There’s a scientific consensus, we’re often told, that global warming is a problem–despite the opinion of qualified experts ranging from the Russian Academy of Sciences to the Alfred P. Sloan Professor of Meteorology at MIT that it isn’t. Yet even if those worried scientists are right, science can’t tell us whether acting to prevent further global warming is worth the trouble. For that, we have to look to economics. And in that field there is a growing consensus that global warming is the least of our problems.
This was underlined recently in Denmark, where The Economist and Bjorn Lomborg, author of The Skeptical Environmentalist, brought together eight of the world’s leading economists, including three Nobel laureates, for the “Copenhagen Consensus” project during the last week of May. From the beginning, the project clearly identified its mission: “The goal of the Copenhagen Consensus project was to set priorities among a series of proposals for confronting ten great global challenges.” In other words, the point of the Consensus was to list the challenges facing the world, and their possible solutions, in order of value for money. The projects that would provide the greatest good for mankind for the least amount of money would top the list.
The Consensus ranked four projects as representing very good value for money. They were new programs to prevent the spread of HIV/AIDS; reducing the prevalence of iron-deficiency anemia by means of food supplements; multilateral and unilateral abolition of tariffs and non-tariff barriers, together with the elimination of agricultural subsidies; and the control and treatment of malaria.
On climate change, the Consensus project considered a paper suggesting that the benefits of action now on climate change would outweigh the costs. But to arrive at this conclusion, the paper determined the cost ratio by using an unfeasibly low discount rate for the benefits of 1.5 percent. The panel rejected this methodology.
In fact, the panel ranked all three suggestions for action concerning global climate change–an “optimal carbon tax,” a “value-at-risk carbon tax,” and the Kyoto protocol–last on the Consensus’s ranking of 17 project possibilities, and even termed these options “bad investments.” The final report summarized:
The expert panel regarded all three proposals as having costs that were likely to exceed the benefits. The panel recognized that global warming must be addressed, but agreed that approaches based on too abrupt a shift toward lower emissions of carbon are needlessly expensive. … The panel urged increased funding for research into more affordable carbon-abatement technologies.
This ranking backed up previous research that has shown that all the main suggestions for dealing with global warming–the Kyoto protocol, reducing all greenhouse-gas emissions globally to 1990 levels, or limiting carbon-dioxide presence in the atmosphere to double the pre-industrial level–would lead to economic disaster, slapping the world with a cost that would far exceed the benefit. A widely accepted 1999 study, for instance, found the cost of the Kyoto protocol to be $220 billion in 1990 dollars, while providing only $95 billion in benefits. We are better off doing nothing.
It is unfortunate that the world cannot currently alleviate all of its challenges. But it is important to understand that, with the world’s limited resources, efficient spending is a critical aspect to accomplishing the greatest benefit globally. Wasting money on climate-change programs like the Kyoto protocol is a misallocation of scarce resources that is at best negligent, and at worst reckless. As the Consensus agreed, the imposing costs of the reduction of greenhouse gases hinder any program attempting to reduce climate change. But programs such as those combating HIV/AIDS come at a comparatively low cost while offering incredibly large benefits.
While some could disagree on the methodology of the Copenhagen Consensus’s results, it is important to bolster the discussion of prioritizing the world’s resources to solve global challenges. Environmental alarmism–including scientists emphasizing unlikely worst-case scenarios and Hollywood making up impossible catastrophes–merely moves us away from a rational, dispassionate assessment of the issues. There is no reason why a warmer world cannot remain an enlightened, rational world.
Iain Murray is a senior fellow and Zack Klein an intern at the Competitive Enterprise Institute.