Monday, December 7, 2009

Causality and Climate Change

I've believed for a while that the debate over climate change is troubled in part because of a slippery grasp of causality. I've been thinking of an analogy to make the point, and Richard Lindzen provides one:
Consider the following example. Suppose that I leave a box on the floor, and my wife trips on it, falling against my son, who is carrying a carton of eggs, which then fall and break. Our present approach to emissions would be analogous to deciding that the best way to prevent the breakage of eggs would be to outlaw leaving boxes on the floor.
What does this have to do with anything? Well, consider the doomesday scenarios being tossed around. The Maldives, for instance, is in threat of ending up under the waves due to rising sea levels. Water wars are supposedly looming in other countries, and so forth.

But the causality here is a little mixed. It's not the case, for instance, that every country faces the threat of going underwater. The Netherlands has set up a fancy water wall that will contain the effects of higher sea levels. The EU will handle any future political turmoil just fine. Climate change will have very different consequences in different places.

So you cannot isolate certain effects, dub them the "result" of global warming, and see carbon cuts as the only solution. Rather, climate change intersects with multiple problems--chief among them poverty, political instability, and bad institutions--that combine to cause further issues down the road. It's by no means obvious that targeting climate change on its own is the best way to address these issues, let alone whether action against climate change is the most cost-effective way to improve welfare in the developing world. All of the problems above will continue to exist whatever the state of the climate; yet we continue to weight deaths due to climate fluctuations far more than deaths due to dysentery and the like.

This is particularly problematic as proposed action against climate change--carbon dioxide reduction in one form of another--harms growth and so destroys economic base necessary to adapt to and mitigate the effects of a warmer world. Back to the Maldives--the government plans to turn the country into a Prius and go carbon-neutral. This is all well and good as a publicity stunt. But it is a waste of resources that comes exactly when the government needs to figure out its climate adaption strategy--throwing up sand bars, buying up land elsewhere, or what have you.

Indur Goklani has an analysis which makes this point clearly. He estimates the GDP per capita in 2100 of developing countries under energy-intensive development with global warming–$72,800–and under a more environmentally friendly regime–$40,200. Ignoring (important) distributional effects, the welfare consequences of enduring lower growth outweight the costs of global warming--even for developing countries.

There is also an incredible amount of status-quo bias in this debate. Can anyone really say that the temperature that prevailed in, say, 1900 was really the optimal temperature for humanity? Is it obvious that a warmer planet is worse; and, if so, wouldn't that imply that a global temperature colder than it is now would be better? Of course a temperature change of any magnitude would change settled patterns and (again) imply distribution effects. Yet a quick scan across America--where temperatures varies substantially without a corresponding variation in income--suggests that climate matters very little in determining the quality of life in a developed economy. Maybe things are different elsewhere. But that's all the more reason for them to develop quickly--something which will be harder for them to do with carbon targets.

I say all of this without questioning the science behind climate change (which Richard Lindzen does) or opposing a revenue-neutral carbon tax. But the broader point is that climate change is crowding out other fruitful tactics for improving the lot of the poor; carbon cuts are crowding out other strategies for dealing with the consequences of climate change; and a focus on reducing emissions by raising taxes ignores other cheap hanging fruit like technology transfers and preventing deforestation.

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