Saturday, November 4, 2006

The British government released the Stern Review on global warming by Nicholas Stern, a former chief economist for the World Bank. As an economist, I tend to leave this topic to my Cato Institute colleague Pat Michaels, a professor of Environmental Sciences at the University of Virginia. Since Mr. Stern is also an economist, however, the rules of logic and evidence that economists use should also apply to this report.

“Economic forecasting over just a few years is a difficult and imprecise task,” the review cautions, so forecasting technology a hundred years from now “requires caution and humility.” Unfortunately, there is little caution or humility in this report.

The 27-page summary begins by saying, “The current level of greenhouse gases in the atmosphere is equivalent to around 430 parts per million (ppm) CO2, compared with only 280 ppm before the Industrial Revolution. These concentrations have already caused the world to warm by more than half a degree Celsius.”

More specifically, that 54 percent increase of greenhouse gases was apparently associated with a warming of only 0.6 degrees Celsius, give or take two-tenths. Citing a 2001 survey of “high projections” for global warming, however, the report claims that a much smaller, 28 percent increase in greenhouse gases by the year 2050 could result in a “global average temperature rise” exceeding 2 degrees.

Yet if we use the same rule-of-thumb now used to predict 2 to 3 degrees more global warming by 2050, the much larger increase in greenhouse gases ever since 1750-1850 should already have increased the average global temperature by at least 2 degrees. But it didn’t.

Suppose this theory works this time, and the Earth actually warms by 2 to 3 degrees Celsius, putting aside what it means to average Chicago’s winters with Key West’s summers. The Stern report reluctantly concedes that places like Canada, Russia and Scandinavia would likely experience “higher agricultural yields, lower winter mortality, lower heating requirements and a possible boost to tourism.”

Plants thrive in greenhouses, particularly fruits and vegetables. The report claims biodiversity would be at risk, as though no threatened species could possibly benefit from milder winters.

And the report thinks malaria would increase, as though mosquitoes are picky about the climate. My great-grandfather J. Mason Reynolds died of malaria in Grand Rapids, Mich., in 1891.

Naturally, The Washington Post seized this opportunity to complain that “Bush has declined to sign the 1997 Kyoto Protocol.” Yet the United Nations just reported that from 2000 to 2004 greenhouse gas emissions increased 4.6 percent in Canada, 2.4 percent in Europe and 1.3 percent in the United States. Besides, as the Stern report notes, “most future emissions growth will come from today’s developing countries, because of their more rapid population and GDP growth and their increasing share of energy-intensive industries.”

As I have often noted, passenger cars are not nearly as large a share of greenhouse emissions as people think. In fact, this report’s first graph shows transportation accounting for less than 14 percent of greenhouse gas emissions — the same share as agriculture or industry. Trucks, buses and cars account for less than 10 percent of global greenhouse gas emissions. Electricity is a much bigger offender, which must be why Hollywood lefties are infatuated with electric cars.

Two contradictory dogmas of the anti-auto cult are that consumption of fossil fuels will continue to increase just as rapidly as it has in the past and that fossil fuels will become increasingly expensive because we have passed the peak of oil.

If the second prediction were correct, people would find ways to use less oil. Because some of Mr. Stern’s conclusions are “based on simple extrapolations,” however, he must and does argue that the world has “an abundant supply of fossil fuels.” Otherwise, we wouldn’t need thousands of international bureaucrats being bribed to decide which uses of fossil fuels are more meritorious than others, and which “alternative” fuels merit the biggest subsidies.

Mr. Stern’s view of “sensible policies” involves a truly global system of high carbon taxes, tough regulations and generous subsidies “across both developed and developing nations.” Because “low-carbon technologies are currently more expensive than fossil-fuel alternatives,” he would heavily tax cheaper fuels and subsidize expensive ones. A high and “broadly similar price of carbon” throughout the world is apparently to be enforced in some way by the notoriously ineffectual United Nations and World Bank.

The Washington Post described the Stern Review as proof that “failing to curb the impact of climate change could damage the global economy on the scale of the Great Depression or the world wars by spawning environmental devastation.” But such sensational comments about “worst-case scenarios” use strong words to conceal weak logic and nonexistent facts.

For one thing, the disaster scenarios largely depend on unconvincing assertions pretending to link “extreme weather events” — such as “heat waves like that experienced in 2003 in Europe” — to extremely gradual and highly variable changes in the average temperature of many nations. The report says, “The risk of outcomes much worse than expected are very real and they could be catastrophic.” But any outcomes that are “very real” must to some extent be expected in a report claiming to deal in probabilities. And why is there no comparable assessment of outcomes much better than expected (such as the past 200 years)?

There is repeated abuse of the old trick of switching from talking about things that could conceivably happen to things that would happen. Mr. Stern writes that “the temperatures that may result from unabated climate change would take the world outside the range of human experience.”

The most widely reported conclusion of the Stern Review is that keeping a lid on greenhouse gases would cost “only” about 1 percent of world GDP (about $607 billion last year). Yet the fine print says the actual estimates “are clustered in the range of 2 percent to 5 percent of GDP,” with some estimating costs as high as 15 percent of GDP.

There may be something truly informative and original concealed within the 700 pages of the Stern Review, but it does not appear as easy to find as the rough edges.

Alan Reynolds is a senior fellow with the Cato Institute and a nationally syndicated columnist.

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