SCIENCE:
More Inconvenient Truths

By Terry Anderson and Robert McCormick

Al Gore’s film makes global warming seem simple. It isn’t. By Terry L. Anderson and Robert McCormick.

The debate undoubtedly will continue, but whatever the truth, at least three important questions must be answered if we are to pursue sensible climate change policy. First, which humans are to blame? Second, how cost-effective are the proposed policies? And third, if they aren’t effective, what should we do? As we explain, the answers to all three questions depend heavily on how robust the world’s economies are.

Most people assert that rich countries, especially the United States, are to blame for global warming because they produce the most and emit the most greenhouse gases. That is true, but gross emissions are not what they first appear.

To understand why gross emissions don’t tell the entire story, imagine two people of equal age, height, sex, and weight. Individual A consumes 4,500 calories a day and individual B 2,500 calories a day. On the basis of gross consumption, one might conclude that A is eating too much and will get fat. Now suppose that A is a marathon runner and B is an office worker in a wheelchair with little ability to undertake physical exercise. Without subtracting calories burned from calories consumed, we can’t make predictions about whether a person will or will not gain weight. Gross intake is only half the equation.

And the same is true for gross greenhouse-gas emissions. It is true that U.S. emissions have grown exponentially for at least 100 years, but, by itself, this is not cause for concern about or blame for global warming. As we have produced more, we have burned more carbon. But gross emissions tell us little without subtracting carbon that has been tied up—sequestered—by the economic engine emitting all that gas in the process.

There is little evidence—indeed, we can find none—to show that reducing carbon emissions or even stabilizing carbon concentrations will affect global temperatures or sea levels.

What are the net emissions—gross emissions minus sequestration—that result from the overall production process? For example, the farmer’s tractor planting cotton seeds surely emits carbon dioxide, but the cotton seeds take up carbon as they grow, and the cotton cloth produced from the seed sequesters carbon at least temporarily and perhaps even permanently, depending on what happens to the cloth. Similarly, a growing tree consumes carbon from the atmosphere, and the two-by-fours cut from it sequester that carbon when they are used to build homes. Instead of accusing the person who builds a second or third home of consuming too many resources, perhaps we should give him or her a sequestration award. Carbon sequestration is just as much a natural product of many commercial, industrial, and even recreational activities as carbon emissions.

At any given time, the question is: which are greater, emissions or sequestrations? The top line in figure 1 shows tons of carbon emitted per capita in the United States over the past 40 years. Note that at least for the past 25 years, there has been no growth in emissions per capita. This, to many who have read and admired An Inconvenient Truth—and approved of Al Gore’s Oscar-winning documentary—is just one of many other inconvenient truths (IT) associated with climate change.

Figure 1 Gross and Net Carbon Emissions in United States, Per Capita Sources: PERC, Carbon Dioxide Information Analysis Center; data available from authors: tla@perc.org, sixmile@clemson.edu

At least two factors contribute to constant gross emissions per capita. The first is that the United States has shifted the emissions from our local nest to foreign ones—a global example of the NIMBY (not in my backyard) phenomenon. For example, environmental regulations in the United States have pushed cement production to places such as China or Mexico. The result of converting limestone to cement in those places means that carbon is being released there rather than here. In the case of greenhouse gases, however, everyone’s backyard is the same. A second factor is better and more efficient technologies, be they mandated or market driven. Hence our electricity generation, light bulbs, automobiles and so on emit less carbon per person.

Consider now how much carbon is sequestered each year in the United States. Data originally published in You Have to Admit It’s Getting Better: From Economic Prosperity to Environmental Quality (Hoover Press, 2004) show that Americans sequester nearly 40 percent of the carbon they emit. Though the world, ourselves included, has flagellated us for our carbon emissions, when carbon sequestration is subtracted from gross carbon emissions, as shown by the lower line in figure 1, our economic engine removes (as suggested above in cotton or lumber) a large amount of carbon. Certainly this has not been true for the whole of the Industrial Revolution, but for the past four decades, American ingenuity and efficiency have been increasing the amount of carbon sequestered, thus offsetting a significant portion of U.S. emissions. Another IT.

A tree consumes carbon from the atmosphere, and the lumber cut from it “sequesters” that carbon in a new home. Perhaps the person who builds a second or third home should be given a sequestration award.

Examples of sequestration abound. For instance, because genetically modified “Roundup ready” cotton seeds and other crops require less tilling, less carbon is disturbed in the topsoil and therefore less is released into the atmosphere. Similarly, landfills as they are managed in the United States are enormous carbon sinks because the waste deposited there does not decay very much or very rapidly. For example, newspapers from early in the twentieth century have been dug up and found in virtually the same condition as when they were dumped. These newspapers are sequestered carbon that was, before the tree grew, in the air.

The data underlying this conclusion teach us another important point about economic growth and carbon emissions. Many environmental measures such as the cleanliness of water and air deteriorate in the early stages of economic development and then improve as the growth proceeds. This phenomenon is known as the “environmental Kuznets curve,” named after Simon Kuznets, who won the Nobel Prize in economics for his work on income distribution. Plotting measures of environmental quality against gross domestic product shows that environmental quality generally improves with economic growth. Much of the sequestration we observe in the United States comes about because we are wealthy enough to grow more trees, till soil more efficiently, and dump our waste in sealed landfills.

None of this, however, detracts from the IPCC conclusion that warming is occurring and that humans may be part of the cause. Moreover, even if the United States continues increasing its sequestration and even if we were to approach net-zero emissions, greenhouse gas emissions in the rest of the world will most certainly exceed sequestration for a long time, because most of the world is a long way from achieving the efficiency and wealth of the U.S. economy.

But doesn’t this imply that the United States should reduce its gross carbon emissions? After all, if the United States could reduce emissions and continue increasing sequestration, shouldn’t this reduce the chance of warming? And here is yet another IT; there is little evidence—indeed, we can find none—to show that reducing carbon emissions or even stabilizing carbon concentrations will affect global temperatures or sea levels in the foreseeable future.

No matter how we got here or where we are now, Americans are not currently putting enough carbon in the air to make any discernible difference in the climate.

Perhaps the best estimates of carbon reduction and stabilization are those of T. M. L. Wigley, a climatologist with the National Center for Atmospheric Research. In 1998, he concluded in Geophysical Research Letters that the impact of reducing carbon emissions to 5 percent below 1990 levels as called for in the Kyoto Protocol “would be undetectable for many decades.” He estimates that implementing Kyoto reductions would reduce the predicted warming from 2.5 degrees Centigrade during this century by only 0.08 to 0.28 degrees Centrigrade. He also concludes that “the prospects for stabilizing sea level over the coming centuries are remote.”

More recently, Wigley considered the impact of stabilizing carbon concentrations, which would require us “to reduce emissions of greenhouse gases to well below present levels.” He concluded in a March 18, 2005, article in Science, a prestigious scientific journal, that “the inertia of the climate system alone will guarantee continued warming,” and that there will be “a continued rise [in sea levels] of about 10cm/century for many centuries.” So another IT is that realistic proposals to reduce carbon emissions are unlikely to have much impact on climate change in the foreseeable future, and draconian ones that might have some impact over the next century are unlikely to be implemented.

Distorting market signals is hardly the way to encourage adaptation. We shouldn’t try to fool markets any more than we should try to fool Mother Nature.

If the impacts of implementing Kyoto reductions would be minimal, the likely impact of reductions by the United States are even more so. Consider that the average American in 2002 emitted a net 20 pounds of carbon into the atmosphere per day. Even if we had a policy that drove that number to zero, no climate scientist can claim that such a small reduction in carbon emissions would have any effect on global temperatures or sea level. Hence another IT is that, no matter how we got here or where we are now, the people of the United States are not currently putting enough carbon in the air to make any discernible difference in the climate of planet Earth.

Against the evidence that there is little to be gained from reducing gross emissions, we must weigh the costs of reduction. The 700-page Stern Review commissioned by the British government estimates that the costs of stabilizing greenhouse gas concentrations will be approximately 1 percent of global output per year and could even be higher.

The report also contends that the cost of not stabilizing greenhouse gases may be between 5 percent and 20 percent of global output per year, but serious economists have little good to say about these estimates, for two reasons. First, any current cost estimates are unlikely to prevail, because we will certainly find cheaper ways than we have now to reduce carbon consumption. As just one example, ponder the rebirth of the nuclear power industry in the United States; surely part of the political economy of that renaissance is owed to the concern over coal-fired power plants.

Second, the costs will have to be incurred now and the benefits, if any, will come a long time in the future. None of us is willing to incur significant costs today without some possibility of a return on our investment. So why does it make sense to invest trillions of dollars now to reduce carbon if we can’t expect any return in the next 100 years? Even the most fiscally liberal policy analyst must wonder whether emission-reduction policies make good economic sense. Another IT.

Moreover, if net emissions go down as economies grow, imposing large costs on the world’s economy could cause global warming to worsen, not improve. There is a carbon Kuznets relation, and to ignore it might bring about more, not less, global warming. Yes, another IT.

This brings us to the third important question—if carbon taxes and more Priuses aren’t the answer, and if warming will occur and sea levels will rise, what should we do? In a word, the answer is adapt. Climate change will occur over a long period and humans can be remarkably adaptable if confronted with the right signals from land markets, housing markets, financial markets, and insurance markets.

In Germany, wine producers are already seeing opportunities resulting from climate change. Cabernet sauvignon and merlot grapes are migrating northward, allowing German consumers to increase their consumption of locally made reds from 17 percent to 27 percent between 2002 and 2006.

Financial markets are also finding new opportunities with complex financial instruments known as derivatives, catastrophe bonds, and sidecars. These instruments allow people to hedge against volatile weather patterns. Traditionally, these instruments have been based on measures of rainfall and temperature, but they are evolving to include sea levels, wave heights, and humidity.

Might the fact that Florida has one of the largest housing gluts in the country be evidence that people are already adapting to warmer climates and severe weather by moving out, or by moving in at slower rates? We don’t know with any degree of certainty that this is due to climate change, but the evidence is consistent with how we expect people to adapt.

The challenge for governments is to let markets do what they do best—send price signals to consumers and producers so they can respond. Political responses to announcements by insurance companies that they will raise rates and cancel hurricane-insurance policies in Florida and Mississippi, however, do not bode well. The Florida legislature is considering capping insurance rates, limiting policy cancellations, and creating a $4 billion state insurance fund. Distorting such market signals is hardly the way to encourage adaptation. In short, we shouldn’t try to fool markets any more than we should try to fool Mother Nature.

The final inconvenient truth is that the global climate is as complex as the global economy, and these two complex systems are inextricably linked. It is too simplistic to say that gross emissions cause global warming. Once we recognize that lower net carbon emissions are linked to a robust economy and that a robust economy is linked to market forces, we humans will be much better able to deal with volatile weather gods, if not our political ones.

Available from the Hoover Press is You Have to Admit It’s Getting Better: From Economic Prosperity to Environmental Quality, edited by Terry L. Anderson. To order, call 800.935.2882 or visit www.hooverpress.org.

Terry Anderson, the John and Jean DeNault Senior Fellow at the Hoover Institution, is the executive director of PERC—the Property and Environment Research Center—a think tank in Bozeman, Montana, that focuses on market solutions to environmental problems. His research helped launch the idea of free market environmentalism and has prompted public debate over the proper role of government in managing natural resources. He is the cochair of Hoover's Property Rights, Freedom, and Prosperity Task Force.