Testimony before the Subcommittee on Energy and Environment, House Committee on Science, Hearings on the Status of the Global Climate Change Negotiations
by Fred L. Smith, Jr.
November 6, 1997
Good morning, my name is Fred Smith. As President of the Competitive Enterprise Institute, I welcome your invitation to discuss climate change policy. CEI is a public interest group established in 1984 with a current staff of 35 and an annual budget of about $2.5 million. Located in Washington, D.C., CEI works to educate and inform policy makers, journalists, and other opinion leaders on market-based alternatives to political programs and regulations. CEI also engages in public interest litigation to protect property rights and economic liberty. CEI is supported by the voluntary contributions of foundations, corporations and individuals. We accept no grants from any government agency, nor do we accept grants from any other party that would compromise the principled positions we espouse.
CEI is heavily involved in energy, science, and environmental policy -- the primary areas of responsibility of this subcommittee. I co-authored the energy and environment chapter of the book, Market Liberalism: A Paradigm for the 21st Century, and I am the coeditor of the book, Environmental Politics: Public Costs, Private Rewards, which addresses ways in which special interests have used environmental issues to advance their own agenda. CEI also published a book, The True State of the Planet, a positive antidote to the doomsayer volume by Lester Brown and the Worldwatch Institute, The State of the World.
Climate change policy is a major focus of the Competitive Enterprise Institute. Indeed, we have been active in the global warming debate ever since the issue first gained national prominence in the late 1980s. Former CEI environmental studies director Kent Jeffreys published a major monograph on the issue, titled "Why Worry About Global Warming," in February 1991. In 1992, along with the late Dixie Lee Ray, I attended the 1992 Rio Conference as an observer and commentator. Our aim was to give intellectual aid and comfort to greenhouse skeptics in the U.S. and other delegations. Needless to say, our efforts to dissuade the Bush Administration from signing the Framework Convention on Climate Change were less than spectacularly successful. But I remain hopeful that cooler heads will yet prevail in this round. In the past several months CEI has held a full-day conference, conducted a half-day Congressional staff briefing, published nearly a score of op-eds and columns, and participated in numerous media interviews, press conferences, educational symposia, and rallies to challenge the greenhouse orthodoxy embraced by the Clinton Administration. CEI is a member of the National Consumers Coalition, an ongoing coalition of groups organized by Consumer Alert, addressing public policy issues affecting consumers. CEI heads up the Cooler Heads Coalition, a subgroup of the National Consumers Coalition. The Cooler Heads group was formed in May of 1997 to dispel the myths of global warming by exposing flawed economic, scientific, and risk analysis. (See
www.globalwarming.org) The proceedings from our day-long conference will soon be published as a book, titled The Costs of Kyoto: Implications of Global Climate Change Policy. Highlights from that conference will also be released as a one-hour video documentary. On October 5, the day before the White House climate change conference at Georgetown University, CEI ran an advertisement on global warming in the Washington Post. (Attached) We anticipate running radio ads over the next few weeks, and plan to attend the Kyoto conference as an officially-registered non-governmental organization (NGO).
Mr. Chairman, I commend you for holding this hearing. The Clinton Administration is making ambitious plans to restructure the energy economies of America and the world without benefit of the full and candid discussion that ought to precede such visionary proposals. There are risks of global warming, but there are also risks of such global warming policies which we believe are much greater.
OVERVIEW
Former Environmental Protection Agency Administrator William Reilly once quipped that his agency had a "Ready! Fire! Aim!" approach to policy. The global warming debate, alas, provides ample evidence that this tendency is alive and well. Political activists and media spokesmen reinforce this act first, think later bias by emphasizing the possible risks of global warming, while giving little attention to the risks of energy curtailment policies, especially the impacts of such policies on the poor in America and the Third World. Before making any decisions at Kyoto, we should examine these neglected arguments; otherwise, we risk adopting policies which will prove costly, ineffective and unfair.
In December 1997, the nations of the world will meet in Kyoto to seek agreement on a global treaty to withdraw carbon dioxide from the atmosphere by reducing emissions of greenhouse gases. If agreement is reached — and all indications are that Kyoto will produce some form of "binding" commitment, albeit a "small," "modest," "first stop" based on "market mechanisms" — then the environmental establishment, will have achieved its first major victory. Modern Malthuseans have long sought to classify all environmental problems as resulting from a "terrible toos" problem — too many people consuming too many goods and relying too heavily on technology which is too poorly understood. From this diagnosis, the environmental establishment has long argued for curbs on economic and technological growth. Yet these are the very forces which have made possible the major environmental gains of the last century, such as sanitation and the expansion of clean water supplies. Global warming provides the ideal pretext to promote such anti-progress policies. Thus, while global warming itself may or may not pose a threat, global warming policies pose very real threats to our civilization.
Global warming is a possible catastrophe that might befall our planet. But there are others. Only two decades ago, many in the environmental establishment were concerned about global cooling. More recently, astronomers have pointed out the non-negligible risks that an errant asteroid might collide with the earth. And mankind still faces the more prosaic risks of heightened tectonic activity or a new virulent plague. All of these risks are potential; action to fend off any or all of them would be expensive. How then should our democratic society go about allocating resources among these potentially catastrophic risks?
The global warming issue is itself highly complex with major scientific, economic and political uncertainties. Information on all aspects of the topic exists and is gradually improving; still, today, much of this information remains partial and conflicting. What decision procedure should we use in reviewing the conflicting evidence and deciding an appropriate course of action?
Advocates of an international treaty find this an easy question. They invoke the "Precautionary Principle" — any change that might create any risk should be prevented. The use of energy might be warming the earth. That warming might produce catastrophic results. The speed of this change might require immediate action. Governments might be able to prevent that warming by an aggressive global carbon withdrawal policy. That is, the evidence might demonstrate the validity of the global warming hypothesis.
But, of course, one or more of these statements might not be true. Further scientific analysis might find that mankind’s energy use patterns have little impact on the climate and that solar activity or some other factor dominates climate. On balance, we might find that the impacts of warming are positive, that there might be little need for haste, and that the proposed global conservation policies might fail. That is, the evidence might demonstrate that the global warming hypothesis is wrong.
Sequential decision theory suggests one way of addressing such complex policy questions. One begins with an hypothesis — the world is warming — and one collects data and conducts analysis over time (sequentially) to test out that hypothesis. There are two possible choices, either to accept or reject the hypothesis, and thus two possible errors: A Type I error occurs when we reject a correct hypothesis (the global warming advocates have it right and society ignores their advice), and a Type II error occurs when we accept an incorrect hypothesis (the global warming advocates are wrong and we impose needless costs on the world economy). Our challenge is to assess the costs of both error types and weigh each of them. We compare the expected costs and select accordingly. As information is derived on both the likelihood and consequences of the various errors, we are able to make a better decision.
Our decision, of course, depends in part upon what we believe to be the best way to insure ourselves against probabilistic risks. In the global warming area two broad types of insurance have been proposed: a Prevention Strategy and a Resiliency Strategy. The first is the conventional prescription of the Precautionary Principle and is championed by the environmental establishment and its political allies. It would seek to restrict fossil energy use and therefore seek to stabilize anthroprogenic greenhouse gas emissions. Change is the culprit; stop change and we reduce the risk. The second strategy argues that change is best managed by encouraging economic and technological growth. Adaptation or resiliency would best improve the ability of mankind to surmount increased risks. Change is inevitable and rarely predictable; a wealthier more advanced society reduces the risks of unforeseen changes.
To address this issue via sequential decision theory, we first estimate the probability that the global warming hypothesis is or is not true. Probabilities, however, are not certainties and, therefore, we must estimate the consequences of error under both insurance responses. What are the expected costs of a Type I error under both a prevention and resiliency strategy; similarly, what are the expected costs of a Type II error under the two possible responses. Statistical decision theory combines both the likelihood and the consequences of such errors to estimate the expected costs of Type I and Type II error and decides accordingly. If the results are unclear — if our knowledge of either probabilities or consequences is weak — we may wish to defer action while we gain additional knowledge. That delay decision depends, of course, on the costs of acquiring additional information versus the costs of delay itself. In summary, therefore, society has three choices: Accept the global warming hypothesis, reject the global warming hypothesis, or suspend judgment pending better information. This sequential decision process has long been the basis of scientific progress.
The Precautionary Principle can be viewed as a truncated subset of this decision framework. To the Precautionists, the Earth is delicately balanced at the brink of disaster. Any disturbance, always possible given man’s capricious and non-sustainable ways, risks the destruction of our planet, an infinite loss. Thus, Precautionary Principle advocates urge immediate action now. Additional carbon dioxide emissions might be causing adverse climatic change. Therefore, we must reduce these emissions. Only a prevention strategy should be entertained. Whatever costs might be incurred in delaying or blocking economic and technological change may safely be ignored. With great firmness, but little theoretical or empirical basis, they argue that the risks of innovation and economic growth will always outweigh the risks of stagnation. Precautionists have a strong, if reactionary, preference for the status quo.
A more balanced view would first note that the global warming hypothesis is actually a compound hypothesis. For the global warming advocates to be correct, a series of linked hypotheses must all be true. First, man’s increased use of fossil energy must be warming the earth significantly. Second, the impact of such warming must be catastrophic and rapid. Third, energy use reductions must be the sure and certain means of reducing such warming. Finally, for the global warming proponents to be right, the scheme to coordinate global energy use reductions across the world must prove effective. Note that the mere fact that the Earth may be warming or that mankind might be causing this warming resolves little. We would also need to consider whether this warming was imminent and, on net, whether such warming might be harmful or beneficial. Finally, we would need evidence that the global energy reduction strategies now being contemplated would actually prove effective. Clearly, the global warming proponents face a major challenge.
So far, they have not been forced to meet that challenge. Instead of the balanced risk/risk sequential decision theory approach outlined above, we have largely adopted the act first, think later policy mentioned at the outset. Admittedly, politics makes it hard to adopt a balanced and formal approach; still a structured approach is essential if our solutions are not to prove more costly than the problem itself. And that need for balance is even more obvious when both the science and the economics remain uncertain, the need for haste remains unproved. We’re not sure whether carbon dioxide concentration increases or even warming itself would have negative consequences. Nor have we shown that the global warming threat would best be addressed by a prevention rather than a resiliency. Nonetheless, global warming advocates seem eager to rush to judgment — to act rather than to think. Any evidence of change is a clear indication of imminent disaster, which can best be addressed by steep restrictions on energy use.
Precautionists see only one side of the issue. Vice President Gore, environmental activist groups and the renewable energy industry have effectively highlighted the likelihood and potential consequences of a Type I error (the world is facing catastrophic risk and we fail to act). Indeed, in his widely publicized book, Earth In the Balance, Vice President Gore argued that western society’s greenhouse gas emissions constituted an "ecological Kristallnacht" — a clear signal that mankind was destabilizing the planet and that we must move rapidly to curtail fossil fuel consumption. Gore argued passionately that those critical of global warming policies, those urging that we learn more before rushing to judgment, are morally akin to those who remained passive as the Nazis seized power throughout Europe.1 More recently, Interior Secretary Bruce Babbitt suggested that anyone dissenting from the global warming agenda was "un-American."2 The popular culture has reinforced this bias, as illustrated by the dramatic portrayal of the potential consequences of a Type I error presented in Kevin Costner’s multi-million-dollar flop "Waterworld." Many scientists have emphasized the losses that might occur if the earth were to warm quickly and, more recently, several thousand economists cited Type I risks in calling for urgent action on climate change. Type I concerns have also been cited by those business leaders who have climbed on the global warming bandwagon.
There has been far less attention given to the likelihood and consequences of Type II errors (the losses incurred if the global warming hypothesis proves false and we have foolishly slashed fossil fuel use). In many respects, the science, economics, and politics of this issue have all been neglected by the global warming advocates. Over the last decade, much knowledge has been gained about climate, the influence of human activity upon it, and the extent and speed of any induced shifts. We’ve also learned much about the possible consequences of global warming and, at long last, have given some attention to the question as to whether a carbon withdrawal policy would prove effective. The results have generally been reassuring. We’ve become more aware that carbon dioxide increases and temperature increases have beneficial as well as negative impacts. The impacts of global warming, were it to occur, seem now to be less severe and more gradual than once feared. We’ve also gained greater understanding of the difficulty of implementing any carbon withdrawal policy — and the costs, burdens and inequities that such restrictive policies might entail.
Given these trends, the current rush to judgment is especially unfortunate. Our people deserve better. In a world in which information is never perfect, but opportunity costs are inescapable , environmental policy should be determined in the sequential risk-risk framework outlined above. We must consider the likelihood and consequences of Type II as well as Type I errors to decide whether prevention or adaptation offers the superior path. Exhibit I illustrates the sequence of possible outcomes that must be considered. First, there are the science questions: Are man’s activities significantly warming the planet? Second, there are the socio-economic questions: Would such warming be on net catastrophic, neutral or beneficial, and would it be abrupt or gradual? Finally, would the carbon withdrawal strategy proposed by global warming advocates prove effective or not? There are four possible outcomes: Outcome A, the global warming hypothesis is correct; Outcome B, the global warming fears are correct but the carbon withdrawal option fails; Outcome C, man is affecting the climate but the results are slow and/or benign; and Outcome D, mankind is not affecting significantly the climate at all.
The impact of each outcome depends upon the insurance option we have selected. Exhibit 2 summarizes the consequences under each outcome of either a prevention or a resiliency strategy. Note that the prevention strategy favored by the environmental establishment is never an obvious best strategy, even when the global warming hypothesis is right. Even a feasible carbon withdrawal policy might prove a more costly way of addressing the more adverse weather brought about by man’s activities. In the other three possible outcomes, the prevention strategy is clearly inferior to the resiliency insurance strategy. Thus, in summary, while we should be concerned about the risks of global warming, we must also be concerned about the risks of global warming policy!
The Science of Global Warming: Is it Happening?
The first stage of the decision process is to review the science of global warming. As noted in the earlier chapters, in climate science, some facts are agreed upon. The climate of the earth depends upon the energy received largely from the sun via radiation, the amount of that heat retained by the earth because of the greenhouse effect, and the extent to which that heat is distributed vertically and horizontally around the world by air and water currents. Were radiation the only impact on our planet, the earth would be too cold for life. Were radiation and the greenhouse effect the only influences, the planet would be too hot. Additional impacts include convection which moves heat from the earth’s surface to the troposphere where it is radiated into space (via outward long wave radiation). This latter effect reduces the "raw" greenhouse effect and makes our planet habitable.
Most also agree that the concentrations of carbon dioxide and other greenhouse gas levels in the atmosphere have increased significantly over the last century. (Water vapor which constitutes the vast bulk of all greenhouse gases at 90 plus percent is assumed to be constant, although little data exists on this topic.) Carbon dioxide has increased by 28 percent over this period, mostly in the last few decades; other greenhouse gas concentrations have increased as well. Concurrently, most scientists believe there has been a real, but slight (0.5 degrees C), increase in global temperature. However, human-induced increases in carbon dioxide levels cannot easily be linked to this temperature increase. Most of the observed warming (approximately 70 percent) occurred before 1940, while most of the greenhouse gas buildup occurred after 1940. Other trends, of course, may have obscured the warming impact, but the issue remains unsettled. Many temperature measurements are from urban areas that were once rural, biasing the temperature records upward. The less biased and more accurate source of temperature data, the satellite record, available since 1979, shows no temperature increase in recent years. Efforts to relate model predictions to empirical measurements continue but the situation remains unclear.
The computer models which suggest serious temperature changes are evolving rapidly, but still remain crude approximations of the complexities of the energy and material transfer systems that determine weather. Current computing capacity limits the "unit" of analysis to a very large volume of the atmosphere, rendering the models less useful for regional weather analysis. Moreover, the treatment of factors known to be key to climate remains weak. For example, the variability of solar radiation which some believe may well explain (without recourse to any greenhouse theory) most of the temperature variation of the last century is largely ignored. Water, which scientists increasingly recognize as the critical variable in the climate determination game, is handled unimaginatively. Dynamic interaction effects such as how warming might impact upon the amount, distribution and state (liquid, gaseous, solid) of water in the atmosphere are also addressed in rather rigid ways. Some have argued that the additional surface warming suggested by carbon dioxide increases would increase ground-level moisture levels and increase the strength of convection currents which move heat from the surface to the troposphere. The efficiency of out-radiation of heat there is influenced strongly by the dryness of the tropospheric air masses. If the overall impact of surface level warming is a less moist troposphere, then much of any initial greenhouse warming impact might be offset; if the effect is a moister upper atmosphere, then we might anticipate greater warming. Current models simulate these critical relations only imperfectly. For such reasons, Option D (mankind is not significantly affecting global climate) seems highly likely. And, if so, there is little reason to engage in any further discourse.
The Economic Impacts of Global Warming: Should We Worry?
The second phase of the decision process addresses the "so what" question. Even if the scientific evidence were to suggest that man-induced global warming were a certainty, this would decide little. It is not temperature change per se that triggers the global warming concern, but rather views as to how such changes will affect our planet. Warmer weather will certainly have benefits — lower heating bills in the winter and greater agricultural productivity — but some argue it will also increase the frequency and/or severity of hurricanes or floods. Hurricane Andrew and the Mississippi-Missouri floods were disasters of unanticipated magnitude, and we should clearly be concerned if the frequency of such disasters is likely to increase. Here, however, the evidence remains so inconclusive that even the report of the UN Intergovernmental Panel on Climate Change stated, "Overall, there is no evidence that extreme weather events, or climate variability, has increased, in a global sense, through the 20th century, although data and analyses are poor and not comprehensive."3
In fact, warmer weather may well be better weather. Evidence for this may be found in the terminology used by the English climatologist Hubert H. Lamb to label the two warmest periods of the last ten thousand years — the Climate Optimum around 5000 to 1000 B.C. and the Little Climate Optimum around 800 to 1200 A.D.4 Recent historical research by Dr. Thomas Gale Moore provides further evidence that warmer weather correlates well with better times.5 Such findings are compatible with current climate change theories, which suggest that if warming occurs, it will largely occur at night, in the winter, and at higher latitudes. Such a warming pattern would likely lengthen growing seasons and, by reducing temperature variations over time, tend to reduce extreme weather events. Furthermore, higher levels of carbon dioxide increase plant growth and thus increase agricultural output.6 Thus, it is not clear that global warming is something that should be prevented, even if it were easy and cost little. Spending money to avoid better weather makes little sense.
CONTINUED
