The sceptical economist
Danish statistician and environmentalist-sceptic, Bjorn Lomborg, has just published a new book, “Cool It - The Skeptical Environmentalist’s Guide to Global Warming” (Knopf, 2007). From the book’s blurb:
“Bjorn Lomborg argues that many of the elaborate and expensive actions now being considered to stop global warming will cost hundreds of billions of dollars, are often based on emotional rather than strictly scientific assumptions, and may very well have little impact on the world’s temperature for hundreds of years. Rather than starting with the most radical procedures, Lomborg argues that we should first focus our resources on more immediate concerns, such as fighting malaria and HIV/AIDS and assuring and maintaining a safe, fresh water supply-which can be addressed at a fraction of the cost and save millions of lives within our lifetime. He asks why the debate over climate change has stifled rational dialogue and killed meaningful dissent.”
The book has been reviewed in the scientific journal Nature by Partha Dasgupta, professor of economics at Cambridge University (Vol 449, 2007-09-13, pages 143-144, behind a sub-wall). Dasgupta’s main criticism of Lomberg’s book is that it applies a linear analysis to what is an extremely non-linear system. Indeed, the earth’s climate is a complex, adaptive system, whose sum is greater than the interaction of its parts. Likewise, the economy, and even more when the two are considered together. Lomberg appears not to recognize this.
Some excerpts from Dasgupta’s damning review:
“He doesn’t question the science, which says that rising concentrations of greenhouse gases in Earth’s atmosphere are affecting our climate system; he questions whether we should do much about it. If “The Skeptical Environmentalist” was the relentless prosecuting counsel, “Cool It” is the hard-headed but caring economist.
The book is a series of exercises in cost–benefit analysis, interspersed with quotes on climate change from the writings of famous people who should know better than to speak in hyperboles. Lomborg produces figures to show that it would be better to replace the Kyoto Protocol with strategies that encourage economic growth and blunt the harmful
effects of climate change.. . .
Lomborg reports that Kyoto’s annual cost would be $180 billion in foregone output, whereas the smart strategies he outlines, which would include an annual expenditure of $25 billion on research and development in clean technologies, would cost a mere
$52 billion a year. By his reckoning, those strategies would limit the rise in concentration of carbon dioxide to 560 parts per million (p.p.m.) and the accompanying temperature rise to 4.7 °C. Smart strategies would cost far less than Kyoto, deliver higher economic growth worldwide, and markedly reduce poverty. From the vantage point of Kyoto, there is a free lunch to be had wherever you look.. . .
Unfortunately, Lomborg’s thesis is built on a deep misconception of Earth’s system and of economics when applied to that system. The concentration of CO2 in the atmosphere is now 380 p.p.m., a figure that ice cores in Antarctica have revealed to be in excess of the maximum reached during the past 600,000 years. If there is one truth about Earth we all should know, it’s that the system is driven by interlocking, nonlinear processes running at different speeds. The transition to Lomborg’s recommended concentration of 560 p.p.m. would involve crossing an unknown number of tipping points (or separatrices) in the global climate system. We have no data on the consequences if Earth were to cross those tipping points. They could be good, or they could be disastrous. Even if we did have data, they would probably be of little value because nature’s processes are irreversible. One implication of the Earth system’s deep nonlinearities is that estimates of climatic parameters based on observations from the recent past are unreliable for making forecasts about the state of the world at CO2 concentrations of 560 p.p.m. or higher. Moreover, the nonlinearities mean that doing more of a bad deal (Kyoto) may well be very good.
These truths seem to escape Lomborg. His cost–benefit analysis involves only point estimates of variables (interpreted variously as ‘most likely’, ‘expected’, and so forth), implying that he believes we shouldn’t buy insurance against potentially enormous losses resulting from climate change. His concerns over the prevalence of malaria, undernutrition and HIV in today’s world show that he is an egalitarian. There is, then, an internal contradiction in his value system, because if you are averse to inequality you should also be averse to uncertainty.
The integrated assessment models of Earth’s system on which Lomborg builds his case are arbitrarily bounded on either side of his point estimates. It can be shown that if those bounds are removed (as they ought to be), even a small amount of uncertainty — when allied — would imply that humanity should spend substantial amounts on insurance, even more than the 1–2% of world output that has been advocated. If the uncertainties are not small, standard cost–benefit analysis as applied to the
economics of climate change becomes incoherent, even if those uncertainties are judged to be thin-tailed (gaussian, for example); this is because the analysis would say that no matter how much humanity chooses to invest in protecting Earth from passing through those later tipping points, we should invest still more.Economics helps us to realize what we are able to say about matters that will reveal themselves only in the distant future. Simultaneously, it helps us to realize the limits of what we are able to say. That, too, is worth knowing, for limits on what we are able to say are not a reason for inaction. Lomborg’s seemingly persuasive economic calculations are a case of
muddled concreteness.”