What is the Cost of Fixing Global Warming?

Some people are starting to come around to the only sensible position, in my view, on human-induced climate change: that it must be accommodated rather than rolled back. Foreign Policy magazine tells us Why Climate Change Can't Be Stopped:

While some might argue that great reductions can be made in greenhouse gas emissions using current technologies (particularly by increasing efficiency), this is still debated within the scientific community. This argument assumes, among other things, that companies replace their current capital stock with the most efficient available today—something that is not likely to occur in the near future even in developed countries due to its considerable cost. For this reason, even if the Bush administration has been slow to publicly admit that human-induced climate change is real, it has been fundamentally right to focus on developing new technologies that might sever the relationship between energy consumption and emissions.

Unfortunately, given the scale and complexity of modern economies and the time required for new technologies to displace older ones, only a stunning technological breakthrough will allow for reductions in emissions that are sufficiently deep to stop climate change. According to Britain’s Stern report, stabilizing greenhouse gas concentrations in the atmosphere at 550 parts per million—twice pre-industrial levels, a level at which most believe there is already a higher probability of major climate disruptions—would require stopping the global growth in emissions by 2020 and reducing emissions by 2.5 percent per year after that. The longer it takes to stop the growth in emissions, the deeper the eventual cuts need to be.

This kind of talk is progress, but the Foreign Policy take is still incomplete. The issue is not just that it is expensive to modify production technologies. The fundamental consideration is that climate change is a by-product of very valuable human activities - transportation, production, etc. It is a difficult problem because it is a classic case of the tragedy of the commons: everyone's incentives point to emitting pollution in isolation, but the collective effect on the atmosphere is (perhaps) very damaging. The usual economic remedy for such commons problems is either the creation of a private property right - turning open-access pasture into private land gives the owner the proper incentives to take account of all of the costs of his decisions - or public management. The first is impractical, the second phenomenally dangerous from the point of view of human freedom. The environmentalist dream of a global organization charged with limiting carbon emissions would be the road to serfdom, pure and simple.

Any discussion of climate change, carried out among people who have some amount of agreement on how much the climate will warm, and how much can be attributed to humans (no easy task), should ask the following questions:

1. Is climate change good or bad? The answer is not obvious. Some people in some places will be harmed, but some helped. Previous warming episodes are often associated with high levels of civilization achievement. If the amount of warming is something that humans have seen before, and perhaps even if it is not, the effects on humanity are not clearly bad on balance.

2. What are the costs of the proposed solutions? These costs are not just money; they are foregone opportunities - for achievement, for dreams, for progress. It may well be that the cost of "doing something" about climate change, measured as prosperity in rich and poor lands alike that doesn't happen, are far greater than the costs of accommodating it.

Any discussion carried out in the absolutist language of the environmental movement - that climate change is a "crisis" that demands we make major changes to how we live - is simply a nonstarter. The world's people simply will not stand for that.