Global warming debate not over
It is true: the earth is getting warmer. However, contrary to what John Quiggin and friends will have you believe, there is an ongoing debate about the size of the human contribution with some scientists continuing to question the mainstream position that it’s all our fault.
I am not a scientist and so I have nothing to add to the science debate. But science is only half the debate when it comes to global warming (GW) – the other debate is a public policy debate about what to do. I wonder if the scientists will recognise that this is not their area of expertise and leave it to the professional economists and public policy analysts?
At the centre of the current debate about GW policy is the Kyoto protocol. Most studies to date suggest that the costs of Kyoto exceed the small benefits. Supporters of Kyoto respond that Kyoto is just the first step and future steps will have more benefits, but that doesn’t change the benefit-cost ratio because they will also have more costs.
Recently, John Quiggin has suggested that the total cost of stabilising global CO2 levels will be about 5% of GDP. ABARE comes up with a similar estimate. Quiggin considers this a small number, but it sounds big to me.
World GDP is about US$44.4 trillion and 5% of that is about US$2.2 trillion. Assuming 3% world growth and using a 5% discount rate inside a 30 year time limit (standard assumptions), the present value of the economic cost is US$51.1 trillion. Using PPP instead of GDP increases the cost to over US$70 trillion.
Another recent consultancy was more conservative and estimated a present value cost of preventing global warming of “only” US$18 trillion. The authors concluded that this cost was “much greater than any conceivable benefit” from preventing global warming.
And what is the estimated cost of global warming? Robert Watson, World Bank Chief Scientist and IPCC Chair from 1996-2002, suggests that the possible costs from global warming could be “between tens to hundreds of billions of dollars a year” or up to 3 percent lower GDP (US$1.3 trillion/year). Strangely, these two estimates do not match.
Watson goes on to say that “the cost of action is much less than the cost of inaction”, but if we are to believe John Quiggin or ABARE then this is not true.
Further, there has been some suggestion that the costs of global warming have been overestimed by not taking into account the offsetting benefits from global warming. Professor Robert Mendelsohn notes that “warming benefits and damages will likely offset each other until warming passes 2.5C and even then it will be far smaller on net than originally thought”.
None of this is to suggest that the debate is over. We still have a lot to learn about the benefits and costs of global warming and the benefits and costs of possible anti-GW policies, and there may come a time when the evidence unambiguously supports global action. But we are not there yet.
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