Sam Roggeveen on Martin Wolf on climate change: how depressed should we be, and what can be done – Part One

Cross posted from the Lowy Interpreter Blog.*

I was contemplating writing a post on Martin Wolf’s latest Jeremiad on climate change when Sam Roggeveen sent me a link to his own post asking for my response to his musings on the same subject. So here’s my response – or the first part it. Let’s look at Wolf’s six reasons for profound pessimism, with some commentary from me along the way.

The first and deepest reason is that, ‘as the civilisation of ancient Rome was built on slaves, ours is built on fossil fuels’.

This is either silly or just a rhetorical way of saying ‘This time it’s different because the magnitudes are so much larger’. We built our economy on steam from 1750 to 1850 but we changed, and we can change again.

A more serious point is that we can take small problems like CFCs in our stride, but CO2 is too big a meal to digest. In fact, it’s far from that, economically. It’s only the nasties who want you to think that decarbonising our economy would leave us with living standards similar to when our economy was last uncarbonised, circa 1800. But politically it seems too big an ask. Why? I’ll get back to that in my next post.

Wolf’s second reason is opposition to any interventions in the free market. As Wolf says, ‘To admit that a free economy generates a vast global external cost is to admit that the large-scale government regulation so often proposed by hated environmentalists is justified. For many libertarians or classical liberals, the very idea is unsupportable. It is far easier to deny the relevance of the science.’

Well, this rolls off the tongue easily enough, but most right-leaning types (OK, not necessarily extreme libertarians) support spending on defence and police forces, involving far more expense than we need to deal with climate change. And yet these expenditures as just as much expenditures on correcting market imperfections (the fact that marauders can help themselves to resources you’ve built up if you can’t punish them sufficiently for trying to steal them) as the externalities of carbon emissions. Why most right wingers support regulation or other action to internalise egregious externalities as carbon emissions are. For instance they support laws to prevent people pumping their wastes onto their neighbour’s back yards.

So there’s something more going on. I’d suggest it isn’t quite what Wolf says.

Rather, climate change has become a symbolic left-of-centre issue, even if right-leaning Margaret Thatcher was one of the first world leaders to highlight it. And if there’s one thing someone on the right knows, including very often even if they’re a libertarian, it’s that they are against the left. Being a pin-up issue of the left, climate change carries with it all sorts of political baggage that really pisses the right off. Quite a bit of it pisses me off too, but there you go. So it’s not that the right really thinks that there’s no role for regulation, it’s just that they’re pissed off with the left. They instinctively fight the left.

Wolf’s third reason is the pressure of responding to immediate crises that have consumed almost all the attention of policy makers in the high-income countries since 2007. Maybe. I’m suspicious of these ‘intellectual crowding out’ arguments, but no doubt there’s something to it.

Fourth is the touching confidence that, should worst comes to worst, human ingenuity will find some clever ways of managing the results of climate change. This is more than touching. It may well be right. Still, why risk it?

A fifth reason is the complexity of reaching effective and enforceable global agreements on the control of emissions among so many countries. Not surprisingly, the actual agreements reached give more an appearance of action than a reality.

Now we’re talking; let’s put this further up the list. Still, lots of international agreements are more appearance than reality (eg. the Millennium Development Goals). I find the doublespeak involved in these things infuriating, but perhaps it’s better than the alternative, which is no speak. We keep grinding away, and we do tend to devalue the meaning of the words used, but perhaps that’s a price worth paying. Perhaps it helps the world more than it hurts it.

Reason number six is indifference to the interests of people to be born in a relatively distant future. As the old line goes: ‘Why should I care about future generations? What have they ever done for me?’

I concede there’s a lot more to it than this and we shouldn’t despoil the planet environmentally, but I’m all in favour of digging up as many resources as we can. Call it a loan from future, vastly richer, generations. Right now our human capital inheritance is worth over ten times the economic value of our natural resources. Our grandchildren’s human capital inheritance will be ten times that again.

If you don’t understand that you’re grandchildren will be richer than you, you should read about Julian Simon’s successful bets with discredited doomsday prophet Paul Ehrlich.

Wolf’s final (and related) reason is the need to strike a just balance between poor countries and rich ones and between those who emitted most of the greenhouse gases in the past and those who will emit in the future.

Again, I disagree with Wolf, or to clarify, Wolf’s statement may be correct as a description of a stumbling block, but I don’t agree with its sympathy to the low income countries’ case.

If climate change can be used to increase donations to lower income countries from higher income countries in ways that promote growth in the former and thus global equity, well and good. But the idea that high income countries burned the fossil fuels and so we should bear the brunt of addressing the problems they’ve raised is mistaken, IMO.

Why? Well firstly, we can’t be held to blame for the first century-odd of doing so, since we didn’t know we were doing anything wrong. More importantly, in doing all that development we came up with some kick-arse technology, almost all of which is being picked up by lower income countries for free or for massively less than it cost the high income countries to cook it up.

Since I’ve acknowledged that I’m OK with increased aid from the high to the low income countries (lots more is fine with me) then this argument is somewhat moot on its merits. However, there’s a really important point here: as Wolf intimates, the linkage of climate change to low income countries’ ambit claims for more aid has been a huge barrier to global agreement, and in its initial guise involved the bizarre situation in which low income countries, a huge majority of signatories to the UN Framework Convention on Climate Change, which is supposed to auspice the global response, were all agreed that they weren’t committing themselves until they’d seen lots more action from the West, a perfect way to waste the best part of a decade as well as leave lots of baggage around to get up the nose of those on the right as we try to make progress even today.

I mean, imagine if we had a drought and we exempted the poor from water restrictions? It would be absurd, but that’s roughly been the negotiating position of lots of countries for quite some time.

I don’t want this to imply that I’m not aware that lots of them are doing quite good things now (particularly China), but it certainly hasn’t helped us get to sensible binding commitments from low income countries, even though those commitments should probably have permitted them to increase their emissions providing they reduced emissions intensity.

But after all that, how optimistic am I that we’ll find our way through? More optimistic than Wolf or Roggeveen. And what measures might we take to maximise our chances of a happy ending? Well if I told you now, you wouldn’t be back to read part two!

* Note I drafted this as simple quotes from Wolf in a list of dot points with responses from me in square brackets. An editorial decision was made on Lowy to change that format and then I edited the result. Because I can’t be bothered editing the result in the same way again, this appears in the same format as the article on the Lowy blog, though in one area I did take the opportunity to further elaborate what I said on the second draft.

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Patrick
Patrick
8 years ago

I have a slightly different take on it. It’s not so much that I’m instinctively against the left (even if I might be). I’m instinctively doubtful of our ability to know things and get them right. Let alone complex things! Scott Sumner puts it beautifully:

Even though I support a carbon tax, I don’t have a high degree of confidence that my preferred policy is superior to waiting 25 years and hoping for a breakthrough technology, or else doing geoengineering if we don’t get it. (BTW, that’s the policy the world has actually decided to do, in case anyone is interested. But I’d still sleep better at night with a carbon tax.)

For my part I have a very low degree of confidence. Defence is a much easier example, because all other things being equal we know that someone without an army is at the mercy of someone who has one.

On climate change specifically, for example, at how Europe, who has tried mightily to lower its climate change emissions, and America, who hasn’t given much of a damn, have respectively fared in carbon emissions lately. In particular, look at how it is exactly Europe’s environmental policies, and most of all its carbon policies, that have made things so bad (i.e. it made gas too relatively expensive so Germany went back to coal, whilst no-one was allowed to actually drill any gas to try and make it cheaper).

One could call it a poster-child for benign inaction as a preferred policy!

Steve Jones
Steve Jones
8 years ago

There is also the left/right or whatever you like to deal with it view that it will probably be cheaper to deal with the effects of climate change rather than the cause.

Using realistic discount rates (say, estimated from average world growth between 1900 & 2000 and extrapolation that to 2000-2100) the economic case for much climate change action now become dubious.

This is Lomborg’s point and quite a few others.

Or have a look at what Roger Pielke Jnr says. He has an iron law of climate, namely that anything that makes us poorer on climate change won’t be done.

Most people across the developed world are prepared to pay something to slow or halt climate change. But not that much. Maybe, say $150 year per person. It hasn’t changed that much.

And there are some environmentalists who would be happy with that. But others are not. Many say we have to stop burning fossil fuels even without a replacement. That’s nice, but that sentiment has no chance in the wider community.

Add on top of this the fact that the climate hasn’t warmed as expected for at least 15 years. Now, OK, Kevin Trenberth assures us now that all the heat is hiding under a rock or something, but the other obvious explanation is that climate sensitivity has been put too high.

Surely climate change worriers should be delighted that the danger isn’t as big as expected. But where is that sentiment? Why is it missing?

alexinbogota
alexinbogota
8 years ago

Hi Nicholas,

I find it interesting that leading econobloggers from the ‘progressive side’ in Australia don’t seem to carry much truck for considering historical responsibility in allocating burden-sharing arrangements on climate (really I’m just counting you and Prof Quiggin – haven’t done much of a survey!)

One possible reason for this is the continued perception of the pollution of the climate system as a sink/externality problem? If you reconceive of the climate system as a resource with a capped limit before depletion (whatever threshold we collectively decide is too risky to cross) then it becomes a source/commons problem and then perhaps the issue of historical consumption becomes much more pressing?

I would say that there are three broadly reasonable justifications for developing countries’ “not committing themselves before seeing action from the North” -although I personally think we’re at the stage where everyone has to everything now, these were particularly relevant in the past and should inform how we share “everything, everyone, now.”

1. Legal/normative

When you enter into an agreement with someone you expect that agreement to be honoured. If you have agreed terms you would hope to see the other party honour those terms, if they have not, you might reconsider which terms you would want to apply to yourself in the future. The UNFCCC agreed in 1992 certainly preceeded a lost decade (or two) of inaction – but that was from developed countries. They agreed to “take the lead” due to their historical emissions; they agreed to peak their emissions by 2000; they agreed to transfer new+additional technology and finance. None of these things happened (some EITs and UK maybe peaked). It would seem strange for developing countries to look at that and say: these countries with the greatest technological capacity/wealth in the history of the world agreed to do this thing, but they didn’t, so now we should do it. To me it suggests – to do this is really hard, they haven’t done it, they said they would, why should we now do it? I think it’s a bit rough to frame a lack of climate action of the last two decades on developing countries. I would also add that developing countries have actually promised to do MORE emission reductions in the coming decade than developed countries – http://www.sei-international.org/publications?pid=1899

2. Moral/justice arguments

As above, if you consider the climate system a commons, and you consider all people to be equal, then there should be an equal right of access to that system. That applies across time. While it’s true that historical consumption led to the development of technologies etc. that others have gained access to (and so the responsibility should not be solely attributed to the North) this adds a limb of increased capability available to countries with the highest historical consumption – increasing their moral responsibility to act. I also don’t agree that “not knowing” absolves you of all responsibilities for your actions, or that applying a precautionary principle from at least 1970 would not be unreasonable.

We are not facing a “drought” – but if we were, setting a minimum threshold that all people could use would be very reasonable so as not to parch the poorest people, which may happen if you applied an across the board 30% cut in everybody’s consumption. What we are facing is more analogous to being on Easter Island as it was running out of trees. We have to share the 100 trees left and not use anymore or there will be no rejuvination- how should we do that? Saying everyone from now gets 1 tree doesn’t seem fair if many of us have houses built of 50 trees while others only have a few leaves. Saying everyone from now reduces their tree consumption by 30% is also not fair as it means those with more trees now get to have more trees in the future. The fairest way seems to be to say – those who have consumed the most trees in the past (and due to this consumption have the capacity) should develop alternatives to trees and help those who will never get a house made out of trees find alternative shelter – so we can let the forest to survive.

3. Practical arguments

Without massive transfers of science and tech how do we get this done? If the richest and most technologically advanced don’t blaze a path and show it can be done, how do poor societies, with bad infrastructure and weak institutions do it? If we actually want a global response to climate change then the rich have to do it first and then help everybody else to follow them. I can’t see it happening any other way. Can you?

PS

To Steve – I think Bill McKibben on Lateline summed it up well saying the latest report from Otto suggest “we caught a break from physics” but that a reduction in climate sensitivity by 0.5C or 1C may well be offset by the increased impacts that are being observed/projected at lower temperatures (including tipping points). Combined with the fact that we are currently on track to triple the CO2 concentration so it doesn’t really change that we need a drastic transition of energy sources otherwise there maybe a non-linear impact on your wealth projection models, making it hard to think our children will be richer than we are.

Kien
Kien
8 years ago

Presumably a fair allocation of a carbon quota would equalise per capita emissions based on consumption, not production.