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The real questions behind global warming
The key issue is what we can expect from China and India. As I understand the evidence, if China and India continue to grow, the United States cannot succeed in much limiting global warming on its own. Let us assume, somewhat dubiously (many European countries are further from Kyoto targets than is the United States), that Europe is already on board, what are the options?
1. China and India are less locked into fossil fuels than is the United States, and as Brazil has done they will take the lead in moving toward energy alternatives. America does not need to get them "on board," and given their cooperativeness American energy policy will matter at the margin.
2. We can cut a deal with China and India at a suitably presented international convention. China and India will enforce this deal and abide by it, overcoming previous problems they have had ruling their provinces and avoiding excess decentralization.
3. Forget about the international conference, we can pressure China and India by twisting their arms. Like we've done with the Chinese currency. We also can threaten them with trade taxes, as has been discussed in Europe.
4. We are best saying nothing to China and India and calling no conference. There is some chance they will act unilaterally, out of pride and the desire to upstage the United States. External pressure will be counterproductive, remember British imperialism and the Opium Wars?
5. China and India will continue to be major polluters. If we tax American-generated carbon we pay a big price in terms of economic growth but make no real progress on global warming.
6. We do not know what China and India will do, but the United States is a world leader and ought to move first, set a good example, and do the right thing.
Do we know the relative merits of 1-6? I don't. Keep also in mind that what works for China may not work for India, and vice versa.
Of course #5, however ignoble it sounds, is the most serious argument for doing little or nothing. #6 sounds good, but at what point is the chance of #5 high enough to scare us off?
What would it cost China and India to make progress on global warming? Yes Stern estimates it would be a relatively small percentage of gdp, but that is naive. A major problem is institutional, not technological.
I am reminded of some estimates of the costs of cleaning up avian flu in Asia. Measure how much it costs to kill (or vaccinate) one chicken. Not much. Multiply by the number of sick chickens. You have your number.
Not. Many Asian countries simply can't get rid of avian flu. Their institutions are too weak, too lacking in transparency, too decentralized, and too lacking in accountability.
Or how much would it cost to improve the standard of living in Haiti? A few cops, some rule of law, free trade at the ports, and set up some real schools, right? Under one plausible view of the world, that is only a few billion dollars or so. But if we consider some of the very tight institutional constraints faced in Haiti, most of all the almost total unwillingness of the elites and the common voters to support a better politics, the price can seem almost infinite. Which perspective is correct?
The bottom line: When it comes to global warming, the most important question is how China and India will behave, and what kind of leverage "the good countries," if indeed there are any, might have. The correct answer is not a simple matter of fact, but rather rests upon deep questions of how to measure the costs of institutional change and what we can justifiably take as an open variable amenable to change.
All other issues aside, that is why global warming is such a tough problem. I don't like #5, but if you want to sell me on your solution, talk to me some sense about China and India.
Addendum: Jane Galt has a lengthy post on discount rates.
Posted by Tyler Cowen on January 10, 2007 at 07:31 AM in Economics | Permalink
Comments
Based on what I've been hearing from automotive economists this past week, there is little reason to believe Chinese carbon production will go anywhere but up. Auto ownership has tripled in the past few years and auto production will continue to grow as companies like DaimlerChrysler outsource small car production. The issue will probably become worse as those cars bought in the past few years age and there's a lack of qualified mechanics to maintain them.
Posted by: Ted Craig at Jan 10, 2007 8:22:05 AM
U.S. carbon emissions far exceed China's or India's, despite the much smaller U.S. population. Plus, we provide the leading example to China's and India's consumers of the prosperous lifestyle. It is U.S. policy that matters most for global warming.
Under the most optimistic scenarios, in which the Earth's forests and oceans somehow compensate for industrial carbon emissions, our great grand-children may simply get lucky. Under the more mainstream scientific scenarios, the open question is whether our great grand-children will live in a world that descends into chaos and violent depopulation, or a world where America learns to live "richer and smaller."
The good news, from my own family's experimentation with living "richer and smaller," is that it is more fun than you might think.
Posted by: Parke at Jan 10, 2007 8:40:34 AM
My father works in the energy industry with the Chinese. When I asked him about this, he stated unequivocally that the Chinese will not spend the money necessary to run clean energy at this point. I don't think it is arguable that clean energy is a luxury that rich countries can afford and poor ones cannot. Despite their growing GDP, China is still a poor country, and until such time as they become a rich one, they will not focus on environmental issues like we do in the west. In my opinion, they are right to take this attitude. The money they would spend on something as hazy as global warming can be much better spent on things with more immediate and tangible benefits, such as education, the overall energy grid, and yes, avian flu. When they are more able to walk as an economy, they can run with cleaner energy.
Posted by: pawnking at Jan 10, 2007 8:46:12 AM
A major problem is institutional, not technological.
Hm. But technology itself is institutional.
Posted by: A Tykhyy at Jan 10, 2007 8:54:57 AM
yeah i am with global warming. i support it 24/7.
Posted by: yermom at Jan 10, 2007 9:16:47 AM
Are you expecting India and China's global warming warming behavior/person to exceed the United States?
At what point?
Assuming that we could much more easily limit that behavior to our own per person levels, I would imagine that our own behavior will be crucial.
Posted by: theCoach at Jan 10, 2007 9:19:12 AM
How would the united states seeking to limit green house gases not have an impact because of China and India? The United States is responsible for about a quarter of mankind's Co2 emmissions. What we do has a big impact. Now as for China and India, I think they would be doing themselves a disservice by trying to seeking to limit green house emmissions. There is a reason that relatively few people die when natural disaster strikes America but scores of people die when similar disasters strike less developed countries.
Posted by: Michael Foody at Jan 10, 2007 9:32:27 AM
I was under the impression that we could best influence China and India in a positive direction by investing heavily in alternative energy sources to jumpstart the technology. Then, once the technology is developed and the cost of alternative energy sources drops, China and India will want to invest in these other energy sources without undue pressure from us.
Tyler, where are the estimates of the "big price in terms of economic growth"? Is that really the only outcome of taxing American-generated carbon?
Posted by: eriks at Jan 10, 2007 9:34:32 AM
Alternative solution 7.
Invest in technology/solutions that reduce global warming at prices competitive to fossil fuels. The market will discard fossil fuels quicker than you can blink (see the explosion of cell phones in India/China over wired infrastructure build out). The key is to focus on technologies that are more efficient (electronics that sleep, more efficient refrigerators, air-conditioners and stoves, and of course more efficient cars, trucks and industries) and license them cheaply to Chinese/Indian manufacturers
Posted by: Jonney at Jan 10, 2007 9:39:03 AM
Parke, China is getting ready to surpass us as an emitter, and India isn't all that far behind. By 2020, they will indisputably be the top two gross emitters. Yes, they will be lower emitters per capita, but the climate isn't some anthropomorphic agent dispensing punishments and rewards. It warms, or not, based on the amount of carbon being pumped into the air.
Posted by: Jane Galt at Jan 10, 2007 9:41:40 AM
I disagree that China and India are the most important issues. Their gg emissions will, and probably should, increase over the next half-century or so, as they continue to develop. The same is true for other developing countries.
The most important issue for climate change has less to do with any country's emissions portfolio but with the EFFECTS of climate change in the developing countries that can least afford to deal with those effects. As Thomas Schelling has written in several recent publications, dealing with the effects of climate change in developing countries will require more than the small-scale "adaptation projects" contemplated by the Framework Conventionn on Climate Change. What is required is something more on the scale of the Marshall Plan to promote the development of stable market and governmental institutions in developing countries. Such a plan could be financed by revenues from emissions taxes (as Nordhaus recommends) in developed countries.
This implies that Kyoto should be scrapped in favor of a tax-based regime. That new regime should also focus more discriminately on those emissions of gg gases that can be reduced the most at lowest social cost. For example, CO2 emissions from power plants and smokestack industries are relatively easy to control and measure. By focusing on just a few gg gases and sources of emissions, the administrative costs of control can be significantly reduced.
Posted by: Dan Cole at Jan 10, 2007 9:44:15 AM
Funny, I thought that the amount of radient energy being output by the sun might have some effect. Or are our carbons somehow sneaking into the Martian atmosphere--causing the observed global warming there?
I'm amazed that there appears to be no serious analysis of the effects of "green" energy sources on regional weather patterns. Enough solar panels or wind farms & you can power a mid-sized town. Yes. You can also mess up wind and rain patterns.
Posted by: Nathan Zook at Jan 10, 2007 9:51:03 AM
Jane
80% of the CO2 in the atmosphere came from the *existing* industrial countries.
The Global Warming problem was created by the industrialised countries, not by the emerging markets.
CO2 emissions per Chinese citizen are 1/10th of what they are per US citizen. China is still only pumping out half as much greenhouse gases as the US is. Right now in fact China is probably actually *reducing* global warming (because of the amount of Sulphur Dioxide it pumps out, which has a short term cooling effect). The bad news is that SO2 now doesn't offset CO2 output in the longer term (the SO2 turns into acid rain), and in any case the Chinese will have to deal with their acid rain problem sooner than later.
CO2 emissions per Indian citizen are about 1/25th of what they are per US citizen (I'd have to check that number).
Yes China and India matter. But in future prospect. The problem is one we created, and we can't expect them to do anything about it, if we don't.
It's also worth noting that the Chinese average vehicle fuel economy will exceed the American one-- they have mandated a minimum fuel efficiency for new cars.
And energy conservation targets of reducing energy consumption per unit of GDP by 20% are part of this 5 year plan.
Posted by: Valuethinker at Jan 10, 2007 9:57:25 AM
Nathan
Google David Keith at Carnegie Mellon/University of Calgary. He's looked into this.
The effect in most cases (at least for wind) will be very small.
The trick being that converting energy (into another form) doesn't alter the total energy hitting the planet's surface (which drives both wind and solar power).
Posted by: Valuethinker at Jan 10, 2007 10:00:35 AM
I am trying to reconcile Jane Galt's reply with some sort of morality that is not grotesque.
If they will be lower emitters/captia what is the proposed reason for setting appropriate levels per person?
Should levels be capped at the level of nation states? (sounds absurd to me)
Should the Chinese, for example, be given an amount, say 3/5 the amount of the global warming of an American?
I am seriously baffled here. What is the criteria?
Posted by: theCoach at Jan 10, 2007 10:30:49 AM
Global warming activists continue to ignore a credible and cheap alternative to curtailing carbon emissions proposed by Nobel laureate Paul Crutzen. Crutzen made his name researching the ozone layer, and proposes injecting sulphur particles into the upper atmosphere, similar to what occurs naturally in large volcanic eruptions (the penultimate eruption of Krakatoa caused "the year without a summer" in Europe, and even the smaller and more recent Pinatubo eruption caused a temperature drop of .5 C). This has been roundly ignored, though good estimates suggest it would cost only about $25 billion annually and could be stopped at any time, with the effects fading in less than a year.
The technical aspects are pretty straightforward; nonetheless the idea hasn't gotten much traction despite being magnitudinally cheaper and more immediate (given that we've added enough carbon to the atmosphere to be feeling the warming effects, regardless of our current actions, for a hundred years to come) than any austerity measures. I suspect this is because global warming activists would feel cheated if western society were able to escape the consequences of its high-consumption lifestyle.
Posted by: Milk for Free at Jan 10, 2007 10:38:27 AM
Valuethinker:
I'm not convinced yet by your reply to Nathan. I repeat not convinced 'yet'. Nathan's point is that alternative energy sources will also have negative externalities, including potential weather/climate effects. Even if the amount of total energy hitting the planet does not change, I am told that a re-ordering of existing stuff can cause climate change. For example, if we were to purposefully use existing earth-energy energy to melt the ice caps and dilute the salinity of the North Atlantic then that will supposedly redirect ocean currents and cause a mini ice age. Now, as a layman, I am told that we should erect many thousands of wind turbines and solar panels. Is there something about wind that redirecting its currents near the surface on a massive scale in concentrated locations won't have atmospheric spillovers? Seems counter-intuitive but I am a layman.
Posted by: evm at Jan 10, 2007 10:39:58 AM
The best solution I've seen for an international climate change policy can be found in "Climate Change Policy after Kyoto" by Warwick McKibbin and Peter Wilcoxen. It's the only place I've seen issues of international relations taken seriously. Their bottom line is that we should set up a permit system, with the revenues going to the government of each individual country so that there is an enforcement incentive. It's a quick read and well worth it. Relevant to this discussion; according to the book Carbon emissions for India and China combined (in 1999) were less than half of the U.S emissions.
Posted by: anon at Jan 10, 2007 10:51:10 AM
i love how almost every solution offered ignores that the world's nation states can agree about almost nothing, and even when they purport to agree (kyoto), many states fail to live up to their obligations. if wishes were horses than etc. this smells very much like a religion to me (for those who have dispensed with traditional religion), where somehow we will all see the light, be saved, and live in green peace and harmony forever. not likely. so you're left with tyler's do nothing/little option.
btw, where do the apocalyptic scenarios come from? i've seen nothing scientific that suggests some marginally rising sea levels could lead to global anarchy (instead, we get longer growing seasons, more food, etc.). and all such scenarios seemingly ignore that we may have developed hover-houses by then (or will be spurred to do so by warming), so that we can mitigate rising sea levels (holland seems to be pretty much alright).
Posted by: dj superflat at Jan 10, 2007 10:58:52 AM
As few commentators have already pointed out, the environmental effect of the growth of India and China is still marginal compared to that of united States. Also, at their current level of development, it would be futile to expect them to sacrifice economic growth at the altar of environment.
How about focussing on United States? Shouldn't it be taking the lead in developing greener technologies for it's own self interest?
a. Energy security-Oil dependence only helps fuel the economies of Anti-American regimes. Energy independence would probably do more to advance the cause of American interests than almost anything else.
See this article by Robert Stern-
http://www.pnas.org/cgi/content/full/104/1/377
Stern argues that the way to bring OPEC to it's knees is by lowering demand and attacking them on the price front.
b. Even if India and China were prepared to take the lead, will that serve American interests? This country has thrived on a cycle of innovation, should it allow that cycle to be broken for short-term gains? I would argue that it should take the bull by horns, invest money in greener technologies and protect it's pre-eminent position in science and innovation.
India/China can certainly take some steps- for example more efficient use of energy, but at this stage it would be prudent to expect that they will take only those steps a)which don't affect their economic growth b) the cost of implementation is not too high.
For real innovation, United States needs to step up.
Posted by: confused at Jan 10, 2007 11:03:33 AM
Tyler's view seems to be that pollution by china and india will swamp any by the west. but this by itself is not decisive for the choice between #5 and #6. what is the marginal benefit to the world of reduced emissions by the west when worldwide emissions are already very high versus when worldwide emissions are very low?
it could easily be that the former is larger than the latter in which case the inevitable pollution levels of china and india make us even more aggressive in cutting emissions in the west.
Posted by: jeff at Jan 10, 2007 11:12:04 AM
Let’s not forget option #7, Do nothing about global warming and focus on the problems we know how to cure. Stated differently, there is simply nothing that will stop countries from striving to grow economically, both here and abroad. With this in mind what should be done for the environment should be crystal clear. Individuals can start driving hybrid cars, using public transportation, living in smaller homes, recycling, etc. And Government can preserve greenspace, stop over-fishing, encourage green architecture, etc.
These things don’t require complex international agreements that could be negotiated until the end of time but they do require everyone to take action. Ultimately if we take action we will do wonders for the environment but more importantly, if we embrace or desire to grow economically, many of our environmental problems will be indirectly saved as well. For example, in the search to grow economically we basically stopped burning wood and started using electricity. The hybrid car was developed not because it was good for the environment but because it saved consumers money. Tourism is probably the single biggest reason we still have rain forests.
Posted by: Fever at Jan 10, 2007 11:45:06 AM
No matter what your discount rate, it makes no sense to worry about the effects of global warming in 50 years while ignoring where China and India will be in 15 years.
Posted by: DK at Jan 10, 2007 11:45:33 AM
We can’t make policy decisions about global warming without facing a few facts. It is generally accepted that to stabilize atmospheric concentrations of greenhouse gases at between 450 and 550 ppm CO2 equivalent (current concentrations are at about 370 ppm), it would require worldwide emissions reductions of 60 to 80 percent below 1990 levels. If the climate models are correct (which I seriously doubt, but I’ll assume they are for the sake of argument) we’ll still get a warming of 1.5 to 4.5 degrees C. In other words, the marginal benefit of reducing a ton of CO2 emissions is vanishingly small, maybe even zero, while the marginal cost is substantially positive, so marginal costs are already above marginal benefits. All the evidence indicates that the marginal cost curve is very steep, while the marginal benefit curve is basically flat. There is no point at which the marginal benefits exceed the marginal costs, unless you assume some discontinuity in the climate system due to anthropogenic emissions. But no climate model predicts that. They all predict a linear temperature response to increasing emissions.
There are some other geopolitical issues we must face also. China has made it quite clear it has no intention of even discussing greenhouse gas reductions. You say Europe is on board, but they aren’t unless you count sanctimoniousness as being on board. For the most recent five years for which we have data EU emissions have increased twice as fast as U.S. emissions, even though the U.S. economy has grown a lot more than the EU economies over that time. “Doing nothing” seems to be the strategy that is working best so far.
Posted by: pj at Jan 10, 2007 11:48:36 AM
"All the evidence indicates...there is no point at which the marginal benefits exceed the marginal costs"
Care to give some names? My understanding is that conservative cost-benefit analyses exepct net-benefits to arrive sometime after 2300. Of course this is of little help for policy making today, I am just wondering what literature you are refering to.
Posted by: aaron_m at Jan 10, 2007 12:31:19 PM
