Let's Have Less Hot Air About Global Warming

by Don Boudreaux on February 9, 2007

in Environment, The Future

I am not so much a skeptic of global warming as I am of politicized efforts to deal with it.  I am most assuredly a skeptic of pronouncements, predictions, and assumptions made by natural scientists — and by politicians and pundits — about global-warming’s likely consequences on human economy and society.  Many (most?) of these scientists have no earthly idea of the fundamental logic of market exchange.  (This charge is no criticism; it merely points to an inevitable result of a deep division of labor.  After all, most of us who are not environmental scientists are poorly equipped to grasp the important details and nuances of environmental science.  Likewise, specializing in natural science (or in politics, or Hollywood acting) reduces the time and effort you put forward to study and understand the economy.)  And someone with no firm grasp of economic principles can be as right as right can be about global warming and its causes while simultaneously being utterly benighted about what to do about it and even whether or not something should be done about it.

Here’s a letter of mine that appears in today’s edition of the Washington Times:

Let’s grant (if just for the sake of argument) that environmental
scientists have proved that Earth’s ideal average temperature was
reached about a century ago and that the temperature is rising because
of human activity ("Just the facts," Op-Ed, yesterday).

The truth remains that these scientists have no expertise to
judge whether government can be trusted with the power and resources to
"combat" global warming. Nor can these scientists tell us how a free
market likely would deal with global warming’s consequences.

Contrary to widespread belief, environmental scientists can
legitimately say nothing about whether, or how, to respond to global
warming.

DONALD J. BOUDREAUX
Chairman

Department of Economics

George Mason University

Fairfax

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{ 30 comments }

Ray February 9, 2007 at 8:27 am

And contrary to widespread belief,economists can legitimately say nothing about what the effects of global warming will be on food production systems, climatic and weather risks,or on energy requirements.

True_Liberal February 9, 2007 at 9:59 am

Ray – …EXCEPT to point out that the free market is better equipped to make the cost/benefit tradeoffs than any national or international government.

My own assessment (and this is surely as valid as the IPCC SPM) is that whatever anthropogenic warming is occuring, will merely serve to delay the next ice age by a few decades or centuries.

Don't forget, the IPCC pronouncement last week was a "Summary For Policymakers". The data are yet to show their face. What does that tell you about the application of the Scientific Method? (Can you say "cart before the horse"?)

Keith February 9, 2007 at 11:53 am

I think the point on "Earth's ideal average temperature" is key. Who could know this and why are we using average temperature as the important measure in the first place? Shouldn't we be more interested in temperature extremes? What's the average temperature of my kitchen oven? Probably only a few more degrees than my kitchen, but I still don't use my oven for anything other than cooking. Using average temperature as a criterion for measuring climate seems completely ridiculous to me.

ben February 9, 2007 at 2:58 pm

The failure of some climate scientists to understand this distinction, the difference between identifying a problem and deciding whether it is worth fixing and how – is a sure sign of a sort of fundamentalism. It's a widespread failure: I am often accused of being a global warming skeptic when I consistently reject action on cost/benefit grounds and because of skepticism of government intervention. Even Richard Posner often misses this point on his blog.

golddog February 9, 2007 at 3:00 pm

Gore announces prize of $25 million for "the best way to remove significant amounts of carbon dioxide from the atmosphere."

It is great to see Gore using incentives to attack the problem rationally rather than with regulations.

Read more over at Marginal Revolution.
http://www.marginalrevolution.com/marginalrevolution/2007/02/prizes_and_open.html

Tim February 9, 2007 at 5:26 pm

As an economist, do you think global warming and the threat of climate change does in fact require action? And if so, what should be done about it?

Like too many of your colleagues, it seems to me you are dodging the two most important questions here.

Agreed, natural scientists may not be the best to ask when it comes to policy recommendations. But shouldn't economists step up to the task and try to give us some answers (taking into account the fundamental logic of market exchange, for instance)?

It's easy to dismiss what non-economists are suggesting should be done while not coming up with an alternative of your own.

So, let's hear it. What's your plan?

undergroundman February 9, 2007 at 8:24 pm

"The truth remains that these scientists have no expertise to judge whether government can be trusted with the power and resources to "combat" global warming."

And who is the authority on whether the government "can be trusted"? Why do you trust this government with the paving of roads if you don't trust them to deal with this issue? And why do you avoid the fact that the regulation only needs to involve the government to a small degree — a cap and trade program would be effective.

"Nor can these scientists tell us how a free market likely would deal with global warming's consequences."

We don't need a scientist or an economist to tell us that: nothing. As long as the prices remain low, people will keep polluting and imposing external costs on everyone else and ultimately themselves in the long-run.

All scientists can do is tell us what will happen. And they're saying it's going to be huge. Leave it to econonomists like Michael Stern (http://en.wikipedia.org/wiki/Stern_Review)
to tell us what the economic effects of rising sea levels, malaria in the US, and massive species loss will do to the economy.

David White February 9, 2007 at 9:13 pm

But Prof. Boudreaux, surely you know that "the fundamental logic of market exchange" is but the social enterprise itself and that is has nothing to do with the "deep divisions of labor" other than that society thrives on them.

Why convolute this obvious fact? Or rather, why play into the hands of the state by convoluting it?

However important it may be, scientists play a role in the social enterprise no different than the butcher, the baker, and the candlestick maker. Let us rejoice in that fact, that peace and prosperity might result from it!

Sam February 9, 2007 at 11:29 pm

But, as most of us know, we don't have a free market, have not had a free market, and aren't likely to get a free market anytime soon.

The government has distorted and even destroyed the feedback signals that would otherwise let people know the costs of many of their actions.

We are doomed. A large minority is committed to the wrong course and the rest are simply not aware of any alternative.

python February 10, 2007 at 1:48 am

Undergroundman,

I think you are missing the point of the discussion. The argument isn't whether bad things may happen due to global warming. The argument here is whether action taken by government agencies will be beneficial or not – especially action as recommended by scientists.

I don't see any confusion. To restate:

#1 Assume that global warming is real
#2 Who is best at deciding what do about it – scientists, politicians, or society as a whole?

Pointing out that scientists aren't qualified to prescribe a remedy doesn't suggest the author thinks the future is going to be rosy and climatically perfect.

If I may make a simple analogy…Betty has a rat problem in her house. She asks advice on how to solve the problem? Should she ask a zoo keeper, a biologist specializing in rats, the government, or a rat catcher?

Betty says she doesn't think the biologist is suited for the job. The biologist's friend answers "If you don't solve the rat problem, bad things will happen to your house."

Betty says "Thanks for stating the obvious, Mr. Stern, but that doesn't have anything to do with helping me decide who I should ask to catch the rats."

brotio February 10, 2007 at 2:35 am

To undergroundman: Whether we trust the government with paving the roads is irrelevant because the government OWNS the roads. Most often, however, the cost of paving roads is cheaper when the government contracts with private enterprise to pave its roads. And I don't trust this government or any other government to 'solve' this issue. Why would you trust anybody (especially a politician) to put your welfare above their own?

Speedmaster February 10, 2007 at 9:30 am

Well-stated Dr. Boudreaux!

undergroundman February 10, 2007 at 2:35 pm

python,

I think you missed the point. Read over my post carefully.

"Betty says "Thanks for stating the obvious, Mr. Stern, but that doesn't have anything to do with helping me decide who I should ask to catch the rats."

Are you aware that Nicholas (not Michael, sorry) Stern was the chief economist for the World Bank? He released a 700-page paper and ultimately predicts that, if major governmental action is not taken, climate change (as forecasted by the scientists) could bring the world GDP down by 10-20%.

The point is that it doesn't take a genius or even a decent economist to see how the free market will tackle climate change. It is of the tragedy of the commons: the market players are looking to make a profit. They have to. Therefore, they will choose the cheapest source of energy and impose external costs on all of us and the future people of the world.

Furthermore, the problem is game theoretic – it's a prisoner's dilemna. Even if one person wants to spur climate change, he/she is sacrificing profits and competing with the others who are producing with the cheap way.

There's no question that coal and oil are the cheapest sources of energy. Oil may increase in price but it's still looks like it will be the most cheap and easily available source of energy for transportation. Similarly, we have enough coal to last us hundreds of years – it's a cheap source of energy.

What's clear is that Don poses the question "how would the free market approach the problem" but never answers it. Why? Because he knows the free market wouldn't solve the problem.

The solutions proposed (carbon taxation, cap&trade programs) are already widely accepted in the economic literature as effective. They don't require that much governmental intervention – nothing more than we already have in place for the Clear Air Act.

http://en.wikipedia.org/wiki/Cap_and_trade
http://en.wikipedia.org/wiki/Carbon_tax

Please respond.

ben February 10, 2007 at 2:42 pm

Undergroundman,

Here is a description of how the Stern report's famous 20% of GDP was derived (from http://www.opinionjournal.com/extra/?id=110009182)

"On the face of it, Mr. Stern actually accepts Mr. Nordhaus's figure: Even including risks of catastrophe and non-market costs, he agrees that an increase of four degrees Celsius will cost about 3% of GDP. But he assumes that we will continue to pump out carbon far into the 22nd century–a rather unlikely scenario given the falling cost of alternative fuels, and especially if some of his predictions become clear to us toward the end of this century. Thus he estimates that the higher temperatures of eight degrees Celsius in the 2180s will be very damaging, costing 11% to 14% of GDP.

The Stern review then analyzes what the cost would be if everyone in the present and the future paid equally. Suddenly the cost estimate is not 0% now and 3% in 2100–but 11% of GDP right now and forever. If this seems like a trick, it is certainly underscored by the fact that the Stern review picks an extremely low discount rate, which makes the cost look much more ominous now.

But even 11% is not the last word. Mr. Stern suggests that there is a risk that the cost of global warming will be higher than the top end of the U.N. climate panel's estimates, inventing, in effect, a "worst-case scenario" even worse than any others on the table. Therefore, the estimated damage to GDP jumps to 15% from 11%. Moreover, Mr. Stern admonishes that poor people count for less in the economic calculus, so he then inflates 15% to 20%.

This figure, 20%, was the number that rocketed around the world, although it is simply a much-massaged reworking of the standard 3% GDP cost in 2100–a figure accepted among most economists to be a reasonable estimate."

If this is a fair summary of the derivation of the famous 20%, then Stern has essentially made up the headline figure you cite.

undergroundman February 10, 2007 at 7:24 pm

True, the Stern Report is likely disingenuous (good catch!).

Anyway, that still leaves the claims of scientists (massive flooding, malaria in the Northern Hemisphere, massive species extinction) and the economic fact that the free market, without government intervention, will do nothing about climate change. It won't incorporate the external costs into its business model without the government forcing that cost. If you disagree, then show me why.

tarran February 10, 2007 at 8:08 pm

undergroundman,

OK, I'll bite:

1) Let us assume that the worldwide climate changes. Whether this is due to human action or not is irrelevant. The ice-cube Earth came and went long before there were people.

2) What are the effects if nobody does anything to arrest these changes?* Well the utility of different bits of land changes; farmland suited for growing rice may become too dry. Forests that are grown for timber harvesting no longer support the smae mix of trees. Changing coastlines drown or strand previously thriving ports etc.

3) This does not render the land useless. While one may not be able to grow maple trees in Vermont, one may be able to grow oranges there. Former trundra will now make for really good maple trees etc.

4) As the trends start to develop, they will become visible at first to a few entrepeneurs, then to increasing numbers of people. The entrepenaurs will act upon their initial knowledge to purchase land whose utility has changed and act upon their guesses in the future. Thus, some guy will decide to start growing maple trees in the tundra as the Vermont maple tree crop dies out.

AS to the fears of New York getting flooded, etc. Here you have a problem that would be solved through insurance. People who are conservative (I mean believe in conserving their resources, not the political types) will insure their porperty against risks, which in low lying areas includes flooding. As water levels start to rise, and the risk of flooding goes up, insurance companies, who actively try to figure out precise risks to minimize their chances of losing money (when they aren't crying or getting for government protection)** will begin raising their rates or refusing to provide coverage. This provides a signal to people to start abandoning the land, or taking actions (like building dikes) to protect it.

The end result is that if the land is worth preserving, some local scheme will be found to do so. Otherwise it will be abandoned in favor of land which has newly started serving the same purpose.

*Since terrestrial climate has had huge swings without human agency in the past, I think the arguments about the anthropongenicness of global warming is a waste of breath. If we figured out that global temperatures where going to shoot up 20 degrees C and it had nothing to do with human activity, would we be less screwed?

**I am a disgruntled resident of the People's Republic of Massachusetts which has an insurance industry cartelized by the state using the Mussolini model. The fact my rates went up when I moved into the state (the USAA agent told me "we would like to charge you less, but state law prohibits it") really pisses me off.

Sam February 10, 2007 at 8:44 pm

Assumption of costs of climate change have to do with what kind of weather will befall us.

We already have certain costs due to weather. The question then is: will costs due to a warmer climate be greater than costs due to a static climate?
If climate cooled there would be costs as well.

So is the assumption that future weather related costs will be higher than existing weather related costs?
Have such studies considered any benefits?

True_Liberal February 11, 2007 at 9:25 am

tarran says: "**I am a disgruntled resident of the People's Republic of Massachusetts which has an insurance industry cartelized by the state using the Mussolini model. The fact my rates went up when I moved into the state (the USAA agent told me "we would like to charge you less, but state law prohibits it") really pisses me off."

That's why I left MA for saner ground 30 years ago. It's hard to believe that the good people of the Bay State put up with such nonsense.

Alex Forshaw February 11, 2007 at 7:14 pm

I am not so suspicious about whether global warming is anthropogenic to a significant extent, so much as I am suspicious of the people who predict an apocalypse every ten years, unless they are given authority over indeterminate trillions of dollars to entirely restructure the world economy.

I don't know much anything about climate change. So it comes down to whether trust/ have faith in the people who, to all appearances, do know more about it than me. So I look at their track record, and the global warming scientists'/ high priests' track record is awful. Every decade, they change from global warming apocalypse to global cooling apocalypse, once the earlier iteration of their faith has lost credibility.

Furthermore, many of the people screeching loudest for state intervention demonize Republicans for being "anti-science" or leverage that myth in order to exert more pressure, but their affinity for science goes no farther than their own preconceptions. Too many of the self-proclaimed "pro-science" crowd is more than happy to throw the science of economics out the window when it runs up against their own preconceptions on free trade and the minimum wage, even though economics has been around far longer, and is much more proven, than climatology has been. It's a matter of what suits their own preconceptions: global warming involves a colossal state-sponsored redistribution of resources, so liberals choose to believe most fervently in it.

Finally, if these people were truly panicked about climate change, they would advocate much cheaper, more practical ways to do it (e.g., seeding the atmosphere with radiation-deflecting compounds) than reallocating trillions of dollars' resources over decades, which would be impossible to reverse if proven wrong, and which would be rife with collective-action problems (3rd world participation) even if all the other stars aligned just as the climatology priesthood has prophesied.

I guess when their own interests are at stake, the climate apocalypse can wait.

All the more reason to call global warming out for what it is: *the* faith-based initiative of the global Left.

Alex Forshaw February 11, 2007 at 7:16 pm

Er — third to last paragraph meant to be written as: "if these people [climatologists] were truly panicked about climate change, they would advocate much cheaper, more practical ways to *solve* the problem…"

My bad.

undergroundman February 11, 2007 at 8:06 pm

I love continuing this. Tarran,

"2) What are the effects if nobody does anything to arrest these changes?* Well the utility of different bits of land changes; farmland suited for growing rice may become too dry. Forests that are grown for timber harvesting no longer support the smae mix of trees. Changing coastlines drown or strand previously thriving ports etc."

Because of intense heat. Places which are hot already may become practically uninhabitable. The local climates are expected to change dramatically. Nobody knows how much of an impact that will have.

That's basically the problem with your entire analysis. You place faith in the hope that it will all "work out." And you apparently place no value on our untouched and aged natural wildlife — something that I disagree with for scientific and aesthetic reasons.

Gary Dikkers February 11, 2007 at 10:02 pm

Don,

I like your question asking who is to decide what the ideal temperature of the earth and its atmosphere should be? Perhaps the ideal is the way it was 150 million years ago when most of the earth was a hot steamy swamp and algae, plankton, diatoms, giant ferns, and other plants captured the carbon dioxide and eventually became buried muck and metamorphosed into the coal and oil we now burn for fuel.

If I had the opportunity, here is my question for Al Gore:

If you were alive 12,000 years go instead of today, would you be campaigning to stop the melting of the Wisconsin glaciation that covered most of the Upper Midwest, Ontario, and upstate New York?

I don't know how Al Gore would answer, but I can say there are millions of farmers and residents of the Upper Midwest and lower Canada that are mighty glad the Wisconsin glaciers did melt.

Who is to say that in 10,000 years there won't be farmers in Greenland who are equally happy the Greenland icecap melted?

The point is that the earth and its atmosphere have ALWAYS warmed and cooled in great natural cycles with periods of tens of thousands or millions of years. Over the last 70,000 years or so man has adapted to those climate changes by migrating or changing lifestyle accordingly. The same will happen in the future.

The cycles of global cooling and warming are natural, and there is nothing Al Gore or anyone else can do to stop them.

Brad February 11, 2007 at 11:00 pm

Tim,

Economists have stepped up the plate on what to do about global warming. Have you heard of the Copenhagen Consensus? It at least puts global warming in context with all the other scourges that are destroying the world.

http://www.copenhagenconsensus.com/Default.aspx?ID=788

True_Liberal February 11, 2007 at 11:11 pm

Gary says: "The cycles of global cooling and warming are natural, and there is nothing Al Gore or anyone else can do to stop them."

Al Gore's personal anthropogenic contribution may well delay the next ice age by a century or two!

ben February 11, 2007 at 11:25 pm

Tim

McKibbon and Wilcoxen (2001), "The Role of Economics in Climate Change Policy" in the J. of Economic Perspectives is an accessible look at the economics of regulation around climate change. They accept warming is happening, are strongly critical of the Kyoto Protocol back when it was still in fashion, and propose a hybrid tax and permit system in its place.

Greg February 12, 2007 at 1:20 am

True Liberal seems to think exactly like I do, although he writes a bit better…

Russell Nelson February 12, 2007 at 2:45 am

Climate change is the scientific field of the study of the change in climates. Global warming is a political system for assigning blame.

Lee February 12, 2007 at 10:35 am

Not that long ago they were all banging on about peak oil, and the inevitable humanitarian catastrophe that would come of the rising price of oil. A few months later and they are all banging on about global warming, and the inevitable humanitarian catastrophe unless we raise the price of oil.

I think the general idea of Don's position is that we shouldn't put all our eggs in one basket, particularly the basket of government, because we'll probably never get our eggs back even if the current popular theories on global warming turn out to be false.

Bruce Hall February 12, 2007 at 6:34 pm

It is quite interesting to read the comments here versus those at Economist's View where I have been vigorously accused of "ranting" because I question the premise that any increase in the average temperature of earth might not be detrimental, to wit: mankind is adaptable to most climates… even extreme climates; vegetation and agriculture will thrive in warmer climates; fauna will have greater ranges of habitation in warmer climates.

The response was that I should return to Bangladesh because we were all going to live in steamy, malarial places that were filled with disease and death. I remarked that I had Cancun in mind instead.

The point is that most of the claims of disaster… economic and environmental… are made by people who absolutely fear change. All change is bad. The fact that growing seasons might be extended and a greater diversity of crops may be farmed doesn't matter… change is bad. The fact that poor sanitation and no civil engineering leading to disease doesn't have to be the case is ignored.

Only bad things can happen if we live in a warmer world. Hmmm. Wonder what the Canadians and Russians think about that?

What is being pushed is fear. What is being sold is "risk management." What is being bought is hot air.

Now, don't get me started on the mono-causality theory of climate change.

carlos lorca February 21, 2007 at 2:27 pm

could it be just another excuse for a new tax racket and a way for our esteemed Mr. Gore to get made into a bronze statue one day. this is his vanity project. how much more vain could one be? isn't saving the earth the subject of every summer blockbuster. it's the most egotistical fantasy conceivable. taking that as a given, Al Gore's documentary is quite alarmist and will put some fear into the viewer. we can assume the only way to get people to lift a finger is to paint the situation in a way that is excessively negative. after all how many years do we have on this planet anyway. i for one am only concerned about my time here on mother earth. anything else that happens after that is by defintion inconsequential to me. however, pillaging the finite resources we do have is a too short sighted even for me but i don't think enriching an already corrupt and inefficient institution will solve anything whatsoever.

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