Author: Bryan Walker

Krugman on climate economics: uncertainty makes the case for action stronger

Lucidity in an economist is to be prized, and Nobel winner Paul Krugman writes with great clarity in a lengthy article this weekend in the New York Times Magazine headed Building a Green Economy. Is it possible, he asks, to make drastic cuts in greenhouse gases without destroying our economy? I’ll offer a summary of his reasoning here, but strongly recommend reading the whole article if you have the time. He clearly understands the import of climate science, and rightly lets that have full influence in his policy preferences. Economists who haven’t taken on board the seriousness of the prospect the science points to are hardly reliable guides.

“Negative externalities”, says Krugman, are the costs that economic activities impose on others without paying a price for their actions. The market economy does many things well, but left to its own devices it won’t face up to those externalities. The emission of greenhouse gases is a classic negative externality – the “biggest market failure the world has ever seen,” in the words of Nicholas Stern.

What should we do about it?

“Textbook economics and real-world experience tell us that we should have policies to discourage activities that generate negative externalities and that it is generally best to rely on a market-based approach.”

The three approaches Krugman discusses are regulation, pollution taxes and market based emission controls (cap and trade). Each has benefits. Krugman allows that there are times when regulation is a sensible path, but it does not leave the scope for flexibility and creativity provided by the other two. The very scale and complexity of the situation requires a market-based solution, whether cap and trade or an emissions tax.

“After all, greenhouse gases are a direct or indirect byproduct of almost everything produced in a modern economy, from the houses we live in to the cars we drive. Reducing emissions of those gases will require getting people to change their behavior in many different ways, some of them impossible to identify until we have a much better grasp of green technology. So can we really make meaningful progress by telling people specifically what will or will not be permitted? Econ 101 tells us — probably correctly — that the only way to get people to change their behavior appropriately is to put a price on emissions so this cost in turn gets incorporated into everything else in a way that reflects ultimate environmental impacts.

“…A market-based system would create decentralized incentives to do the right thing, and that’s the only way it can be done.”

However he is impressed enough by James Hansen’s arguments that we must stop burning coal to advocate supplementing market-based disincentives with direct controls on coal burning.

He favours cap and trade over emission taxes, pointing out how well the former worked to achieve a significant mitigation of acid rain in the US and at a much lower cost than even the optimists expected. He also considers it politically more feasible because in doling out licensing to industry it offers a way to partly compensate some of the groups whose interests will suffer if a serious climate-change policy is adopted. A tax, on the other hand, imposes costs on the private sector while generating revenue for the government. Which is not to say that there can’t be hybrid solutions.

Part way through his discussions Krugman pauses to make it clear that the science of climate change is for real. He makes three points. First, the planet is warming. Second, climate models predicted this well in advance. Third, models indicate that if we continue adding greenhouse gases to the atmosphere as we have we will eventually face drastic changes in the climate and massively disruptive events.  There is still tremendous uncertainty in long-term forecasts, but that makes the case for action stronger, not weaker.

Can we afford what needs to be done?

Economic modelers have reached a rough consensus that restricting emissions would slow economic growth – but not by much. The Congressional Budget Office, relying on a survey of models, concludes that strong climate-change policy would leave the American economy between 1.1 percent and 3.4 percent smaller in 2050 than it would be otherwise. On a global level the estimates are somewhat lower because of the efficiency gains in energy use possible to emerging economies – between 1 percent and 3 percent.

Krugman acknowledges that there are a number of ways in which the modeling could be wrong. Nobody really knows, for instance, what solar power will cost once it finally becomes a large-scale proposition. But while it’s unlikely that the models get everything right, it’s a good bet that they overstate rather than understate the economic costs of climate-change action. That was the experience with the acid rain scheme. He particularly notes that models do not and cannot take into account creativity.  Surely the private sector will come up with ways to limit emissions that are not yet in any model.

Yet conservative opponents of climate-change policy claim that any attempt to limit emissions would be economically devastating. What has happened to their belief in the dynamism of capitalism?  He thinks they are reacting against the idea of government intervention and indulging in political ploys rather than reasoned economic judgment. Hence their strong tendency to argue in bad faith, willfully misreading the figures.

“The truth is that there is no credible research suggesting that taking strong action on climate change is beyond the economy’s capacity.”

To the objection that the emerging economies won’t participate and therefore there’s no point in limiting emissions in the US, he argues for positive inducements and, if they fail, for carbon tariffs. He certainly doesn’t see the problem as intractable. If the US and Europe decide to move they almost certainly would be able to cajole and chivvy the rest of the world into joining the effort.

The costs of inaction are difficult to estimate. Krugman has a lively sense of the drastic changes which could accompany higher temperatures. We’re reaching levels of carbon dioxide in the atmosphere not seen in millions of years. Nobody really knows how much damage would result from the level of temperatures now considered likely. This uncertainty strengthens the case for action. He agrees with Martin Weitzman that if there is a chance of utter catastrophe, that chance should dominate cost-benefit calculations. Utter catastrophe does look like a realistic possibility. It would be irresponsible not to turn back from what may be the edge of a cliff.

There has been debate as to whether we act with some decisiveness now or build gradually over the century, the big bang or the ramp. Krugman leans toward the big-bang view, represented most notably by Nicholas Stern. Again, it’s the nonnegligible probability of utter disaster that argues for aggressive moves to curb emissions, soon.

On the US political front he’s not sanguine, but thinks there’s some chance that political support for action on climate change will revive.  If it does the economic analysis will be ready.

“We know how to limit greenhouse-gas emissions. We have a good sense of the costs – and they’re manageable. All we need now is the political will.”

A walk on the supply side

 “…we tend to assume that the public are confused because they have a deficit of scientific knowledge, education and cognitive skills. That is to say that they’re scientifically illiterate.”

In these words science historian Naomi Oreskes, speaking with others at a symposium at the recent American Association for the Advancement of Science (AAAS) meeting, depicts the reaction of most scientists to the puzzling gap between scientific knowledge and public perception of climate change. I might add that although I’m no scientist I share the assumption she describes, since it was reading climate science (at the lay level) which made me aware of  the reality of the crisis.

 

She goes on to critique the response of the scientific community:

“So if the problem is a deficit, then the remedy for it is a surfeit. So it seems to me that the scientific community has succumbed to or fallen into or pursued what I would call a supply side response… we try to supply good information with public outreach efforts…And there are many examples of this, but since we’re here at AAAS, one of my favourites is our AAAS Press Room… If you actually read this web page you find it’s filled with fantastic information, but how many people are going to take the time, how many people in the public even know that we have a AAAS Press Room?”

The supply side model has failed.

“…our message has not gotten through to the American people. In fact a completely different message has gotten through which is that scientists are arguing, that there is still a lot of scientific uncertainty, that more research is needed, and that a lot of what we’re seeing can be explained by natural variability.”

She has tried to understand how this message of uncertainty and doubt is the one that has got through to the public and has found that for the past 30 years the American people have been subject to a very organised and systematic campaign to spread that alternative message.  Her forthcoming book, co-authored with Erik Conway, will document the campaign. (The book will be reviewed on Hot Topic.) But in the meantime she offered the symposium an example which the book doesn’t cover.

After the first President Bush signed the UN Framework Convention on Climate Change, Western Fuels, a consortium of coal producers, launched one of many campaigns to challenge the scientific evidence. They did this by hiring a PR firm, a group known as Bracy Williams & Co, and a set of market researchers, Cambridge Reports, to specifically plan a strategy, to test that strategy, and if it were successful, to implement it. The main point of this strategy was to reposition global warming as theory, not fact.

They began with a series of print ads. Oreskes sums up the message of those ads as follows:

“’Who told you the Earth was warming?’ Chicken Little, so there’s your alarmism argument. ‘Some say the Earth is warming, some also said the Earth was flat.’ So scientists are now cast as the opposite, as the anti-science. And ‘How much are you willing to pay for a problem that may not exist?’ That’s an argument that we’ve seen repeatedly over the last 20 years.”

Then they organised public relations tours in combination with this ad campaign

“and a big part of this public relations tour was to get scientists who could appear on TV, so arrange television appearances by sceptical scientists, usually not climate scientists, but people who had what appeared to be relevant credentials.”

Next step was to analyse the results through focus groups, which showed that yes, you could market attitude change. But it worked best if the evidence was presented as facts by technical spokespeople, that is to say people who were scientists or who appeared to be scientists. Therefore that it was essential to recruit scientists to deliver the message.

The scientists were duly found and incorporated into step two of the campaign, the production of a video called The Greening of Planet Earth.  Most of them weren’t climate scientists, but mostly actually agronomists from the US Department of Agriculture making the claim that we know for a fact that carbon dioxide increases agricultural productivity, and in fact not just agricultural productivity but productivity of all plants.

“So it’s a very, very positive message, it’s all good, the scientists are all very kindly-looking, they’re very nice, they’re very calm, and they just tell this good news message over and over again.”

In a weird way, Oreskes comments, the opponents of scientific information have been more scientific than the science community. They studied and tested and built on the evidence they gathered from the testing. More scientific, more organised, more aggressive  The scientific community meanwhile has relied on peer reviewed journals and websites which are too technical for the general public.

People are not confused, she argues, because they are ignorant of the science. They are confused because people have tried to confuse them. Successfully. The misinformation campaigns get reported in the mass media.  The scientists’ responses are made in peer reviewed journals.

What’s to be done? Oreskes raises PR possibilities, but recognises they may not enhance scientific credibility. But at least, she says, since what the scientific community has been doing in the past has clearly not been effective, it might be worth considering some alternatives. Yes indeed, but what?

Oreskes is doing an excellent job of revealing the enormity of what the science has been up against over the past two decades. It certainly isn’t scientific scepticism. But I don’t see any possibility of science matching the kind of organised campaigns that Western Fuels mounted and others have continued. They are highly unethical.  They are cynical and manipulative.  They have no scientific basis.  Those and many other considerations make it impossible for the scientific community to even think of doing battle on that ground.  Science is the only weapon the scientists have.  Not that they have to confine themselves to peer reviewed papers.  These are critical times and it would be good to see more of them entering into the public arena, seeking out journalists, expressing their fears, writing op-eds, badgering editors, publishing books.  But when all is said and done it is only the dawning realisation of the seriousness of the science that will tell against the false assurances of the deniers. It seems to me we’re stuck with that.

Who will rule the waves?

Cleo Paskal, whose book Global Warring was reviewed recently on Hot Topic, has been speaking in New Zealand and left her card by way of an article in the Herald.  In it she focuses on one matter raised in her book – the fate of island nations whose land becomes uninhabitable because of rising seas.  Two small islands have disappeared recently. When Bermeja, in the Gulf of Mexico, disappeared so did the large claim Mexico was making in the hydro-carbon rich waters of the Gulf. No island, no claim, says the US. (Did the CIA blow the island up?) When New Moore Island at the mouth of the boundary river between India and Bangladesh disappeared, so did the competing claims of the two countries for control.

Paskal points out that the problem of land loss potentially leading to maritime zone loss is going to come up more often in the future, especially in the Pacific, and that it is a matter of considerable importance for the inhabitants. Tuvalu is an example of particular relevance to New Zealand.

Continue reading “Who will rule the waves?”

Buying denial: Koch caught in the act

Greenpeace has been digging.  It has unearthed Koch Industries as a major funder of climate change denial groups. A new 44 page report tells the story. It fits well with  their more widely-scoped report Dealing in Doubt to which Gareth drew attention recently.

I was unaware of Koch Industries and, according to Greenpeace, that’s also the case for most Americans.

“This private, out-of-sight corporation is now a partner to ExxonMobil, the American Petroleum Institute and other donors that support organizations and front-groups opposing progressive clean energy and climate policy. In fact, Koch has out-spent ExxonMobil in funding these groups in recent years. From 2005 to 2008, ExxonMobil spent $8.9 million while the Koch Industries controlled foundations contributed $24.9 million in funding to organizations of the ‘climate denial machine’.”

 

The corporation is owned by the Koch brothers, two of the ten richest people in the US. Kansas-based Koch Industries is a conglomerate dominated by petroleum and chemical industries. The report details the roughly 40 climate denial and opposition groups receiving Koch foundation grants in recent years and notes this may be only part of the picture, since direct contributions from Koch family members, executives, or the company itself are not disclosed. Political influence is wielded in other ways as well, including $37.9 million from 2006 to 2009  for direct lobbying on oil and energy issues.

Greenpeace notes that around twenty of the groups Koch Industry supports were involved in the “ClimateGate” story of the supposed malfeasance of the climate scientists involved in the stolen UEA emails.  Between them they set up the echo chamber which repeated and rebroadcast the story, claiming the emails prove a “conspiracy” of scientists and cast doubt on the scientific consensus regarding climate change.

It’s familiar enough ground. What’s new is the major part Koch Industries has played and continues to play in it. The Greenpeace report is further confirmation that climate change denial is firmly grounded in the vested interests of those whose wealth might be threatened by a move away from fossil fuels.  Some of the denial campaign’s foot soldiers may consider that they have genuine intellectual reasons for their denial, but it’s hard to believe that the Koch brothers support is anything other than cynical.

For a short and engaging coverage of the issues involved it’s well worth having a look at this 8-minute video clip on DeSmog Blog.  It’s from the Rachel Maddow show and includes an interview with Jim Hoggan the author of Climate Cover Up. He extends the period covered by the Greenpeace report and says that over 13 years Koch Industries have spent more than $50 million dollars supporting the 40 organisations. Hoggan’s field is public relations.  He comments that the concerted attacks from apparently diverse sources poison public conversation and undermine public confidence in the science.

“The trick in public relations is always repetition…When you pour $50 million into the 40 organisations like this – and Koch Industries isn’t the only funder, Exxon and a number of other groups and companies are funding these 40 climate change denier outfits – that is an incredibly powerful influence over public opinion.”

Journalists still talk solemnly about the “damaged credibility” of climate science in the wake of Climategate.  Big money so far has every reason to be satisfied with the return on their investment in the campaign of denial. Much less expensive than doing science and still apparently more effective. Hopefully there will be an end to it.  James Hansen commented in a recent  communication to his email list: “On the long run, these distortions of the truth will not work and the public will realize that they have been bamboozled.”  But he feels obliged to add: “Unfortunately, the delay in public understanding of the situation, in combination with the way the climate system works (inertia, tipping points) could be very detrimental for our children and grandchildren.”

I often wonder whether these powerful vested interests give thought to the welfare of their children and grandchildren, who will share the common fate in a matter as fundamental as climate change.

Dogged Pearce still hounding Jones

Fred Pearce is a fine one to speak of a rush to judgment. Many of his Guardian articles on the UEA emails did just that. (See Pearced to the Heart and Defending the Indefensible on Hot Topic) Yet that is the accusation he levels at yesterday’s report of the parliamentary committee’s investigation into the matter.  Essentially because, he claims, they avoided investigating the more complex charges such as those raised by him in the Guardianseries.

What he seems most concerned with is that Jones got off lightly.

“The MPs are clear that there are serious issues to address both in climate science and in the operation of freedom of information law in British universities. But in their desire not to single out Jones, they end up bending over backwards to support a man who is the pillar of the establishment they are criticising.”

Here is what the report concluded:

“The focus on Professor Jones and CRU has been largely misplaced. On the accusations relating to Professor Jones’s refusal to share raw data and computer codes, we consider that his actions were in line with common practice in the climate science community. We have suggested that the community consider becoming more transparent by publishing raw data and detailed methodologies. On accusations relating to Freedom of Information, we consider that much of the responsibility should lie with UEA, not CRU.”

Not enough for Pearce.  It lets Jones off too lightly:

“… whatever standard practice may be, surely as one of climate science’s senior figures, Jones should take some responsibility for its misdemeanours? Jones has worked for the CRU for more than 20 years and been its director for six. The MPs found there a “culture of withholding information” in which “information may have been deleted to avoid disclosure.” It found this “unacceptable”. Doesn’t its director take responsibility?”

What does Pearce want?  Resignation?  Dismissal?  The parliamentary committee received submissions, examined Jones, affirmed that it had seen nothing which suggests the science from the CRU is faulty, said Jones should be reinstated and made recommendations for changed practices in  future in the interests of the science being irreproachable.  There are further investigations to come.  Meanwhile the globe continues to warm.  It seems to me that Pearce as an environmental journalist ought to be able to find more useful occupation for his talents than arguing with the verdict of the committee. Jones might have earned a period of respite. The Guardian should call off its dogs.