Friday , October 20 2017

On Climate Change

David Henderson and I wade in to perilous waters in the July 31 Wall Street Journal. We try to stake out a different and more productive conversation than the usual shouting match between alarmists and deniers.Climate change is often misunderstood as a package deal: If global warming is “real,” both sides of the debate seem ...

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David Henderson and I wade in to perilous waters in the July 31 Wall Street Journal. We try to stake out a different and more productive conversation than the usual shouting match between alarmists and deniers.
Climate change is often misunderstood as a package deal: If global warming is “real,” both sides of the debate seem to assume, the climate lobby’s policy agenda follows inexorably.
It does not. Climate policy advocates need to do a much better job of quantitatively analyzing economic costs and the actual, rather than symbolic, benefits of their policies. Skeptics would also do well to focus more attention on economic and policy analysis.
As usual, I have to wait 30 days to post the whole thing.

As economists, we both have a healthy skepticism of large computer based forecasting models. The famous 1972 club of Rome forecast that we would run out of resources, and the grand failure of large scale Keynesian models in the late 1970s are two humbling examples. The "climate" models also feature a lot of questionable economics. A crucial question -- how much carbon will the world's economies add on their own, without Paris-accord policies? That's economics, very questionable economics, and not meteorology.

That said, however, the point of the oped is to try to shift the debate away from climate science and mixed climate-economic computer models. Stop arguing about climate, and let us instead investigate costs and benefits of policies. That strikes us as a much more fruitful place for discussion. If you are wary of the climate policy agenda, the costs and benefits of those policies are more fertile ground for discussion than the science of carbon emissions and atmospheric warming. If you only argue about the climate, then you implicitly admit that if the models are right about climate, the whole policy agenda follows. Do not admit that point. They may be right about climate and wrong about policy.

In California, it is seriously suggested that the way to get more water is to build a high speed train, which will save carbon, which will cool the earth, which will... actually, it goes the other way, but never mind. To address an argument like that, you should not get dragged in to whether human-released carbon warms the planet. A simple dollars per ton and tons per inch of water would do.

If it is not clear enough, nothing in this piece takes a stand on climate science, either affirming or denying current climate forecasts. I will be interested to see how quickly we are painted as unscientific climate-deniers. Shifting a politicized debate is hard. That is, if anyone pays any attention.

A few other choice bits:
Global warming is not the only risk our society faces. Even if science tells us that climate change is real and man-made, it does not tell us, as President Obama asserted, that climate change is the greatest threat to humanity. Really? Greater than nuclear explosions, a world war, global pandemics, crop failures and civil chaos?
No. Healthy societies do not fall apart over slow, widely predicted, relatively small economic adjustments of the sort painted by climate analysis. Societies do fall apart from war, disease or chaos. Climate policy must compete with other long-term threats for always-scarce resources.
As something of a conservative libertarian, I do worry about the end of western civilization and our society falling apart. And I worry about the natural environment as part of that. Still, slow warming in the next two centuries, and a sea level rise (much smaller than the one that happened a mere 10,000 years ago), while a worry, is not obviously the top worry.
Global warming is not even the obvious top environmental threat. Dirty water, dirty air and insect-borne diseases are a far greater problem today for most people world-wide. Habitat loss and human predation are a far greater problem for most animals. Elephants won’t make it to see a warmer climate. Ask them how they would prefer to spend $1 trillion—subsidizing high-speed trains or a human-free park the size of Montana
I'm also something of an environmentalist, with a soft spot for people living in terrible conditions and for the awful permanence of species extinction. Starting with wooly mammoths.
The Intergovernmental Panel on Climate Change’s “scientific” recommendations, for example, include “reduced gender inequality & marginalization in other forms,” “provisioning of adequate housing,” “cash transfers” and “awareness raising & integrating into education.” Even if some of these are worthy goals, they are not scientifically valid, cost-benefit-tested policies to cool the planet.
When I read the IPCC report, starting on p. 26, I had to check that I was not unintentionally reading The Onion. We cut for space. A longer list (from that p. 26) of the IPCC's policy ideas
Reduced gender inequality & marginalization in other forms…. Improved access to & control of local resources; Manipulation of disturbance regimes; Community-based natural resource management…. Provisioning of adequate housing,… Micro finance; Disaster contingency funds; Cash transfers; Public-private partnerships…Patent pools & technology transfer…: Awareness raising & integrating into education; Gender equity in education; Extension services; Sharing indigenous, traditional & local knowledge; Participatory action research & social learning; Knowledge-sharing & learning platforms… behavioural shifts, or institutional & managerial changes that produce substantial shifts in outcomes. (under”practical” subheading) Individual & collective assumptions, beliefs, values & worldviews influencing climate-change responses.
Again, you do not have to get deep into cloud modeling and ice melt feedback loops to wonder if all of this list necessarily follows. And, for the record, I have no qualm with lots of this list. Gender equality and equity in education? Improved access to resources? Who can object? But this is supposed to be about effective policies to cool the planet, not a grab bag of things that would be nice. (I do have qualms with a lot of the list, of course. It's a rather Orwellian and statist vision. "Public-private partnerships" characterizes much of contemporary Russia.)

I like our last paragraph.
Climate policy advocates’ apocalyptic vision demands serious analysis, and mushy thinking undermines their case. If carbon emissions pose the greatest threat to humanity, it follows that the costs of nuclear power—waste disposal and the occasional meltdown—might be bearable. It follows that the costs of genetically modified foods and modern pesticides, which can feed us with less land and lower carbon emissions, might be bearable. It follows that if the future of civilization is really at stake, adaptation or geo-engineering should not be unmentionable. And it follows that symbolic, ineffective, political grab-bag policies should be intolerable. 
For the record, I favor a uniform carbon tax in place of all the other direct energy regulations and subsidies. (A neighbor just showed me his electric car, purchased in addition to a regular car, for one reason only: you can ride it solo  in the HOV lane, a right worth thousands in California.) The rate on such a tax can be raised or lowered as politics and science see fit. If we're going to do something, and if the health of the economy is a prime consideration, then we must do something economically efficient. (David disagrees, but he can explain his views in his own blog.) As I favor a uniform VAT in place of the idiotically complex income and corporate tax system. I recognize the essential failure of our political system to enact simple transparent reforms, but that's a question for another day.

I do think there is hope however. A while ago I went to a meeting organized by the Niskanen Center bringing together free-market and libertarian types with some large environmental organizations. The environmentalists were concerned about climate change, understand that feel-good policies (like the subsidy for my neighbor's car) aren't going to slow down climate change, and will suck resources away from policies that could. The free marketers were largely a bit skeptical about just how much of a threat climate change is, but appalled at the inefficiency of IPCC style regulations. There is a deal to be had -- we'll do something efficient and effective (say, a carbon tax) in return for eliminating the junk.  We can agree to disagree about the level of that tax. My sense is that environmental groups are not ready to say this in public, for fear of angering allies who want to use the environmental label for a grab bag of policies (see IPCC list!), and the libertarians and free market types don't trust the "get rid of" rather than "in addition to" everything else part of the bargain. But there is a bargain to be made, and strong political leadership could bring it about.

(By the way, we didn't choose the figure caption. We know that Rotterdam is not prone to floods. Much of it is below sea level, and Miami is 9 feet above sea level.)
John H. Cochrane
In real life I'm a Senior Fellow of the Hoover Institution at Stanford. I was formerly a professor at the University of Chicago Booth School of Business. I'm also an adjunct scholar of the Cato Institute. I'm not really grumpy by the way!

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