Global Warming

Some Economics of Global Warming
Rather long article, I'll try to provide a short(ok, shit, this is damn long) summary of some key points in the article. feel free to ignore the rest of the post if you're not planning to do an essay related to the issue.

We are living on borrowed time
"If three degrees Celsius is taken as an index of climate change to come within the next century or so, how big is that compared with what has happened within the last century, or the last 10,000 years... The answer is that for 10,000 years, since the disappearance of the last ice age, average temperature appears never to have varied over anything like three degrees. A band of one degree Celsius would cover the current estimates of what average temperatures have been since the dawn of recorded history. We will be moving into a climatic regime that has never been experienced in this the current interglacial period... A caution: the models probably cannot project discontinuities--just gradual change --because nothing goes into the models that will produce catastrophes. There may be phenomena that could produce drastic change, but they are not known with enough confidence to introduce them into the models... do the hot American summers of the past few years announce the arrival of a greenhouse, confirming predictions?--the answer is in two parts: maybe it's the greenhouse; but it's not what the greenhouse models predict."

Possible Impacts on the Economy

For developed countries:
"... A conclusion we might reach is that a climate change would have appeared to make a vastly greater difference to the way people lived and earned their living in 1900 than to the way people live and earn their living today. Today very little of our gross domestic product is produced outdoors, susceptible to climate... Manufacturing rarely depends on climate, and where temperature and humidity used to make a difference, air conditioning has intervened... Finance is little affected by climate; similarly for health care, or education, or broadcasting. Transportation can be affected, but improvements in all-weather landing and take-off in the last 30 years are greater than any differences that climate makes... I conclude that in the United States, and probably Japan, Western Europe, and other developed countries, the impact on economic output will be negligible and unlikely to be noticed. And there is no reason to believe that in these countries there could be a noticeable impact on health..."

Developing countries:
" This complacent assessment cannot be extended to the much larger population of the underdeveloped world. The livelihoods earned in agriculture and other climate sensitive outdoor activities, 3 percent in the United States, comprise 30 percent and more of all livelihoods in most of the developing world... There is no strong presumption that the climates prevailing in different regions 50 or 100 years from now will be less conducive to food production. But there is also no assurance that climate changes will not be harmful, and even if on balance the impact is neutral, there may be large areas with large populations that suffer severely. Those people are vulnerable in a way that Americans, Western Europeans, and Japanese are not. Nor can the impact on health be dismissed or readily subsumed among generally improving health conditions, as for the developed world. Numerous parasitic and other vector-borne diseases affecting hundreds of millions of people are sensitive to climate. Again, there is no strong presumption that malaria mosquitos, to take an example, will on balance benefit from climate changes, but the risk is there."

Adaptation to effects of global warming

"As it was in our own country during this century, the trend in developing countries is to be less dependent on agriculture and less vulnerable to climate in transportation and other activities and health. If per capita income growth in the next 40 years compares with the 40 years just past, vulnerability to climate change should diminish, and the resources available for adaptation should be greater. I say this not to minimize concern about climate change, but to anticipate the question of whether developing countries should make sacrifices in their development to minimize the emission of gases that may change climate to their disadvantage. Their best defense against climate change may be their own continued development. What is desired is to optimize development by investing in greenhouse-gas abatement only when that appears, subject to all the uncertainties, to contribute more to their development in the future than the alternative direct investment in development. It is not economic growth versus environment; it is growth with the environment taken into account." - the article was written in 1992. Do not be quick to reach a similar conclusion for China - there's many things to be considered, such as those in the article by IHT.

" A related point: population growth is important for the climate change, in two respects. One is that carbon emissions in developing countries are positively driven by population; population growth does not merely dilute carbon emissions per capita, but for a number of reasons more people means more carbon. If China succeeds in holding population growth to near zero for the next couple of generations, it may do as much for the earth's atmosphere as would a heroic Chinese anticarbon program coupled with 2-percent annual population growth. The other population effect is simply that the most likely adverse impact of climate change on human productivity and welfare would be on food production. In the poorest parts of the world, the adequacy of food depends on the number of mouths and stomachs... For the developing worlds, the increasing concentration of people is probably more serious than the increasing concentration of carbon dioxide."

"At this point, I appear to have reached the conclusion that the developed world has no self-interest in expensively curtailing carbon consumption and that the developing cannot afford to incur economic penalties to slow the greenhouse effect. There is a mismatch between those who may be vulnerable to climate change and those who can afford to do anything about it. Why should the rich developed countries care enough about climate change to do anything about it? The answer must depend partly on how expensive it is going to be to do anything about it."

argument 1: " A strong argument for trying seriously to slow climate change is that the developing countries are vulnerable and we care. Developed countries are currently providing $50 billion per year of assistance to the developing world; we would be talking about expending or forgoing perhaps 4-8 times that much to slow emissions and slow climate change."

argument 2: " A second argument for an expensive program of carbon abatement is that, while our production of material goods and services may not suffer from climate change, our natural environment may be severely damaged. Natural ecosystems will be destroyed; plant and animal species will become extinct. Places of natural beauty will be degraded. Valuable chemistries of plant and animal life will be lost before we learn their genetic secrets. And the earth itself deserves our respect. For many people, something close to religious values are at stake."

argument 3: "The third argument for spending heavily to slow climate change is that the conclusions I reported earlier may be quite wrong. I said that the climate models predict that climates will change slowly and not much; the models do not produce discontinuities, surprises, catastrophes."

Increasingly, we find that "green technology" today is far more efficient than in 1992, and an utilitarian reason for developed countries to research and develop such technology should be plausible.

Mitigation of Global Warming
"Stopping or slowing deforestation is important for reasons other than carbon emissions but is quantitatively more important than reforestation. Reforestation is unlikely to take up as much as 100 billion tons of carbon; deforestation, in areas where deforestation is likely, could contribute several hundred billion tons of carbon, partly because forest subsoils contain carbon typically greater than the amount in the trees themselves, and this carbon is subject to oxidation when the trees are removed."

"...First, if in decades to come the greenhouse impact begins to confirm the more alarmist expectations, and if the economic sacrifices required to reduce emissions prove unmanageable for economic or political reasons, some of these "geoengineering" options will invite attention. Second, if they do, and especially if they prove to be within the budgetary capabilities of individual nations, international greenhouse diplomacy will be transformed." - geoengineering options such as carbon capture and sequestration

IHT Business of Green Blog: "...According to Gabriela von Goerne of Greenpeace in Germany, separating the CO2 and pumping it below ground is energy intensive and could create problems for future generations.

Environmentalists like von Goerne also say that funding for developing CCS could be used to improve the efficiency of renewable energies like solar, wind, biomass and geothermal rather than prolonging the use of fossil fuels.

Other environmentalists like Sanjeev Kumar at WWF in Belgium have a radically different view. Kumar says climate unfriendly coal plants are springing up so fast that generators should be forced to buy CCS equipment and start pump harmful emissions underground as soon as possible. ‘‘The growth of coal plants is absolutely scary,’’ says Kumar."

Carbon Taxes/Markets/Quotas

" Financing energy conservation, energy efficiency, and switching from high-carbon to lower-carbon or noncarbon fuels in Asia and Africa would not only be a major economic enterprise, but a complex effort in international diplomacy and politics...The kind of thing we are talking about is inducing the Chinese, through our somehow offsetting their cost, to forgo a massive electrification based on coal and the cheapest coal-combustion technology. Without engaging in blackmail, the Chinese can assert that it is not in their interest to do that at their own expense, even if they are the keystone of a "social contract" and no other nation will do anything unless the Chinese fully participate." - race to the bottom

"A carbon tax sufficient to make a big dent in the greenhouse problem would have to be roughly equivalent at least to a dollar per gallon on motor fuel, and for the United States alone such a tax on coal, petroleum, and natural gas would currently yield close to half a trillion dollars per year in revenue. No greenhouse taxing agency is going to collect a trillion dollars per year in revenue; and no treaty requiring the United States to levy internal carbon taxation at that level, keeping the proceeds, would be ratified by the Senate. Reduce the tax by an order of magnitude and it becomes imaginable, but then it becomes trivial as greenhouse policy." - all the problems of government intervention

" Tradable permits have been proposed as an alternative to the tax. There are two main possibilities: (i) estimating "reasonable" emissions country by country and establishing commensurate quotas or (ii) distributing tradable rights in accordance with some "equitablyÓ criterion, such as equal emissions per capita (a possibility that has actually been discussed). Depending on how restrictive the aggregate of such tradable emission rights might be, the latter is tantamount to distributing trillions of dollars in discounted value and making, for a country like Nigeria, the outcome of its population census the country's major economic policy. If, instead, quotas are negotiated to correspond to every country's currently "reasonable" emissions level, they will surely be renegotiated every 5 or 10 years, and selling an emissions right will be perceived as evidence that a quota was initially too generous. It is unlikely that governments will engage in trades that acknowledge excessive initial quotas."

Politics
"If the developed countries ever manage to act together toward the developing countries, their bargaining position is probably enhanced by the fact that cleaner fuels and more efficient fuel technologies bring a number of benefits other than reduced carbon, and recipients of greenhouse aid will be actively interested parties, not merely neutral agents attending to the global atmosphere. At the same time, large nations like India and China will be aware of the extortionate power that resides in ambitious coal-development projects."

"While the developed countries are feeling their way into some common attack on their own carbon emissions, a tangible expression of their interest and an effective first step would be to establish a permanent means of funding technical aid and technology transfer for developing countries, as well as research, development, and demonstration in carbon-saving technologies suitable to those countries. Eventually the rural Chinese household may cook more efficiently with nuclear-powered electricity, but for another generation or two what is important is less carbon-wasteful ways of cooking and heating."

I feel it is fairly comprehensive of what is happening today - other stuffs we can talk about include the debates over biofuels, the IPCC report, and the Kyoto Protocol.