Until perhaps two years ago, whether climate change was occurring and whether it was anything to do with human activity were topics that politically-minded people debated. Greens urged that the burning of fossil fuels was going to heat up the planet, raising sea levels, expanding deserts, and causing much misery. Climate change sceptics urged that the evidence was not there, and that we should not shackle the Market, undermine trade and limit the development of poorer nations on the basis of scare stories and hype.
In my view that debate went on rather longer than was fruitful, and because some people still cling to the most sceptical positions there, the real debate that we should be having has been seriously hobbled. I shall explain.
I know lots of very smart people who still don’t believe there is any good evidence of human-induced climate change. I understand why, as intellectually-confident individuals with lots of letters after (an sometimes before) their names they feel able to defy the overwhelming consensus of a scientific community. Presumably many people that have become environmental scientists in the past twenty years took up research in that area precisely because they already believed that there was human-induced climate change, having been influenced by the concerns of green writers in the late 1980s. That their subsequent research has confirmed their initial prejudices may make figures along the lines of “99% of all climate scientists think that…” My guess is that the proportion of experts in feminist ethics who think that women had a good deal in the 1950s or that the husband is the head of the wife will be rather small, also.
But although, given the likely biases in the climate change research community, I think it appropriate to be polite to listen to my very clever friends’ scepticism, the fact remains that we forfeited our right to be listened to concerning the details of this debate when we chose not to do environmental science. So now our entertaining dinner table debates cannot hope to influence policy.
In my view, the scientific consensus on this topic has been long past adequate to demand a policy response of some kind for perhaps ten years. I take it that, for policy purposes, we should believe the following two propositions (even if we are still prepared to debate them in the privacy of our own homes):
(a) The planet is warming up;
(b) Human activity, including (though not necessarily restricted to) the burning of fossil fuels is a material contributory factor to this warming.
Now for many people, once (a) and (b) are accepted, the debate concerning action is over. If humans are causing the planet to heat up, they believe we should stop doing so. But this is a classic error in policy formulation. When formulating policy, we should always bear in mind a number of principles:
- It does not follow, from the mere fact that we can tell a story that something is wrong that anything needs to be done about it. For example, I could tell you a story about car repair shops, according to which consumers are relatively ill-informed about car repair compared with car repair shop-owners, and as a consequence are vulnerable to exploitation (e.g. by having unnecessary work done on their cars, or work that is deliberately shoddy so that it will need to be done again more quickly than is necessary). Does the fact that I can tell such a story mean that car repair shops should have a regulator — like the FSA — or perhaps be subject to economic regulation — like the water industry? Of course not. For the Market may offer its own solutions to the problems we identify. It is only once we have a compelling account of why the market cannot solve these problems that our analysis even gets going.
- Next, it does not follow, from the mere fact that there is a problem that the Market cannot address, that intervention by the government can address the problem any better.
- Next, it does not follow, from the fact that the government could, in principle, intervene to make things better, that any particular intervention is actually one that makes this problem better.
- And finally, even if a specific intervention would, indeed, make things better, it does not follow either that it is the best intervention available or that it will not have other impacts (costs and risks) that are worse than the problem it is trying to solve.
To summarize, if the government is to act, we need to know that any particular measure will actually improve things in a way that the Market would not, and that it does not create more problems than it solves. Now this is no longer a scientific question. It is an economic and policy question.
In the case of climate change, economists have been looking at the issue for a while. Up until the Stern Review, although the analysis was still underdeveloped, there was a growing consensus that even though climate change might well have material impact, the costs of trying to prevent it (in the jargon, “mitigation”) were enormously greater than the costs of trying to live with it (in the jargon, “adaptation”). The Stern Review was in many ways the most serious attempt to consider the costs and benefits calculation that had been done up to that point, and of course we all know the headline figures: Give up 1% of GDP today to get 20% of GDP back in the future.
Now the Stern Review has been subjected to extensive methodological criticism, and I think it’s fair to say that the position amongst economists is something like the following:
- If we want to do any work on environmental economics for any government agency, we take the results of the Stern Review as given and unquestionable.
- When we are down the pub, or chatting in meetings with other economists, almost no-one takes any of its results seriously.
I shan’t bore you with most of the critiques economists have offered of the Stern Review. Indeed, for what it’s worth I consider many of them unfair, for I think the Stern Review should not be considered as the end of a research programme, but the beginning. It proposes some interesting radical ideas about how we should think through certain problems, and the thing about interesting radical ideas is that most of them are stupid — but that’s okay, it’s how we make progress. The problem only arises with the Stern Review if policy-makers misunderstand the robustness of its conclusions and take them as having proved that certain policies are desirable — for it does not achieve that.
There was one issue on which the Stern Review may have seemed radical to some readers, but in which it actually reflected a common kind of thought — one that is badly wrong. Mainstream climate models and economic analysis associated with them suggest that the costs of climate change might, in a century’s time, be perhaps five percent of GDP. To place this in context, people at that point are expected to be five times as wealthy as today if it were not for these costs of climate change, so the effect is that they are only 4.75 times as rich as us. Since they are expected to be much richer than me, one might not think it too problematic if they pay for the costs of adjusting to climate change, rather than me — they aren’t planning to pay me for my research and development and capital accumulation, all of which will be important drivers of their wealth.
If we think about the claim that current climate change is the result of human-induced CO2 emissions since the industrial revolution, we can see the idea. The deal is this: Tuvalu sinks beneath the waves, there is even more flooding than usual in Bangladesh, and in exchange we get pharmaceutical medicine, TV, Reeboks, McDonald’s, air travel, computers, blogs, and all the other apparatus of modern life. That’s a no-brainer. And in a century’s time, perhaps our great grandchildren will be sitting in their climate-controlled domes on Mars thinking “The deal was this: London flooded, the Mississippi overflowed even more than usual, and in exchange we got the cure for cancer, interplanetary travel, a life expectancy of 200, eyelid head-up-displays, telepathy, and all the other apparatus of modern life. That was a no-brainer.”
So in principle there is little to apologize for if we decide not to bear additional costs today so that our great grandchildren will be “only” 4.75 times as rich as us. Stern tried to deal with this partly through a very non-standard and highly criticized use of discount factors, which we shan’t go into, partly through evaluating non-financial losses to nature (ditto), and partly through placing some weight on scenarios in which matters went much worse than the (reasonably conservative) mainstream scenarios he considered.
This is the issue I wish to engage with. Climate change will have an impact, but I believe that we should place zero weight on truly disastrous scenarios for that impact. Why? Well, throughout human history there have always been terribly clever people who would offer us terribly clever arguments as to why the world is about to end and the gods can only be assuaged by sacrificing a few virgins. And, of course, from a policy perspective it can be quite attractive to acquiesce. After all, when the world does not end we can point at the dead virgins and say: “Well, we took the hard decisions, and were criticized at the time, but all has turned out well in the end. We have been vindicated by events.” But the truth, I submit, is this: if your model predicts the end of the world, that is not an interesting discovery about the future path of things; it is a discovery about model, viz that it is flawed.
Doubtless there are some terribly clever climate change modellers who want to tell us that matters will be disastrous unless we reduce carbon emissions by — who knows? — 70 per cent. And they get lots of airtime and politicians make lots of promises. But, be their models ever so clever, they are wrong. And that is not because I have some critique of the detailed workings of their models. It is because the answer is just wrong. The world isn’t going to come to an end even if we spend the next thirty years doing our utmost to increase carbon emissions. The world isn’t going to come to an end at all. Of course the climate will be affected. Of course the landscape may alter radically — as it has done many times through human history. But the world will not come to an end.
That your climate change model tells you the world is going to end is a useful scientific result, for it tells us that there is something wrong with the model. In the same way I sometimes see slightly sad articles in science magazines telling me that certain models of General Relativity predict that travelling backwards in time is possible. Indeed they do, and what that tells us is not that time travel is possible. It tells us that those models are wrong. And that is not because of the detailed workings of the model. It is because of the answer.
In exactly the same way, climate models that tell us that the earth is likely to flick into a “white earth” scenario within a few centuries, or any other “end-of-the-world-as-we-know-it” scenario, are wrong. We should not place any weight on such models, any more than we would place weight on models that predict we can travel backwards in time. They are interesting and useful precisely because, and only insofar as, they are wrong.
Mainstream climate models do not predict that the world will end. Consequently we are not faced with a desperate race against time in which we aim just to do as much as we possibly can, hoping that tomorrow we will be able to do more. Rather, we are in the situation of normal policymaking, in which it may well be that there is a policy intervention that makes the world a better place by reducing the impact of climate change at fairly low cost, but each intervention needs to be judged on its own merits. Climate change is not a special issue to which the normal rules of policy-making do not apply. As in all other settings, we need an account of exactly what the problem is supposed to be, why the Market will not address it itself, and why this particular policy option on the table is the one to follow. Then perhaps we can stop trying to “save the planet”, and instead stick to the more modest goal of “making the world a better place.”