Archive for the ‘lomborg’ Category

Lomborg misapplies the "Copenhagen Consensus" to ignore carbon pricing and yet argue for massive government investments in clean energy

September 4th, 2008 No comments

I copy below comments I made on a related thread at Roger Pielke, Jr.’s Prometheus science policy blog, regarding recent duelling op-eds on climate change policy between the left-leaning Danish political scientist Bjørn Lomborg and economist Gary Yohe.

Lomborg has stirred up discussions of environmental issues with his books, The Skeptical Environmentalist (2004) and Cool It: The Skeptical Environmentalist’s Guide to Global Warming (2007), and conceived, organized and directs the Copenhagen Consensus Centre at the Copenhagen Business School, where Lomborg is now an adjunct professor.  Yohe, on the other hand, is a professor of economics at Wesleyan University (Ph.D. Yale), is a leading economist on climate change an one of the Lead Authors of the Intergovernmental Panel on Climate Change (IPCC)’s Third and Fourth Assessment Reports.

At issue in the dust-up between Lomborg and Yohe were discrepancies in interpretation of (1) the conclusions of the 2008 Copenhagen Consensus – by which a panel of leading economists tried to prioritize various government policies for improving welfare in the developing world – and (2) the challenge paper on climate change that Yohe, Richard Tol and others prepared and submitted to the Copenhagen Consensus panel.

My remarks were as follows; for more context, please see Pielke’s post and thread (linked above), as well as his follow-up post (here) (minor edits and emphasis added):

Round 1:

If I may venture a few comments:

“1. It seems to me that Tol and Yohe have a point that Lomborg has confused his readers as to what Yohe and Tol concluded, but fail to focus on the point of confusion – only Roger seems to have caught the drift, but doesn’t identify any responsibility for Lomborg in it.

Lomborg first mentions Yohe as “one of the lead economists of the IPCC” who “For the Copenhagen Consensus … did a survey”. But in concluding what climate policy should be, Lomborg completely ignores the strong recommendation of Yohe and Tol (for a policy that focusses on mitigation, with R&D investments to be primarily market driven and some limited government-funded efforts to aid adaptation in developing countries) for “the best climate solution from the top economists from the Copenhagen Consensus”, without making any effort to clearly distinguish Yohe/Tol from those who voted on the CC ranking.

Says Lomborg, “if we are to find a workable and economically smart solution, we would do well to look at the best climate solution from the top economists from the Copenhagen Consensus. They found that, unlike even moderate CO2 cuts, which cost more than they do good should focus on investing in finding cheaper low-carbon energy. This requires us to invest massively in energy research and development (R&D). Right now, we don’t – because the climate panic makes us focus exclusively on cutting CO2.”

But none of these conclusions can be derived from the Yohe/Tol work, and since Lomborg first refers to them, it is a puzzle that he did not do a better job of distinguishing their conclusions from those of the CC voting panel of economists.

2. The disjunction between Lomborg scoffing at Tickell’s concerns about the immediate and long-term effects of a global average warming by 2100 in the range of 3-4 degrees C (with costs to global GDP of only a few %) and but then nevertheless insisting that climate risks “requires us to invest massively in energy research and development (R&D)” is more than a bit much.

If there’s no serious problem, why should our governments do anything about it? If there is – and a global average temperature increase of 3-4 degrees C sounds EXTREMELY serious to me – why is having governments throw money at the best solution? Why does Lomborg think the CC ranking means we should ignore what the entire economics profession has been telling us for decades about pricing carbon, and about letting private markets determine where investment funds should flow and what other behavior changes are warranted?

3. Lomborg’s assertion that “climate panic” makes us focus exclusively on cutting CO2, at the expense of R&D, is not merely unsupportable but manifests a fundamental misconception – apparently also embedded in the CC process – as to what drives (and who makes) investment in market economies.

Absent a serious concern about climate change, there is simply little justification for government funding of low-carbon energy R&D investments. That we are finally seriously talking about such investments in the US (Warner-Lieberman was full of such pork) is only a result of what Lomborg dismisses as “climate panic”. Clearly, then, mitigation and government R&D funding can go hand-in-hand and in fact are intimately linked.

But the more basic confusion is that R&D of the type Lomborg and the CC calls for is in fact already underway – in the private economy. Because there is really little justification for the government to directly be making such investments, it is wrong to somehow lump this R&D into government expenditures, in the manner that both Lomborg and the CC do. Rather, the vast bulk of such investments can be made by the private economy once carbon pricing mechanisms – which are really a form of factor pricing with respect to what has until now been a valued but unpriced open-access resource – are in place.

For purposes of the CC valuations, the only real governmental cost that should be measured is the cost of establishing measures to administer carbon prices; these can be extremely cheap if carbon taxes are used, or more expensive if politicians prefer opacity and side deals for rent-seekers (cap and trade). In either case, the administrative costs will be much less than the level of private R&D that carbon pricing will elicit from markets.


Round 2:

 “I would agree with davidacoder: the misrepresentation here lies in the silly rules of the CC exercise and the liberties Lomborg takes in describing the conclusions.

The whole premise of the CC is that if governments are going to spend a limited pot of money, what would they spend it on? The economists’ panel recognized the foolishness of this in part by putting Doha at second to the top – and explained that freeing trade costs nothing and in fact improves GDP. Much the same for climate change – although in this case the economists didn’t focus on the question of whose pocket the money was coming from. To pose the issue starkly, if governments imposed and fully rebated carbon taxes, what do the carbon taxes cost the governments? Nothing, but an effective mitigation industry nevertheless springs up. Meanwhile, governments remain free to spend on other priorities.

Of course, an observer might note that if governments DON’T rebate carbon taxes or permit revenues, they actually have MORE revenues to spend on a Copenhagen Consensus agenda, not less.

Accordingly, the CC ranking tells us almost nothing about climate change policy.

Thomas Schelling’s explanation for the low ranking for climate change specifically confirms that they were looking only at government dollars spent, for which one looks at mitigation only if it is the government paying industry/utilities to mitigate:

“The reasons why climate change measures came out so low on the list of priorities are that, for one, the Conference tried to look at cost-benefits, and, for another, its original idea was to rank things in terms of priority for immediate expenditure of money. Therefore, we proposed to eliminate poverty over and above anything else. The trade liberalization ranked fairly high. This was expected, whenever economists got together to talk about a variety of things including trade liberalization. The climate issue became lower ranks, because the paper on climate advocated for the project that stretched out to the year 2250 with the estimated costs to be in many trillions of dollars. We did not see how spending any part of 50 billion dollars on climate change measures would make a difference, although putting way down the list did not necessarily mean that we considered it as not an urgent subject. We put climate way down the list of priorities, because we did not see how spending a little bit of money over next few years would significantly improve the cost effectiveness.”

Further, as I and others have noted, the papers presented and the conclusions of the economists panel certainly don’t tell us, as Lomborg would have it in his editorial, that mitigation strategies “cost more than they do good”. This is a liberty too far, not only from the Yohe/Tol paper, but from Chris Green’s as well. Green specifically suggests using a mitigation-spurring carbon tax to raise the pot of money for government-spent R&D:

“If the $60 billion were raised by a carbon tax, then even a tax with a 25% cost of public funds would stay within the CC budget constraint ($60 + 25(60) = $75 billion). A tax of $4 per ton CO2 on just 50% of the approximately 30 GtCO2/yr (~8GtC/yr) currently emitted would raise 60$ billion/yr. But frankly, if it were politically feasible, I cannot see why we cannot do better by starting with a more robust $8-10/tonne CO2, and then allow the tax to rise gradually over time. To keep within CC ground rules the extra revenues could be used to reduce other taxes that have even higher marginal costs of public funds.”


Round 3:

 “Roger, as to justifications for government R&D soending, I think my main point stands; namely, that Lomborg is wrong to blame “climate panic” and a focus on mitigation for stymieing low-carbon energy R&D investments.

In market economies, it is the private economy that makes investment decisions and drives wealth, not the government. While there is plenty of low-carbon energy R&D investments already underway, one of the the most effective ways to get more research done is to send the market carbon pricing signals. The government may of course decide to drive research by spending for it itself, but this is money that has to come out of the pockets of the private economy.

In either case, the government can only act in a meanful way if politicians are supported by a sufficiently serious concern about climate change. Those who argue for mitigation are NOT getting in the way, but are obviously pushing things along. If Lomborg believes that the best way to move policy along is to bash his putative allies and throw government money/pork to those are blocking policy change, then even while I oppose pork I’d at least be able to understand where he is coming from.

In response to my position that “Absent a serious concern about climate change, there is simply little justification for government funding of low-carbon energy R&D investments,” you argue that “The costs of energy, energy demand, energy security, and non-climate environmental concerns all provide solid justifications for such investments.” In this, apparently I am even more of a “non-skeptic heretic” than you, who take a classic big-government position (hard to say whether your position is liberal or conservative these days, after we’ve just wasted trillions in Iraq on an “energy security” fantasy).

The market addresses all of these concerns well. The only items I have sympathy for are some you haven’t listed – but which Jim Manzi argues for at Cato:

“improved global climate prediction capability, visionary biotechnology to capture and recycle carbon dioxide emissions, or geo-engineering projects to change the albedo of the earth’s surface or atmosphere”

We should leave decisions on particular investments in energy technologies with private markets. Governments will never have more knowledge than markets do, and they tend to give us pork-barrel boondogles instead, like synfuels and corn-fed ethanol.”


Lomborg’s brilliant climate plan: leave GHG externalities alone and let governments spend 0.05% of GDP on picking winning low-carb technologies!

June 29th, 2008 No comments

The folly practically speaks for itself

Why does Bjorn Lomborg think that governments can better determine worthy investments than private firms?  And that such investments should be borne by ordinary taxpayers rather than those who are generating the externalities that are the basis for his concern?  And why does he think governments around the world will each bear their fair share of such expenditures, instead of free riding?

Lomborg’s policies will simply lead to more politically directed pork (wasted money) while doing nothing to discourage GHG emissions or to encourage private investments in GHG-lite technologies. 

h/t Don Boudreaux, who startlingly calls Lomborg’s post “great good sense”!

(Jim Hansen’ “carbon tax – 100% rebate” proposal (noted in my preceding post) – which is much along the lines of the revenue-neutral carbon tax/income tax rebate that kicks in July 1st in British Columbia – makes much more sense than having the government try to micromanage investments and other private decisionmaking.)


Not Climate Change Welfare, But Capitalism and Free Markets

January 21st, 2008 No comments

… is what poor countries need.  So corrrectly argues Keith Lockitch of the Ayn Rand Institute, in a new article that responds to the agreement, by the delegates of industrialized nations at the December climate change conference in Bali, to activate an “adaptation fund” that would help undeveloped nations cope with projected climate change threats (such as disruptions to agriculture and decreased water availability).

But while thought-provoking, Lockitch fails to explore his chief premises and wastes his insights by falling into enviro-bashing – suggesting that failed development is all enviros’ fault, and that these do-gooders want to waste our tax dollars while keeping the poor in their place.  This might gratify his emotions but generates considerably more heat than light.

Lockitch correctly observes that:

  • The world’s poorest can barely cope with day-to-day survival, let alone with unproven threats projected to occur over decades. Imagine having no electricity or access to clean drinking water. Imagine having to cook your meals over an open fire, breathing smoke and ash every day. Billions around the world survive at a subsistence level because they lack the elements of industrial capitalism that we in the developed world take for granted: power plants, factories, modern roads and hospitals, cars, refrigerators, and countless time- and labor-saving devices.
  • What poor countries need is not climate adaptation welfare … ; what poor countries need is to become rich countries. They need to embrace free markets and private property rights and attract the investment of profit-seeking entrepreneurs to create wealth and drive economic growth.”

This last point is Lockitch’s most powerful, as it is clear that it has been corrupt, kleptocratic governance and the lack of clear and enforceable property rights that has hamstrung development in the third world.

However, Lockitch’s analysis is disappointing in several regards:

1.  He fails to explain that “climate change welfare”, in the form of transfer payments to developing nations and funding of particular “adaptation” projects, is just as likely to be wasted and diverted to the pockets of local elites and First World contractors as have been the past several decades of “development aid”.  Clearly, simply throwing good money after bad is no solution.  It is puzzling that Lockitch fails to affirmatively make his strongest case.

2.  He falls prey to “Enviro Derangement Syndrome” and unfairly lays the suggestion of “climate change welfare” at the feet of enviros, even though it has long been a part of the mainstream discussion that developing nations, while being least prepared to cope with climate change and having made only minor contributions to it, are likely to bear the greatest brunt of climate changes. 

Says Lockitch:  

“If environmentalists were really concerned about people in undeveloped countries, they would be helping them to bring about what they really need: industrial development. … Yet, it is precisely the adoption of industrial capitalism by undeveloped countries that environmentalists reject. Not only do they not want poor countries to become rich, they are trying hard to force rich countries to become poor by capping carbon emissions and abandoning industrialization. Despite their feigned concern for the world’s poor, the measures proposed by environmentalists pose a far greater threat than any possible changes to the earth’s climate.”

The charge of pushing “climate change welfare” as a means of keeping developing nations down is a rather grotesque one to lay at the feet of environmentalists, many of who for decades have been working at helping local groups to protect their property rights against governments and powerful elites.

While Lockitch is certainly correct to note the ambivalence that some enviros express regarding to further development in the poorer nations, such ambivalence reflects real problems, as noted below.  But obviously it is governments, and not enviros, who are running the international climate discussions.  “Environmentalists” are certainly players, but that there are plenty of others with agendas of their own surely can’t escape the thinking man’s attention, can it?

Further, “conservative” and “skeptical” analysts like Bjorn Lomborg ( and Indur Goklany ( have also prominently argued that the wealthy world, in lieu of establishing carbon prices at home, should be making investments in helping the third world to adapt and develop.  Even further, libertarian analysts like Jonathan Adler (law prof. at Case U. and blogger at the Volokh Conspiracy) have argued that since the developed nations are chiefly responsible for climate change, they owe an obligation to compensate the developing world for damages (  Adler’s conclusion flows directly from Lockean property rights principles.

In addition, Lockitch’s assertion that “the measures proposed by environmentalists pose a far greater threat than any possible changes to the earth’s climate” is unexplained and unsupported – what measures?  How are they a threat to the world’s poor?  The general shape of the international discussion (and certainly under Kyoto) is that the developed nations will act first, to be followed by developing nations as their wealth (and climate contributions) grow.  How are unilateral actions by wealthy nations to address climate change hamstringing the poor?  The chief policy tool discussed so far – pricing carbon emissions in the developed world – should dampen demand for fossil fuels in the wealthier countries, thereby dampening price pressure and resulting in a net price subsidy to developing nations.  In response to such measures, industry in wealthy nations will develop more efficient energy technologies and reduce the costs of such technologies, for the indirect benefit of the developing nations, which will not shoulder any burdens for their growing carbon emissions until later.  Aren’t these net subsidies to poorer nations?

And far from “forc[ing] rich countries to become poor”, figuring out how to manage a global commons like the atmosphere, while it may have the effect of imposing a cost on the release of carbon, is basically aimed at privatising externalities, with the intention of increasing the efficiency of private transactions and net wealth.  Climate change is, of course, just one of a broad range of pervasive problems that occur when markets encounter resources that are not clearly or effectively owned or managed.

3.  Most importantly, while Lockitch correctly diagnoses the illness – poor countries need to “embrace free markets and private property rights and attract the investment of profit-seeking entrepreneurs to create wealth and drive economic growth” – he simply fails to address what wealthy nations SHOULD be doing, if anything, to assist the cure.  This, of course, is the main dodge, because Lockitch fails to own up to the true difficulties involved in trying to help the developing nations. 

Trying to build “soft” infrastructure in the form of rule of law and property rights (ending kleptocracy and theft of “public” resources) is tremendously difficult – perhaps a problem that is even more difficult than the wealthy nations deciding how to share the pain of GHG reductions (as I noted in comments to a post on Amazonian deforestation here:, the wealthy nations have a hard enough time doing the easiest things to speed development of poorer nations, which is simply to open import markets by removing domestic tariffs, import restrictions and subsidies.  Rather, it seems that the richer nations have to feed their more powerful elites first, while hamstringing competition from poorer nations in products for which they should be able to exploit a comparative advantage.  If Lockitch was truly interested in helping the poor of developing nations, you’d think he’d note how enduring rent-seeking at home serves to keep the poorer nations down.

And if the wealthy nations should do something to help poorer nations, which seems implicit in Lockitch’s analysis (if not conventional aid, then aid to build soft, governance infrastructure), then can’t some of those efforts easily dovetail with efforts to establish carbon pricing in the wealthy countries?  Why couldn’t aid budgets be funded by carbon taxes at home, for example?  And can’t demand for “carbon credits” help to establish incentives to improve governance infrastructure in poorer nations?  In other words, “mitigation” (efforts to limit climate change) in developed nations need not conflict with any efforts to help poorer nations “adapt” to climate change or otherwise become wealthier.

4.  Lockitch asserts that the concern of enviros for the world’s poor is “feigned”, but this is a cheap and unproductive ad hominem – and one that can easily be turned around.  While some enviros may not understand the institutional sicknesses that hinder development, this illness has been fed much more by governments and corporations at home than by enviros, many of who have been involved in the long, hard effort to build local infrastructure and to protect traditional private and community property rights. 

On the other hand, just what is it that evidences that Lockitch himself – or other skeptics – have any “real” concern for the world’s poor?  Does the wheel of this concern ever hit the road, or is it simply spinning noisily, to welcoming nods from  domestic special interests who benefit from the continuation of climate externalities?

A key insight of Austrian economics relating to the environment is that man does not harm the environment per se, but that social welfare or efficiency problems arise because of interpersonal conflict associated with irresolvable inefficiencies – inefficiencies that cannot find a solution in the entrepreneurial workings of the market process because of institutional defects associated with the lack of clearly defined or well enforced property rights.  (See Roy Cordato,  It is both ironic and disappointing that many Austrians and others similarly minded, rather than focussing on the difficult task of conflict resolution in the case of the climate, seem to prefer the emotional rush of conflict itself over analysis and bridge- and consensus-building.  But this is nothing new (and is certainly tempting, given our tribal nature)( 

No one owns the world’s atmosphere, so all are entitled to their opinions about managing it.  And clearly the world continues to struggle with the rapid exploitation of other unowned, “public” or poorly defined or protected physical resources, in the face of growing populations, growing markets and technological advances that lower the costs of access to the commons.  I suggest that rather than ad hominems, we would be better served by frankly acknowledging problems of this nature and starting to build shared understandings.  The writings of Elinor Ostrom are a good place to start:

In honestly engaging on these issues, it is perfectly appropriate – nay, essential – to be aware of the self-interests of various participants and to caution against the problems of rent-seeking, “rent-farming” by politicians, and frequently unaligned incentives of bureaucracies.

5.  Finally, this is a quibble, but Lockitch is wrong to assert thay developing nations need to “industrialize”.  What they need to do is to better govern themselves by protecting investments, markets and human rights, and then getting out of the way of their people.  What results will be these countries’ own path, which will naturally differ from Western industrialization (leapfrogging it in some ways).