The Price of Change

One of several unfortunate elements of the global warming debate is that it's my sense that the public generally overestimates the degree of sacrifice involved in heading off catastrophic climate change. For a corrective, Ezra Klein quotes this piece by Bill McKibben:

the IPCC team made it clear in their May report that it was not only feasible to make these changes but economically possible as well. They calculated that if we made this energy transition, the economy would grow very slightly more slowly than before -- about 0.12 percent more slowly annually, or 3 percent total by 2030. In other words, our children would have to wait until Thanksgiving 2030 to be as rich as they would otherwise have been on New Year's Day of that year.

The trouble is that people generally underestimate the power of economic growth. They look around and see things that use energy -- their car, heating their house, factories where things are manufactured -- and then imagine a world very like the world of today except missing some of that stuff. That, they think, represents the economic cost of pricing carbon adequately to reduce carbon emissions in time to head off catastrophic climate change. In fact, the cost to economic growth comes not in the form of reduced output but a reduced rate of growth. The people of 2030 will still be richer than the people of 2007, and the people of 2050 will be richer still.

The only prospect for people actually becoming poorer -- as opposed to growing richer somewhat less rapidly -- is for some kind of disaster to strike. These things do happen to countries and happen all-too-frequently. They don't, however, happen as a result of increased energy taxes. They might occur, however, under some of the worst case climate change outcomes. More plausibly, unchecked climate change would have a negative impact on growth anyway (even if the changes prove mild enough to adapt to, the costs of adapting -- relocating tons of people, infrastructure, agricultural activity, etc. -- would be high) so it's by no means clear that there's an economic tradeoff here at all. But even if there is, the tradeoff isn't a question of building a less prosperous tomorrow -- a world like today, except with somewhat less -- it's a question of building a tomorrow that, while more environmentally sound, is a bit less additionally rich than it otherwise might have been.

Comments

Attached is a link to a column in Sundays' Washington Post by one Bjorn Lomborg effectively saying what, me worry.

http://www.washingtonpost.com/wp-dyn/content/article/2007/10/05/AR2007100501676.html?hpid%3Dopinionsbox1&sub=AR

Posted by SLC | October 8, 2007 9:52 AM

Fewer particulates in the air from fossil fuel burnination = lower medical costs?

Posted by ferd | October 8, 2007 9:53 AM

I think it would be just awesome for the U.S. to once again miss a huge, huge, giant opportunity to be at the forefront of saner, more efficient, less harmful technologies of energy production, storage, delivery, and use, and we should certainly keep as much business and consumer activity kept in the dumbest, most wasteful modes as possible. Because We Are America, Dammit.

Posted by El Cid | October 8, 2007 10:01 AM

This is exactly what people said to justify cutting the rate of growth for Social Security benefits. Yet, somehow, that was a cut regardless of how small it would be, but this isn't.

Posted by Think of the Children! | October 8, 2007 10:01 AM

One problem is that there's a sort of unwitting narrative that no public policy-based environmental progress has been made.

Industrial polluters claim that any new regulation will lead us to living freezing in the dark, implying that since we aren't living like that, surely we live under a policy of environmental anarchism.

Radical environmentalists -- here, I use that as a term of art to mean environmentalists who regard the whole first world lifestyle as wrong, requiring large reductions in consumption, not mere technical fixes -- act as if all environmental news is bad, and say the only path forward is living freezing in the dark.

Right-wing economist-ish types look at the fact that things like urban particulate pollution have declined dramatically in recent decades, and imply that we needn't worry about policy, because increasing wealth accompianies a reduction in pollution, as if this occurred in some sort of policy vacuum and will continue to do so as a natural consequence of economic progress.

These are all different stories, but they all depend on a common implicit assumption that so far environmental regulation -- at least serious environmental regulation -- is something new under the sun. Thanks to various government regulations, we've already made a huge amount of progress in tackling environmental problems such as sulfur dioxide pollution, and it hasn't caused the collapse of industrial civilization.

Posted by Julian Elson | October 8, 2007 10:10 AM

It is sweet that economist pretend that we live in an open and transparent free market economy but we do not!

They pretend that energy taxes would be the only distorting and growth slowing initiative that we are discussing these days...

Nobody mentions the many many many economic advantages of making the market more transparent and aligning it with ecological natural laws.

Everybody seems to understand how money and exchange rates work. One puts a price on value.. when it comes to the value of an alarm system to protect your home - people understand why it requires a monetary investment. (The more you own the more you have to lose?) In the case of climate change they react as if we are considering taxes and other incentives for the first time in history and as if there is no crime in human nature.

All right then - let us not build earthquake save buildings in SF and Tokyo any more.. it slows growth too much!

Me thinks ALL this is because they do not, yet, believe in climate change. And people do not believe in climate change because they have lost their connection with nature.

But even if you do not believe in climate change - what about these positive growth externalities:

1. Oil/gas independence - how much is this worth to the DoS/CIA/Pentagon? Give us an e$timate please!

2. In case of a switch to truly green energies like solar, geothermal and wind - how much is it worth to the DoS/CIA/Pentagon to have less nuclear threats (Iraq/Iran/NorthKorea/Pakistan). Every time developing nations claimed that they need nuclear energy - we could prove to them that there are even better, cheaper alternatives? How much would that be worth?

3. better soil and food quality leads to better health of citizens. How much is this worth to the Government concerned with exploding health care costs and food security? We are currently subsidizing the worst CO2 polluter we know of with about $20 billion per year of tax money? Many Americans become resistant to antibiotics due to the foods which are full with drugs, pesticides, E.coli, ... How much is the prevention of a global bird flue worth to us (sources for such diseases have been factory farms)

3. A return to transparent free market economics. We will know better which sectors eat our tax money (utilities, agriculture, automotive) and why?

4. A return to rationality: Currently the brain thinks so highly of itself that it believes not to need the body any longer. We have reached a realm beyond the physical universe and enter religion more than rational thought? What is an increase in rationality and realism worth to us as a society and to our meager educational budgets?

5. etc...

Hedging and economic growth prediction have to include all possible variables? From what I know - hedging happens in order to guarantee economic growth and NOT to slow it down.

Same with risk mitigation. It would be better if the IPCC would include an economic prediction for the coming 30-50 years without hedging - then we can compare...

Here some additional info that has no price tag yet:

Theft or loss of nuclear materials by year:

1993: 6
1994: 3
1995: 6
1996: 1
1997: 2
1998: 12
1999: 23
2000: 29
2001: 21
2002: 26
2003: 35
2004: 34
2005: 48
2006: 85

How much would DC, NY or London pay in order to avoid a dirty bomb over the next 5 years? Please do try to prevent it this time and not to react only when it is too late? This will not work by bugging every phone call and email exchange on the planet! This will not work by bombing poppy seeds in Afghanistan or by making sure that the nuclear programs in Iran, Pakistan and North Korea are "peaceful"... This is mere symptom treatment but NOT prevention!

PS: Even the conservationist conservatives have forgotten the meaning/value of "prevention" and confuse it with treatment. Please everybody - look this strange term up in your dictionary and meditate on its meaning!

I don't know how but if we could teach our children the value of prevention again - the world would be a better place for all? Right now - the term seems to be linked with something negative that infringes our freedoms, something pessimistic, un-American, etc. How did this happen again?

Posted by Hugo Pottisch | October 8, 2007 10:19 AM

"Fewer particulates in the air from fossil fuel burnination = lower medical costs?"

If that was a question, then, yes.

"How did this happen again?"

Political expediency and willful ignorance.

Posted by Rihilism | October 8, 2007 10:31 AM

Criminals And Moralists Working Together

Posted by M. Simon | October 8, 2007 10:43 AM

Fewer particulates in the air from fossil fuel burnination = lower medical costs?

Yes, but particulate emissions don't correlate directly with CO2 emissions. A clean-burning gas power station will still put out a lot of CO2. A cooking fire will put out (proportionately) a lot of both. Percap CO2 emissions go up and up; percap particulates can go down (no more smogs in London, for example.)

Posted by ajay | October 8, 2007 10:51 AM

"Percap CO2 emissions go up and up; percap particulates can go down (no more smogs in London, for example.)"

Not meaning to quibble, but, yes, in the US and elsewhere there is a lower correlation, but that is simply because we chose to regulate particulates. In the developing world, the correlation is still very high and directly switching to non-fossil fuel alternatives could lead to improved health in addition to the environmental and economic advantages.

It would not suprise me if nations such as India and China make these decisions earlier than say D.C. or London and take advantage of this enormous opportunity to achieve energy and geopolitical independence.

Posted by Rihilism | October 8, 2007 11:27 AM

Actually, right now the relation is somewhat of a tradeoff, as the presence of industrial particulates in the atmosphere may actually be helping to *lessen* the impact of global warming, given that the particulates increase the amount of incoming solar radiation reflected away from the Earth's atmosphere.

So if we were to immediately clean up industrial particulate pollution in the atmosphere (just speaking magically), suddenly we'd be dealing with a more intense 'greenhouse effect'.

On the other hand, industrial particulates in the atmosphere hasten illness or cancers, so increasing industrial particulate pollution in the atmosphere is no great aid either. And, of course, this being science and reality, there are many ill-understood aspects regarding the behaviors and interactions of various particulates (aerosols) and "radiative forcings" (how things in the atmosphere change how radiation is transmitted, say, like infrared photons, or heat).

http://www.realclimate.org/index.php/archives/2007/02/aerosols-the-last-frontier/

Posted by El Cid | October 8, 2007 11:35 AM

Yes, atmospheric particulates may have been masking the greenhouse effect. It appears that our current energy "policy" is damned if we do, damned if we don't, since the developing world and the fastest growing economies will soon recognize the advantages of reducing particulate emmissions, just like we did.

All the more reason to make a clean break from energy sources that contribute a net gain of carbon to the carbon cycle.

Why any rational human beings would hesitate to act upon this (other than those who benefit from the status quo) is beyond me.

Posted by Rihilism | October 8, 2007 11:50 AM

More people live better and with less effort now than in the past. If you graphed out quality of life over human history it would be a long low slope until about 2-300 years ago, where the slope started rising much more steeply. I think the main reason for this is that we we found better ways to create usable energy to power the stuff that makes our lives better.

But the main ways in which we create energy hasn't really changed. In the begining there was fire, and today we are still burning stuff. When you burn stuff basically you get smoke (to use the scientific term) and as our population has grwon (because of the benefits of our energy creation, so has the smoke, to the point where our quality of life is definitely threatened

So now we are at this crossroads and I wish we could look at the problem and our history and capabilities as a species. We look back and see what a source of energy can mean to our lives. We can project that forward and see what it would be like to have more energy. We could live in that post-scarcity world that I read about in SF books. I mean, if we would collectivly just take our heads out of our asses we would see that we are at a golden moment. We have the intellectual resources built up over milliniea. We have the motivation in the form of a big threat hanging over our heads. If we all just consciously said that energy is good, better sources could really make all our lives better, lets really try to figure something our. Let's make it a human project. This is an opportunity to really transform our lives.

Posted by cw | October 8, 2007 12:41 PM

MY creates a Twilight Zone argument - The Club For Growth and Supply Side Vodoo overcome Global Warming energy restrictions:

Where the per capita basic energy needs, like the per capita caloric needs are somehow overcome by GROWTH. There is a baseline where you cannot restrict BTUs used or calories consumed in food before lifestyle or physiological sustenance is gravely compromised.

With Open Borders and high 3rd World breeding rates, America is to go from 300 to 420 million people by 2050 and global population from 6 billion to 10, but environmentalist claim we will achieve a 50% NET reduction in carbon use, AND be richer?? Using hugely more expensive and unreliable "exciting alternate energy"???

In your dreams.
Coal and nuclear and less people allowed are the short and medium term solutions.

Long-term, maybe fission-fusion as 60% of energy, with fossil still 10%, renewables 30% - in a world of only 1-2 billion people.

********************
Pottisch engages in nuclear alarmism. Conflating dirty bombs with actual nuclear weapons as a threat, and doing silly "lost nuclear materials" stats as if that signifies a growing risk of A-bombs in the wrong hands.

Nuclear materials like a hospital iodine or CS-137 source cannot be used in nuke weapons, but still count as "lost nuclear material" and the reason reports are up is that many countries started reporting systems after 1997 when the IAEA finally reacted to various lost sources showing up in recycled rebar steel and kids playing in a Bazilian dump with CS-137 they mandated a reporting scheme.

We are a lot safer now from lax security and accountability for plutonium and HEU than we were in the early 90s.

The difference between a dirty bomb and a real nuclear weapon is profound.
The military found no use for dirty bombs because they kill or injure virtually nobody and decon is pretty easy if you use the Civil Defense standards most countries have to recover cities intact. The maximum size is 10,000 to 20,000 curies and how many pounds of TNT or C4 is used as a dispersant.
A real nuclear bomb runs 20-40 million pounds equivalent of TNT, produces 1.6 million curies of radioactivity for every kiloton of explosive power, plus several million additional curies of gamma, neutron emissions, plus thermal and EMP pulses setting fires and destroying electronics well past the blast area.

The world is again going nuclear, and it would behoove Americans to get past their ignorance and fear and learn enough to rationally assess risk.

Posted by Chris Ford | October 8, 2007 2:56 PM

"Coal and nuclear and less people allowed are the short and medium term solutions."

I vote Chris Ford off the island...

Posted by Rihilism | October 8, 2007 4:07 PM

Chris Ford

Why not use the hot air coming out of your "mouth" to power billions of people? I have yet to find a semi-interesting post of yours which is in touch with the times... (you sound as if somebody just woke you from a 40 year deep sleep)

Regarding the nuclear alarmism - all of it comes from the IAEA. btw - you do not need much for a dirty bomb (you can try to turn my argument around and claim that I was talking about a real nuclear bomb - but I was not).

Here another quote from the IAEA - who knows nothing about nuclear risks, etc.:

"Most of these incidents involved radioactive sources, including high-risk "dangerous" sources. Of the incidents with nuclear materials, 15 involved the seizure of highly enriched uranium and plutonium from individuals or groups who possessed them illegally. Information reported to the ITDB shows a persistent problem with the illicit trafficking in nuclear and other radioactive materials, thefts, losses, and other unauthorized activities"

After Iraq, Iran, North Korea, Pakistan (Khan) etc - we can only talk about alarmism.. not real threats.

Now imagine every second nation on the planet having a nuclear plant... not a real threat.

It is not even worth mentioning to somebody like Chris Ford that the IAEA itself is critical regarding their accounting practices and margin of error. Like with micro-payments - one could get access to substantial amounts of nuclear material (enough for dirty bombs) by the application of "micro-transfers" that do not even show up on illicit monitoring databases. Like any half-good hacker does with banks.. take out only 0.003% per transaction.. but over years.

Finally - I obviously agree with Rihilism...

(mental note: do not fall for distractions from the topic at hand all too often)

Posted by Hugo Pottisch | October 8, 2007 6:31 PM

Re Chris Ford

The problem with nuclear fusion is that there appears to be very slow progress being made. In 1970, some "experts" predicted that nuclear fusion would begin to come on line in 30 years. Here we are 37 years later and nuclear fusion appears to be at least another 30 years away. This is a technology that may never arrive.

Posted by SLC | October 8, 2007 7:27 PM

SLC - Fusion is like the "cure for cancer". Supremely important, but beset with difficulties other technologies and medical cures developed right before they became the goal didn't have. Fusion looks more promising than a cure for cancer because we at least know it works and we have reached (barely) energy breakeven.

With ITER we will be closer, but realistically, it is likely, but off in the distance enough that it doesn't help us in the sort or medium term, as I said. And, in the long term, it's most efficient in energy production as a fission-fusion hybrid reactor - when paired with a reactive blanket of U-238 that will both breed plutonium for fission reactor fuel and heat from fast neutron fissions of the same U-238, based on quantum probabilities.

Let's hope it's achievable because the "exciting alternate energy sources " liberal environmentalists who are largely technologically clueless tout and rhapsodize on have major drawbacks of cost, reliability, and availability on a mass scale. It's nice to say, "every bit of chicken guts turned to biodiesel helps", but it is also trite if anyone thinks the sum of these minor wind, solar, biodiesel, geothermal, tidal sources plus "conservation" will replace even oil or gas on their own, let alone all nuclear and fossil fuel. Or even 20% of fossil by 2100.

Pottlisch - you do not need much for a dirty bomb

No, you dummy, I explained why a dirty bomb is militarily inconsequential. You just chose not to listen.

Same with your fear that little bits here and there could finally be enough for a nuke. The whole field is permeated with undercover agents looking for both sellers and terrorists trying to buy little bits. Chance of detection is huge.

Nor do you understand why civilian nuclear energy poses little risk of someone getting nuke weapons as long as enrichment, reprocessing, and fuel burn-up are under strict regulatory control.

Without enrichment, you have as much chance of building a nuclear bomb out of 3% enriched fuel assemblies as you do out of car battery lead. Without a secret reactor that burns fuel for only 6,000 full power hours vs the 14,000 reactors under regulation require before "fuel sticks" can be removed - you cannot reprocess because the fuel then has too much Pu-241 to use, vs. the lower burned fuel that doesn't have Pu-241 yet added to the Pu-239 inventory. But even if you do get your "secret reactor", you still have to build a very visable and detectable reprocessing facility that uses equipment and chemicals only a few nations make and trace...

Rather than nukes of high casualty and consequences or "dirty bombs" of no casualties and light consequences, bio, chem, or poison offer lower risk of detection and the casualties a "dirty bomb" cannot create.

Basically, we will be going more and more nuclear globally in power generation because all the "exciting alternate energy sources" amount to squat. That we will have no choice on it, and the era of Lefties and environmentalists blocking "evil nuclear power" is ending by necessity.
That leaves the job of controlling the rogue nations that might abuse nuclear power to those nations with 85% of the world's population, 96% of it's economy, and 99% of the military might, inc nukes - to control or in extremis, destroy any transgressing rogue nation. The hapless UN can be the "stable nations" vehicle of choice, but ultimately the IAEA is not backed up by the "UN's moral authority" but people and nations quite willing to kill nuclear transgressors.

Posted by Chris Ford | October 8, 2007 8:16 PM