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June 10, 2007

 A radical thought experiment in halting climate change

You wake up tomorrow as Tamerlane Asoka Bentham Khan, Princeps et Imperator Mundi, Son of Heaven, Great Inca, King of Kings, Executive Secretary General of the United Nations, Governor for life of the Stare of California, and fellow of All Souls College, Oxford. Sitting down at the jade desk in your palace in Persepolis at 6 a.m - being emperor of the world is no sinecure - you find a file marked "Climate Change". What do you decide?

It is stipulated that you are as benevolent as Asoka, as strictly utilitarian as Bentham, and as ruthless as Tamerlane. Justice, rights, and national feeling are to you just petty foibles of your subjects, and there are few practical limits on your power to coerce obedience to your commands. (I won't bother making this male fantasy gender-neutral).

Let's open the file.

Perhaps something came out of the last meeting of the former G8 leaders, now waiting in justified apprehension in the Hall of Audience to grovel at your feet? This is what they said (my italics):

49. We are therefore committed to taking strong and early action to tackle climate change in order to stabilize greenhouse gas concentrations at a level that would prevent dangerous anthropogenic interference with the climate system. Taking into account the scientific knowledge as represented in the recent IPCC reports, global greenhouse gas emissions must stop rising, followed by substantial global emission reductions. In setting a global goal for emissions reductions in the process we have agreed today involving all major emitters, we will consider seriously the decisions made by the European Union, Canada and Japan which include at least a halving of global emissions by 2050.....
53. ...It is vital that major economies that use the most energy and generate the majority of greenhouse gas emissions agree on a detailed contribution for a new global framework by the end of 2008 which would contribute to a global agreement under the UNFCCC [Rio treaty] by 2009.
In other words, more talk. Not much help there. Let's see what advice the experts give, the climate scientists in the IPCC (page 27 of the executive summary of the fourth report on mitigation of Working Group III) :
20. Decision-making about the appropriate level of global mitigation over time involves an iterative risk management process that includes mitigation and adaptation, taking into account actual and avoided climate change damages, cobenefits, sustainability, equity, and attitudes to risk. Choices about the scale and timing of GHG mitigation involve balancing the economic costs of more rapid emission reductions now against the corresponding medium-term and long-term climate risks of delay [high agreement, much evidence].
High agreement for a tautology? I should hope so. This also amounts to more talk, but with longer words. This caution is excusable; the IPCC are scientists and must preserve their professional credibility at all costs, though without the incessant Republican attacks on them they would surely have been braver.

Can Bentham Khan work it out for himself using the IPCC reports? The choice is between leaving carbon emissions to market forces and adapting to the effects, which will have a cost curve rising with CO concentrations; and curbing the emissions, with a cost curve sloping downwards with higher concentrations. It's a standard Econ-101 X-shaped graph. Where the curves intersect is the least-cost optimum, no?

The second curve for prevention is more or less OK. Put together from IPCC tables SPM 4 and SPM 5 (pp 16, 23 of the Working Group III executive summary - notes and definitions omitted, consult before citing:









Global costs of CO2 stabilization, IPCC 4th assessmentfrom IPCC 4th report
Stabilisation levels (ppm CO2 -eq)Global mean
temperature rise
Change in global CO2 emissions in 2050 (% of 2000)Global reduction in GDP in 2030, median (%)Global reduction in GDP in 2030, range (%)
590 – 7103.2 - 4.0+10 to +600.2-0.6 – 1.2
535 - 5902.8 - 3.2-30 to +50.60.2 – 2.5
445 – 5352.0 - 2.8-85 to -30na<3

What about the cost curve for the impact of inaction? There isn't one. WG II on impacts just says this (executive summary, page 16) :
These observations confirm evidence reported in the Third Assessment that, while developing countries are expected to experience larger percentage losses, global mean losses could be 1-5% GDP for 4C of warming... It is very likely that globally aggregated figures underestimate the damage costs because they cannot include many non-quantifiable impacts.
WG II seems to have been treading water on impact costs since the third report, which offered a range of -0.1 to -2.0 % of global GDP for warming of 2.5C in table 19.4 , based SFIK on four scenarios - WG III's current table of climate sensitivity is based on 177 scenarios! (Note from Bentham Khan to aides - Action This Day - Beef up the social science side of climate research and the IPCC).

Market GDP is a lousy metric. By the principle of diminishing marginal utility, increases in consumption mean a lot in terms of happiness to poor people and countries, but much less to rich people and countries - quite possibly, nothing. As a consistent utilitarian, Bentham Khan must reweight GDP accordingly. The average Costa Rican stands close to world median GNI per capita at PPP so an appropriate unit is the "Costa Rican normalised marginal utility dollar." A unit of American marginal GDP at current prices has lower utility that this and has to be downgraded (at least by half), and African GDP upgraded (at least doubled). Second, GDP leaves out non-market goods like biodiversity, natural beauty, community and heritage; and it's poor for health and education. We would want to include these in any overall welfare index. Third, central estimates of GDP losses from climate change underrate the asymmetric risks of catastrophes. The IPCC doesn't even offer a stab at aggregating these factors; all we can say for sure is that the true cost curve in "normalised marginal risk-adjusted quality-of-life-adjusted Costa Rican utility dollars" is higher and steeper than the market GDP one.

Is Bentham Khan's optimum strategy then to follow the G8 and the IPCC and wait until things are clearer? No; the aggregation difficulty is fundamental and a few years won't solve it; and delay will impose considerable costs by locking in stupid investments in coal, oil shale, and biofuels. The best bet, having read the file, is to pick a target with a pin and order your satraps to get moving. You can always adjust the target later. A maximum 2.5C warming, CO-eq stabilised at 500 ppm, and market GDP costs of 3% by 2030 looks about right. The target can always be corrected later on. To put the cost in proportion, world dictatorship allows Bentham Khan to cut world military spending by three-quarters, saving 1.8% or so of world GDP per year, or 40% of a year's output by 2030.

What about geoengineering : seeding the oceans with iron, fiddling with aeroplane exhausts, and (my favourite) building giant Venetian blinds in space? The IPCC says it's risky and unproven (WG III, page 27). Fair enough, though another Action This Day memo goes out to spend serious money on researching the option. So Bentham Khan should hold it back for plan B, in case things go wrong and the 2.5C warming he allows turns out to be dangerous - after all, the only CO concentration we know is safe for humans is the pre-industrial 300 ppm, with near-zero net emissions.

Bentham's decision-making reflects the only way things can change; and it's roughly how Angela Merkel has proceeded at the G8. The first IPCC quotation above describes an idealised process of policy analysis, not a feasible one of policymaking. Change happens because of will; and anyone who has seen international cooperation close up, as I have, knows that it is even more Nietzschean than national government, as there are fewer common assumptions and values to prop up consensus. Real negotiation takes place reactively, around a driving proposal or vision. Knowing this, Jean Monnet ensured that the EU would have a Commission with an institutional mandate and culture to drive forward European integration. That's both why the EU works, and why it's out of control, as there are few inbuilt checks and no ex-ante limit to integration.

The current health care debate in the USA is welcome but it's an impossible model for climate change. Health care reform will take the form of a set of once-off measures that can be implemented by federal legislation and budgets. It's reasonable to demand that the proposals are detailed, coherent and joined-up. Climate change is complex, world-wide and only partly understood: like unemployment during the Depression, or race inequality in the 1960s. Measures addressing them will start processes that themselves can't be fully predicted: as with a carbon tax, a right to reverse metering, massive research on renewable and fusion energy. On climate change, the models for American politicians should be FDR's New Deal and LBJ's Great Society, driven forward by men who were not wonks - though they listened to them - but visionary, flexible (and none too scrupulous) leaders.

If they fail, I fear the world may spiral into a night of chaos in which the despairing peoples may, as many of them have done before, sacrifice their freedom to a Strong Man. There is zero probability that such a man would be an Asoka, and very little a Bentham or Augustus. What they would likely get would be more like an unvarnished Tamerlane.

Footnote
World military spending is around $1 trn according to SIPRI , or 2.5% of world GDP. Half of this is accounted for by the Pentagon. A generous steady state military budget for a world dictator, excluding one-off demobilisation costs (Augustus' headache), could be:
1 x US Army (0.5 m) = $110 bn. (excludes Iraq)
1 x Indian Army (1.3 m) = $10 bn.
0.5 x US Navy (130 ships) = $64 bn.
0.25 x USAF (1500 aircraft) = $32 bn.
Total $226 bn. Round up to $250 bn.
US data from Pentagon 2007 budget, table 6.3; Indian from here.
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