming: Part III

By David W. Riggs, Ph.D., Senior Fellow, Economic and Environmental Studies, Center of the American Experiment

Introduction

When the issue is framed properly and with sobriety, global warming is a risk; it presents a possibility of loss. But we also face other risks. Only two decades ago, we were warned about the imminent dangers from falling worldwide temperatures,¹ and we face non-negligible risks from earthquakes, viruses, and there’s even a threat, albeit small, of asteroids. It is prudent to take all of these risks seriously, but when confronted, how should our democratic society respond to them?

The recently negotiated Kyoto Protocol provides one response to global warming risk. Recent news reports hail the Protocol as a historic measure to “save the planet.”² The Protocol is viewed as a first step to obtaining binding commitments from industrialized nations to reduce their carbon dioxide emissions and other greenhouse gases. By 2008 to 2012, the agreement would have the U.S. cut greenhouse gas emissions by 7 percent below 1990 levels. The European Union would reduce its emissions 8 percent below 1990 levels and Japan would reduce to 6 percent below what they were in 1990.

This report is the final part in a three-part series addressing the global warming issue. As Part I of this series showed, the science of global warming remains, by and large, unresolved and the data do not show evidence of significant human-caused temperature changes. While keeping the scientific uncertainties in mind, Part II presented the most recent cost estimates of greenhouse gas emission-reduction policy. This installment examines the strategy of the Kyoto Protocol and presents an alternative framework for addressing the possibility of global warming.

The Reduction Strategy

The Kyoto Protocol is based on the premise that the planet is teetering on the brink of disaster. Any disturbance, such as an increase in carbon dioxide emissions, runs the risk of destroying the planet. Therefore, the proper response, according to this strategy, is to immediately reduce carbon dioxide emissions.

In order for this “reduction” strategy to constitute a proper course of action, a series of linked hypotheses must all be true: man’s increased fossil fuel use must significantly affect temperature; the impact of a temperature increase must be negative; and emission limits must be an effective mechanism to control climate change.³ The global-warming evidence, however, does not substantiate any of these hypotheses.

Atmospheric temperature data do not support a significant human-caused warming. Temperature increases shown in land-based measurements are attributed to natural (not human-caused) fluctuations. And 18 years of satellite data show a slight cooling trend.⁴ In fact, much of the 1-degree Fahrenheit warming that has occurred over the last 130 years appears to be a product of the sun.⁵ That is, there is a correlation between temperature and solar activity, which implies reduced climate sensitivity to human-caused greenhouse gases.

Even if a warming was to occur, the net results may not be harmful. Benefits such as agricultural improvements and a fertilization of the biosphere (carbon dioxide is essential to plant life) likely would be the case.⁶ Moreover, much of the temperature increase would occur at night and during the winter. In short, it is not clear if carbon dioxide concentrations should be higher or lower.

In addition, the greenhouse gas emissions that the Protocol designates for reduction might or might not reduce the rate of increase in greenhouse gas concentrations. Recall that global climate change is determined, in part, by changes in the concentration of greenhouse gases, and the concentration of gases, such as carbon dioxide, are determined cumulatively over a very long period of time. The manner in which global warming policy is implemented might simply redistribute the place of origin of emissions that determine global concentration. For example, emissions might be relocated from developed nations to developing nations, with no net reduction in concentration. Simply put, emission reductions from industrialized nations might not stabilize greenhouse gas concentrations.

Furthermore, even if the rate of increase in the concentration of greenhouse gases was reduced, temperature might or might not be effected. Climate has always varied and the cause of this variation is largely unknown, and therefore unpredictable.⁷ As scientists learn more about the atmosphere’s ability to adjust, the more they learn of its incredible complexity.

Yet, whereas the benefits to be gained from the Kyoto Protocol are distant and speculative, the costs are immediate and real.⁸ No matter how the Kyoto Protocol is implemented (e.g., a system of permits, taxes, and/or through the rule-making ability of bureaucracies), reducing greenhouse gas emissions ultimately would impose controls, by definition, on energy use and production. Although estimates vary, the emission limits would require about a 30 percent decrease in America’s energy consumption. As a result, energy prices would increase.

The impact of energy restrictions was estimated in a study by WEFA, Inc., an independent consulting firm.⁹ For Minnesota, the study showed that much of the direct impact would be centered on the mining and manufacturing sectors. Due to a decrease in demand from energy-intensive metal finishers and end-product producers, the mining sector which is especially key to northern Minnesota would experience decreases in output and employment. In the manufacturing sector – especially computer and electronic manufacturers – output is predicted to decrease by 3.4 percent, and about 13,000 jobs would be lost due to reduced international competitiveness, by 2010.

Consumers, moreover, would be squeezed by slower increases in income and rising costs of necessities. For example, emission limits would result in higher electricity and home heating cost, bigger bills at the gas pumps, and restrictions on the availability of, and higher prices for, pick-up trucks, vans, and sport utility vehicles. Karen Kerrigan of the Small Business Survival Committee said this of the cost of emission limits: “Despite President Clinton’s attempt to play down the ‘pain factor’ in his proposals to put U.S. energy use under U.N. authority, the facts cannot be denied. It will mean energy rationing or massive tax hikes or some of both.”¹⁰

Given the lack of scientific basis and negligible environmental improvement, the cost of a reduction strategy may very well be higher than the “problem” itself. In short, the rationale and efficacy of an “energy diet” is highly suspect.

The Resiliency Strategy

A more balanced approach to global warming seeks to improve society’s overall ability to address disaster.¹¹ We likely will face social, biological, geological, economic, and political risks in the future and quite possibly risks from potential climate change. Because we do not know which of these risks is likely to be dominant, we ought to improve our general ability to adapt, survive, and recover from whatever future shocks and surprises the world has to offer. This “resiliency” strategy is based on the empirically valid notion that a prosperous economy nurtures a healthy society.

Much of America’s economic success is due to the fact that free markets and private enterprise have flourished here. These days more than ever, private enterprise and capitalism are the rule, not the exception, around the globe.

Without continued prosperity, it would be no easy matter for America and other nations to finance improvements in the quality of life – and, most pertinently, research and development in energy-efficient technology. Because energy is the lifeblood of modern economies, a low-priced and accessible energy market contributes to a nation’s supply of useful goods and services. That is to say, an unfettered energy market is a critical ingredient in the recipe for economic prosperity.

Only a prosperous economy has resources available to protect against probable risks and to undertake remedial activity when events or changes do occur. In a newly released book, The Costs of Kyoto, Fred Smith of the Competitive Enterprise Institute describes an appropriate analogy for the resiliency strategy.

“When a hurricane occurs in Florida, people are alerted early and move out of the path of the storm. . . . The wealth of our society makes it possible for people to incur the expenses of temporary relocation, and it funds rapid clean-up, restoration, and recovery. The storms in Bangladesh are not dissimilar. Yet Bangladesh lacks the wealth, the communication technology infrastructure, and the mobility needed to respond to such risks.”¹²

The consequences of storms reflect differences in resiliency. There are few fatalities in the United States, while fatality lists are tragically long in Bangladesh. The economic well-being that America enjoys helps to reduce our exposure to risk and improves our recuperation when disasters do occur.

Summary

The energy restrictions of the Kyoto Protocol attempt to avoid one very uncertain problem, while potentially imposing substantial cost. This, in turn, diminishes our ability to adapt, survive, and recover from potential climate changes and a variety of other risks. A resiliency strategy, which builds on economic strength, freedom, responsibility, and limited government – the recipe that generates America’s prosperity – better prepares us to face global warming among other risks. In other words, it recognizes that the future is uncertain and improves our ability to adapt and respond as necessary.

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Footnotes

1 Schneider, S. H. The Genesis Strategy: Climate and Global Survival. New York: Plenum Press, 1976. For a unique and historical examination of the global warming issue see, Hinderacker, J. and S. Johnson. “The Global Warming Hoax.” Working paper, on file, Center of the American Experiment, 1997.

2 Begley, Sharon. “Wake Up Call.” Newsweek. Dec. 22, 1997, pp. 66-68; Lemonick, Michael D. “Turning Down the Heat.” Time. Dec. 22, 1997, pp. 23-27.

3 Smith, Fred L. “Conclusion: The Role of Opportunity Costs in the Global Warming Debate.” The Costs of Kyoto: Climate Change Policy and Its Implications. Washington, D.C.: Competitive Enterprise Institute, 1997.

4 See generally, Singer, S. Fred. Hot Talk, Cold Science: Global Warming’s Unfinished Debate. Oakland, CA: The Independent Institute, 1997; and, Spencer, Roy. “The State of Climate Science,” The Costs of Kyoto: Climate Change Policy and Its Implications. Washington, D.C.: Competitive Enterprise Institute, 1997.

5 Michaels, Patrick J. and Paul C. Knappenberger. “The Decline and Fall of Global Warming.” Jobs & Capital. Vol. 6(4), Fall 1997.

6 Singer, supra note 4.

7 Singer, supra note 4.

8 Lewis, Marlo. “Mother of All Globalony.” CEI Update. October 1997.

9 WEFA, Inc. “Global Warming: The Economic Cost of Early Action ( National Impacts.” Philadelphia, PA. 1997.

10 American Petroleum Institute. “Notable Quotes.” http://www.api.org/.

11 Smith, supra note 3.

12 Smith, supra note 3, p. 165.