Volume 25 | Number 3
An Economist Looks at Global Warming
Investing in anticipation of environmental upheaval is a matter of numbers.
Global warming effects are expected to take a long time to appear, and there is great uncertainty about their extent. Moreover, where one sets the “discount rate” for that future damage—if it is discounted at all—will make a huge difference in estimates of its cost. For example, suppose the damage to generations 50 years from now equaled about $2 trillion of their welfare. At a 3 percent discount rate, today’s value for the damage would be about $500 billion; it wouldn’t pay to eliminate those harmful effects on future generations if it cost more than $500 billion to ameliorate the harm through emissions taxes, carbon sequestration, and the like.
Is it fair to future generations to give their welfare less weight than that of present generations? It’s possible that future generations would in fact be better off if those now alive, instead of investing huge sums in greenhouse gas–reducing technologies, invested in capital to be available decades from now. It’s also likely that technologies will continue to improve, including those to help the environment.
—Gary S. Becker,
Senior Fellow, Hoover Institution
More Inconvenient Truths
Al Gore’s film makes global warming seem simple. It isn’t.
The recently published fourth report of the United Nations Intergovernmental Panel on Climate Change leaves little room for skeptics to claim that world temperatures are not increasing and that humans are not at least partly to blame. According to that report, humans are “very likely” to be responsible for rising temperatures. The debate undoubtedly will continue, but, whatever the truth, at least three important questions must be answered if we are to pursue sensible climate change policy. First, which humans are to blame? Second, how cost-effective are the proposed policies? And third, if they aren’t effective, what should we do?
Answers to such questions won’t be readily apparent to those who see An Inconvenient Truth, which sidesteps many inconvenient truths associated with climate change. It ignores Americans’ carbon sequestration. And there is little if any evidence to show that reducing carbon emissions, or even stabilizing carbon concentrations, will affect global temperatures or sea levels in the foreseeable future.
—Terry L. Anderson, Senior Fellow, Hoover Institution and Executive Director, PERC
—Robert E. McCormick, Senior Fellow, PERC and Professor and BB&T Scholar, Clemson University