Nordhaus: Why the Global Warming Skeptics Are Wrong

William D. Nordhaus, one of the most renowned scholars on the economics of climate change, has taken the climate “skeptics” to task for misrepresenting his work and climate science in general in a recent article in the New York Review of Books, which is worth quoting at length. Nordhaus’ article addresses 6 questions:

  1. Is the planet in fact warming?
  2. Are human influences an important contributor to warming?
  3. Is carbon dioxide a pollutant?
  4. Are we seeing a regime of fear for skeptical climate scientists?
  5. Are the views of mainstream climate scientists driven primarily by the desire for financial gain?
  6. Is it true that more carbon dioxide and additional warming will be beneficial?

1. Is the planet in fact warming?

Climate deniers like to claim that “global warming stopped in 1998” or similar. Nordhaus does what any serious statistician does, he looks at the long-term trend (see also here).

We do not need any complicated statistical analysis to see that temperatures are rising, and furthermore that they are higher in the last decade than they were in earlier decades….

One of the reasons that drawing conclusions on temperature trends is tricky is that the historical temperature series is highly volatile, as can be seen in the figure. The presence of short-term volatility requires looking at long-term trends. A useful analogy is the stock market. Suppose an analyst says that because real stock prices have declined over the last decade (which is true), it follows that there is no upward trend. Here again, an examination of the long-term data would quickly show this to be incorrect.

2. Are human influences an important contributor to warming?

A second argument is that warming is smaller than predicted by the models … What is the evidence on the performance of climate models? Do they predict the historical trend accurately? Statisticians routinely address this kind of question. The standard approach is to perform an experiment in which (case 1) modelers put the changes in CO2 concentrations and other climate influences in a climate model and estimate the resulting temperature path, and then (case 2) modelers calculate what would happen in the counterfactual situation where the only changes were due to natural sources, for example, the sun and volcanoes, with no human-induced changes. They then compare the actual temperature increases of the model predictions for all sources (case 1) with the predictions for natural sources alone (case 2).

This experiment has been performed many times using climate models. (…) Several modelers ran both cases 1 and 2 described above—one including human-induced changes and one with only natural sources. This experiment showed that the projections of climate models are consistent with recorded temperature trends over recent decades only if human impacts are included. The divergent trend is especially pronounced after 1980. By 2005, calculations using natural sources alone underpredict the actual temperature increases by about 0.7 degrees Centigrade, while the calculations including human sources track the actual temperature trend very closely.

3. Is carbon dioxide a pollutant?

Here I really learned something new. When skeptics say “CO2 is not a pollutant”,

By this they presumably mean that CO2 is not by itself toxic to humans or other organisms within the range of concentrations that we are likely to encounter, and indeed higher CO2 concentrations may be beneficial.

However, this is not the meaning of pollution under US law or in standard economics. The US Clean Air Act defined an air pollutant as “any air pollution agent or combination of such agents, including any physical, chemical, biological, radioactive…substance or matter which is emitted into or otherwise enters the ambient air.” In a 2007 decision on this question, the Supreme Court ruled clearly on the question: “Carbon dioxide, methane, nitrous oxide, and hydrofluorocarbons are without a doubt ‘physical [and] chemical…substance[s] which [are] emitted into…the ambient air.’ …Greenhouse gases fit well within the Clean Air Act’s capacious definition of ‘air pollutant.’”

In economics, a pollutant is a form of negative externality—that is, a byproduct of economic activity that causes damages to innocent bystanders. The question here is whether emissions of CO2 and other greenhouse gases will cause net damages, now and in the future. This question has been studied extensively. The most recent thorough survey by the leading scholar in this field, Richard Tol, finds a wide range of damages, particularly if warming is greater than 2 degrees Centigrade. Major areas of concern are sea-level rise, more intense hurricanes, losses of species and ecosystems, acidification of the oceans, as well as threats to the natural and cultural heritage of the planet.

In short, the contention that CO2 is not a pollutant is a rhetorical device and is not supported by US law or by economic theory or studies.

4. Are we seeing a regime of fear for skeptical climate scientists?

The idea that skeptical climate scientists are being treated like Soviet geneticists in the Stalinist period has no basis in fact. There are no political or scientific dictators in the US. No climate scientist has been expelled from the US National Academy of Sciences. No skeptics have been arrested or banished to gulags or the modern equivalents of Siberia. Indeed, the dissenting authors are at the world’s greatest universities, including Princeton, MIT, Rockefeller, the University of Cambridge, and the University of Paris.

I can speak personally for the lively debate about climate change policy. There are controversies about many details of climate science and economics. While some claim that skeptics cannot get their papers published, working papers and the Internet are open to all. I believe the opposite of what the sixteen claim to be true: dissident voices and new theories are encouraged because they are critical to sharpening our analysis. The idea that climate science and economics are being suppressed by a modern Lysenkoism is pure fiction.

To this I would add that if anyone is being intimidated, it’s climate scientists. For instance, when John Schellnhuber gave a presentation in Australia last year he was greeted with a hangman’s noose. And the perpetrator even bragged about it on video.

5. Are the views of mainstream climate scientists driven primarily by the desire for financial gain?

There is a suggestion that standard theories about global warming have been put together by the scientific equivalent of Madison Avenue to raise funds from government agencies like the National Science Foundation (NSF). The fact is that the first precise calculations about the impact of increased CO2 concentrations on the earth’s surface temperature were made by Svante Arrhenius in 1896, more than five decades before the NSF was founded.

The skeptics’ account also misunderstands the incentives in academic research. IPCC authors are not paid. Scientists who serve on panels of the National Academy of Science do so without monetary compensation for their time and are subject to close scrutiny for conflicts of interest. Academic advancement occurs primarily from publication of original research and contributions to the advancement of knowledge, not from supporting “popular” views. (…)

In fact, the argument about the venality of the academy is largely a diversion. The big money in climate change involves firms, industries, and individuals who worry that their economic interests will be harmed by policies to slow climate change. The attacks on the science of global warming are reminiscent of the well-documented resistance by cigarette companies to scientific findings on the dangers of smoking. Beginning in 1953, the largest tobacco companies launched a public relations campaign to convince the public and the government that there was no sound scientific basis for the claim that cigarette smoking was dangerous. The most devious part of the campaign was the underwriting of researchers who would support the industry’s claim. The approach was aptly described by one tobacco company executive: “Doubt is our product since it is the best means of competing with the ‘body of fact’ that exists in the mind of the general public. It is also the means of establishing a controversy.”

One of the worrisome features of the distortion of climate science is that the stakes are huge here—even larger than the economic stakes for keeping the cigarette industry alive. Tobacco sales in the United States today are under $100 billion. By contrast, expenditures on all energy goods and services are close to $1,000 billion. Restrictions on CO2 emissions large enough to bend downward the temperature curve from its current trajectory to a maximum of 2 or 3 degrees Centigrade would have large economic effects on many businesses. Scientists, citizens, and our leaders will need to be extremely vigilant to prevent pollution of the scientific process by the merchants of doubt.

6. Is it true that more carbon dioxide and additional warming will be beneficial?

A final point concerns economic analysis. The sixteen scientists argue, citing my research, that economics does not support policies to slow climate change in the next half-century …

The skeptics’ summary is based on poor analysis and on an incorrect reading of the results.

The first problem is an elementary mistake in economic analysis. The authors cite the “benefit-to-cost ratio” to support their argument. Elementary cost-benefit and business economics teach that this is an incorrect criterion for selecting investments or policies. The appropriate criterion for decisions in this context is net benefits (that is, the difference between, and not the ratio of, benefits and costs).

This point can be seen in a simple example, which would apply in the case of investments to slow climate change. Suppose we were thinking about two policies. Policy A has a small investment in abatement of CO2 emissions. It costs relatively little (say $1 billion) but has substantial benefits (say $10 billion), for a net benefit of $9 billion. Now compare this with a very effective and larger investment, Policy B. This second investment costs more (say $10 billion) but has substantial benefits (say $50 billion), for a net benefit of $40 billion. B is preferable because it has higher net benefits ($40 billion for B as compared with $9 for A), but A has a higher benefit-cost ratio (a ratio of 10 for A as compared with 5 for B). This example shows why we should, in designing the most effective policies, look at benefits minus costs, not benefits divided by costs.

This leads to the second point, which is that the authors summarize my results incorrectly. My research shows that there are indeed substantial net benefits from acting now rather than waiting fifty years. A look at Table 5-1 in my study A Question of Balance (2008) shows that the cost of waiting fifty years to begin reducing CO2 emissions is $2.3 trillion in 2005 prices. If we bring that number to today’s economy and prices, the loss from waiting is $4.1 trillion. Wars have been started over smaller sums.

My study is just one of many economic studies showing that economic efficiency would point to the need to reduce CO2 and other greenhouse gas emissions right now, and not to wait for a half-century. Waiting is not only economically costly, but will also make the transition much more costly when it eventually takes place. Current economic studies also suggest that the most efficient policy is to raise the cost of CO2 emissions substantially, either through cap-and-trade or carbon taxes, to provide appropriate incentives for businesses and households to move to low-carbon activities.

One might argue that there are many uncertainties here, and we should wait until the uncertainties are resolved. Yes, there are many uncertainties. That does not imply that action should be delayed. Indeed, my experience in studying this subject for many years is that we have discovered more puzzles and greater uncertainties as researchers dig deeper into the field. There are continuing major questions about the future of the great ice sheets of Greenland and West Antarctica; the thawing of vast deposits of frozen methane; changes in the circulation patterns of the North Atlantic; the potential for runaway warming; and the impacts of ocean carbonization and acidification. Moreover, our economic models have great difficulties incorporating these major geophysical changes and their impacts in a reliable manner. Policies implemented today serve as a hedge against unsuspected future dangers that suddenly emerge to threaten our economies or environment. So, if anything, the uncertainties would point to a more rather than less forceful policy—and one starting sooner rather than later—to slow climate change.

The group of sixteen scientists argues that we should avoid alarm about climate change. I am equally concerned by those who allege that we will incur economic catastrophes if we take steps to slow climate change. The claim that cap-and-trade legislation or carbon taxes would be ruinous or disastrous to our societies does not stand up to serious economic analysis. We need to approach the issues with a cool head and a warm heart. And with respect for sound logic and good science.

Related Posts:

Weather Is Not Climate: Neat Graphic Showing Why Short-Term Cooling Doesn’t Mean That Warming Has Stopped

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