[updated] A great new post by libertarian Ron Bailey of Reason here:
Congratulations to Al Gore
But be wary of the man’s proposed solutions for global warming.
Ronald Bailey | October 12, 2007
http://www.reason.com/news/show/122960.html
1. Here are some excerpts (emphasis added), followed by a copy of my comments over at Reason:
[Gore is] wrong to characterize global warming as a moral and spiritual problem. Man-made global warming is not some kind of environmental sin. It’s just another commons problem that has emerged as human civilization continues to develop. Most environmental problems arise in what are called open-access commons. That is, people pollute air and rivers, overfish lakes and oceans, cut down rainforests, and so forth because no one owns those natural resources and therefore no one has an interest in protecting them.
The point is clearest in the case of tropical forests and fisheries. No one owns the forests or fisheries, so anyone may exploit them. No one has an incentive to leave any trees or fish behind because, if they do, someone else will harvest them and get the benefits for themselves. In other words, those who immediately benefit from exploiting the resource do not bear the long-run costs of its ultimate destruction. This mismatch between benefits and costs is a recipe for disaster. Similarly, no one owns the global atmosphere, so there is no incentive for anyone to protect it from various pollutants, including greenhouse gases that tend to raise average global temperatures.
Generally, humanity has solved environmental problems caused by open-access situations by either privatizing the relevant commons or regulating it. …
As a skeptic of government action, I had hoped that the scientific evidence would lead to the conclusion that global warming would not be much of a problem, so that humanity could avoid the messy and highly politicized process of deciding what to do about it. Although people of good will can still disagree about the scientific evidence for climate change, I now believe that Gore has got it basically right. The balance of the evidence shows that global warming could well be a significant problem over the course of this century. …
Yale economist William Nordhaus … calculates that the optimal policy would impose a carbon tax of $34 per metric ton carbon in 2010, with the tax increases gradually reaching $42 per ton in 2015, $90 per ton in 2050, and $207 per ton of carbon in 2100. A $20 per metric ton carbon tax will raise coal prices by $10 per ton, which is about a 40 percent increase over the current price of $25 per ton. A $10 per ton carbon tax translates into a 4 cent per gallon increase in gasoline. A $300 per ton carbon tax would raise gasoline prices by $1.20 per gallon. Following this optimal trajectory would cost $2.2 trillion and reduce climate change damage by $5.2 trillion over the next century. …
Man-made global warming is an economic and technical problem of the sort that humanity has solved many times. For example, forests are expanding in rich countries because they have well-developed private property rights. Also in rich countries, regulations have helped once polluted rivers and lakes to become clean and have drastically cut air pollution. One of the keys to solving environmental problems is economic growth and wealth. …
In any case, global warming is not the result of environmental sin; it is the result of human progress creating another commons problem. … I have no doubt that man-made global warming is an economic and technical problem that an inventive humanity will solve over the course of the 21st century.
Still, congratulations are in order to Al Gore for being recognized by the Nobel committee for his persistence in trying to get humanity to pay attention to this new commons problem.
2. Here is a digest of my comments to Ron:
Basically, a great post, but I’ve got a few small quibbles.
1. You were right last year when you said that “In the end, the debate over global warming and its obverse, humanity’s energy future, is a moral issue.”
http://www.reason.com/blog/show/113924.html
2. I share your understanding of the economics and institutional problem and agree that a straightforward explanation of these is important for very many.
3. However, you forget what evolutionary psychology, Ostrom and Yandle have explained to us so well about how our innate moral sense drives and underpins mankind’s success as a species by enhancing our ability to cooperate and to overcome commons issues.
Ostrom: http://conservationcommons.org/media/document/docu-wyycyz.pdf
Yandle: http://www.fee.org/publications/the-freeman/article.asp?aid=4064
Our long history of developed rules and institutions (informal and formal now overlapping) are based on our moral sense and the effectiveness of these rules depends critically on our moral investment in accepting their legitimacy – witness our views on murder, theft, lying and “not playing by the rules” – and in voluntarily complying with them.
Our moral sense reinforces our judgments about when rules/institutions are not working and the need to develop new ones in response to changing circumstances and new problems. When we see a problem that we think requires change, it is unavoidable that we respond to the status quo, the behavior of people within it and the need for change with a moral sense.
This is simply a part of our evolutionary endowment. (Of course, other parts of our endowment accentuate our suspicions of smooth talkers and help us catch free riders and looters and to guard against threats from outsiders.)
4. Accordingly, while it’s unclear how deliberate Gore’s talk of “a moral and spiritual challenge” and “lifting the global consciousness” is or whether this is a productive approach for some people, I think it is fairly clear that, in order to build consensus for a solution to the climate commons problem (and other difficult commons problems) and to ensure that any agreed solutions are actually implemented, we will need to bring our moral senses to bear.
In other words, it is RIGHT to worry about climate change, but no meaningful/effective “solution” can be reached or implemented unless it is FAIR and the parties involved have sufficient TRUST (backed by information) in each other.
5. You have understated the AGW problem, especially in light of the inertia both in our energy systems and in the climate, the long duration of CO2 and other GHGS, and the rapidity with which the climate is already changing – faster than even this year’s IPCC reports: http://www.carbonequity.info/docs/arctic.html
6. It is surprising that in referring to Nordhaus you have not indicated the ways in which it seems clear that Nordhaus has understated the costs and risks of climate change and the utility of acting sooner rather than later, as noted by Weitzman, Sterner & Persson, Quiggin and others, or that by “revenue recycling” as noted by McKitrick we can substantially reduce the costs of carbon abatement policies.
http://www.economics.harvard.edu/faculty/Weitzman/papers/JELSternReport.pdf
www.rff.org/Documents/RFF-DP-07-37.pdf
http://johnquiggin.com/index.php/archives/2006/11/17/stern-on-the-costs-of-climate-change-part-1/
http://www.uoguelph.ca/~rmckitri/research/co2briefing.pdf
7. You fail to note that while there are real costs to our economies to build climate change institutions, once established in principle any resulting carbon pricing reflects real costs and is not a “cost” to the economy.
8. It is a puzzle that you did not note that the most powerful way to call forth the investment and behavior changes that would help us to “find a cheap, low-carbon source of energy” and to limit GHG emissions would be to find ways that would effectively price GHG emissions.
9. Finally, one further comment on this:
“One of the keys to solving environmental problems is economic growth and wealth. … So keep in mind that anything that unduly retards economic growth also retards ultimate environmental clean-up, including global warming.”
Not sure what you’re driving at here.
As far as developing countries go, efforts by Western nations to address climate change are actually net subsidies to them (by dampening Western demand for fossil fuels) and are providing incentives and investment for growth.
And as for Western economies, at least in principle internalizing externalities by enclosing commons (that have provided value which has not been factored into GDP) doesn’t retard economic growth, but enables it by forestalling the destruction of resources, permitting greater wealth-generating private transactions and reducing inefficiency.
There are just a few small problems – even within the developed world (and very clearly outside of it), there are many important resources that are unowned and thus not fully priced in the “market” economy.
Unowned resources include almost all of Nature. Primary productivity (the amount of vegetation produced from photosynthesis) has changed little, so as we use technology and our organizational abilities to divert more and more of it to feed us, this is an inevitable cost to other species, either directly or in the form of altered environments that support less life (and less diversity of life).
In altering our environments to suit us, we are of course no different from other life forms that compete for resources to live and propagate, but with our technical and organizational abilities, mankind has clearly triumphed over the rest of nature (except perhaps evolving microbes, to whom we represent an increasingly large and relatively untapped food source). But at what cost?
Through the centuries we have wiped out many wild systems of food and other resources – because they were never owned, and because our improving technology enabled us to race each other to take the resources before others (or from others, in the case of many native peoples). Not only Jared Diamond`s “guns, germs and steel”, but also forms of social organization have played deciding roles in the competition between human societies for survival, growth and dominance. In this regard, societies that recognize and protect property rights internally and utilize free markets have proven clearly superior in the competition with other societies to obtain and utilize available resources.
But our struggle has been not only to capture resources and to use them before others do, but also to manage and protect them effectively. Evolving ownership systems have been a key means of limiting wasteful “tragedy of the commons” struggles (see Yandle; von Mises), but even where ownership systems have been implemented, we have generally replaced complex natural systems with simpler systems designed solely to feed us (and particularly so where, due to higher consumptive demand, we have replaced common property systems with private property systems (Ostrom)).
Meanwhile, virtually all of the natural world – the world’s oceans, atmosphere, tropical reefs, tropical forests and other great commons – remain unowned and thus unmanaged and unregulated (or indigenous occupants have been forced aside). For example, the great cod fishery off of the Grand Banks that fed Europe for centuries has now disappeared, and other fishery stocks worldwide are crashing – to be “replaced” by “farmed” fish that are fed to a substantial degree by catching and grinding up fish stocks that humans prefer not to consume directly, and in part by fish firms that are established by destroying the mangroves that are estuaries to various fisheries. The same is true of the replacement of vast tracts of tropical forests with soybeans or oil palm plantations, with the rapid increase in atmospheric CO2 (and attendant risks to climate) and with the correspondly geolologically rapid increases in ocean acidification (and threats to plankton, corals and shellfish).
While populations in the developed economies are now relatively stable, demand from our markets (as well as the burgeoning developing markets) continues to strip out unowned (or mismanaged “public”) resources from the oceans or undeveloped countries, aided by kleptocratic elites who are happy to steal from the peoples they supposedly represent in order to line their own pockets.
As Dan points out, property rights failures in poorer nations contribute to population growth there by delaying the demographic transitions that we have experienced. Developed economies face similar problems with respect to “public”, state-owned lands, for which rent-seeking by and sweet deals to insiders are enduring problems and sources of politcal conflict (as markets cannot work to allocate resources).
Dan states that the stunningly rapid growth of human populations from the Renaissance to the present (6+ billion now expected to nearly double again soon) “actually represents the rise of capitalism and capital development … [and] shows … the stunning capacity of freedom to provide for the whole world.” While partly correct, this misses completely the question of our massive impact, within a very short period of geological time, on the environment in which we evolved over millions of years, the fact this has occurred because clear and enforceable property rights have not been created in many of the resources that have been consumed, and the corollary fact that we continue to lack the ability to manage our impact on our endowment of natural resources.
The market clearly does NOT send accurate pricing signals with respect to goods that are unowned or ineffectively owned; these goods are either unpriced or underpriced, so the effect is overconsumption until the point that the resource is greatly degraded, at which point attention is turned to the next unowned resource. Thus, human populations are responding to rather imperfect market signals. And where resources are unowned, individuals and groups with differing values and desires cannot adjust or realize those desires by means of private, market transactions. As a result, we are seeing a recourse to the public and political arenas – and the inevitable discordant debates – as various parties seek to use either moral suasion or the levers of government (locally, nationally and internationally) to advance what they consider to be their own interests. (Of course, in a “tragedy of the commons” situation, all resource users share an interest is the future availability of a resource; the difficulty is in the prisoners’ dilemma negotiations at the primary user level about how to allocate short-term pain in the interest of long-term gains, compounded in the case of multinational resources by rent-seeking with each national participant.)
A cynic may say that our ongoing assault on nature is only “natural”, presents no moral or philosophical issues and that we hardly owe any responsibilities to “nature” or even “future generations” – so let’s just all keep on partying, consuming for today, and patting ourselves on the back at how marvelous our market systems are. And that we should keep on hurling invective at those evil “enviros” who want to crash the party and drag us all back to the Stone Age.
Perhaps I suffer from a want of sufficient cynicism.
TT