Just a quick thought about global warming rhetoric, which came to mind while reading this Marginal Revolution post and the linked posts by Jim Manzi. Some of those who advocate taking major steps (starting with a hefty carbon tax) to stop global warming say doing so is a way of “buying insurance” against a major catastrophic event. Their point is that the really really bad scenarios, like a complete melting of the polar ice caps, might be very unlikely, but the consequences are sufficiently bad that we should act anyway.
As policy, there is something to this position. But calling the measures in question “catastrophe insurance” is akin to calling new brake pads “car insurance.” An action designed to reduce the risk of something is not the same as an action that insures against the risk of something. New brake pads reduce your risk of getting into an accident. Car insurance, on the other hand, doesn’t reduce your risk of an accident; it just pays for your losses if an accident occurs. The policies being advocated, insofar as they are supposed to reduce the likelihood of catastrophic climate change, are more like the brake pads. If you’re looking for policies that take the form of insurance, think investments in air-conditioning and dike-building technologies that will be mostly useless unless the crazy stuff really does happen.
It is true that people might buy insurance and adopt preemptive/ameliorative policies for similar reasons. If you’re risk averse, you want to both reduce risk and buy insurance. (Though not necessarily both; if you can reduce risk, it’s not as necessary to insure against it, and vice versa.) But despite similar justifications, the mechanisms are different.
Monday, January 07, 2008
Global Warming Insurance?
Wednesday, September 26, 2007
Why I Hate Restroom Hand Dryers
1. They fail at their primary function: actually getting my hands dry.
2. And they take too much time in failing. Thank goodness for blue jeans. (Tip: dry your hands on the lower legs of your jeans, so you don’t get wet spots all around your waist and crotch.)
3. They are alleged to be more hygienic than hand towels. I don’t buy that for a second, because they “dry” your hands by blasting them with recirculated air from the restroom itself. You didn’t think there was a canister of fresh air hidden behind the wall, did you? And guess what’s probably floating around in the restroom air. That’s right, tiny particles of you-know-what. (I will concede that the hand dryer is nonetheless hygienically preferable to the continuous-roll-of-cloth machine.)
4. They are alleged to be environmentally friendly because they “save trees.” This is nonsense. Okay, not total nonsense – you do in fact have to kill trees to make paper towels – but nonsense in any sense relevant to the environment. Trees are a renewable resource, and that means higher demand for paper products results in the planting of more trees. The more paper consumers are expected to use, the more incentive tree farmers have to expand their acreage. By decreasing the demand for hand towels, hand dryers actually diminish the number of trees in the world.
There is the solid waste issue, I suppose. Paper towels end up in landfills. But so what? The main concern with putting paper in landfills is the potential for dyes and bleaches to leach into the soil or groundwater; but since paper towels are usually unbleached brown, I suspect that’s not a big problem here. In any case, if we’re going to look at the wider environmental impact – as opposed to the ridiculous “killing trees” issue cited by the hand dryer advocates – then we have to consider the electricity used to power the dryers. If some or all of the electricity is produced by burning fossil fuels, that raises potential concerns about air pollution and global warming. In the wider scheme, if hand dryers produce any net benefit to the environment relative to hand towels, it’s far from obvious and has nothing to do with saving trees.
And let me say it again: they don’t even get your hands dry!
Thursday, September 20, 2007
High Oil Prices and Pigovian Taxes
Free Exchange and Megan McArdle both criticize Felix Salmon for having said this:
Oil just hit a new high of $81.24 a barrel this morning. This is a Pigovian tax with the proceeds going to Saudi Arabia rather than the US Treasury, but if [Greg] Mankiw is right that a carbon tax would reduce carbon emissions, then these high oil prices should be instrumental in reducing oil consumption, carbon emissions, and, ultimately, the pace of global warming.Okay, Salmon is wrong to say a high price on oil IS a Pigovian tax. It’s not. But he’s right to say the high price is functionally equivalent to a Pigovian tax.
In their critiques, both Free Exchange and Megan assume, at least implicitly, that the market for oil is perfectly competitive. Free Exchange says the “high price of oil only reflects assessments of oil demand and supply,” while Megan uses an Econ 101 supply-and-demand graph to show the impact of a tax. If they were right, then Salmon’s claim would be incorrect; the high price of oil would simply reflect higher costs of production and/or increased demand for oil. But the market for oil is not perfectly competitive; there is good reason to think some part of the price is attributable to the oligopoly power of OPEC and other oil producers. That power is surely exaggerated from time to time – and many aspects of the oil business can be understood without it – but it’s still pretty clearly there.
As a result, we have to consider the economic theory of the second best. Simply put, this theory says that one market imperfection can offset another market imperfection. If the consumption of some good – like oil – creates a negative externality, then we should expect its price to be too low, and people will consume too much. If the market for a good is characterized by oligopoly or monopoly power, we should expect its price to be too high, and people will consume too little. But if both conditions hold, then the effects at least partially cancel out. In this sense, oligopoly pricing is equivalent to a Pigovian tax, because it pushes the price above what it would be in the presence of the externality alone.
Of course, the amount of the oligopoly price premium might be too small – or too large. Only by coincidence would it precisely offset the negative externality. But the same is true of actual Pigovian taxes as well, unless we believe the governments that set the taxes will somehow manage to get them exactly right.
(Free Exchange and Megan make some other, valid responses to Salmon’s overall position. I am only responding to their notion that the high price of oil is nothing like a Pigovian tax.)
Friday, March 23, 2007
How Not to Bet on Global Warming
Brian at Backseat Driving has been challenging people to bets about global warming, and it looks like I’m the latest to be challenged.
In general, I like the idea of betting on propositions, because it forces people to put their money where their mouth is, as well as to think carefully about what they really believe. That said, I’m not sure Brian’s proposed bets really get to the heart of the matter.
You’ll notice that many of his proposed bets are about whether the world is getting warmer, without any reference to causes. As I’ve said before, I’m reasonably convinced that the world is getting warmer; I’d say it’s about 95% likely. That means I’d require at least 19-to-1 odds in order to bet that global temperatures will stay the same or get cooler. If Brian is willing to offer those odds, I’ll take them. But I would fully expect to lose the bet, having agreed only because of the high payout in the unlikely event of winning. I hardly think any loss-of-face would be on the line.
As far as I can tell, only one of Brian’s proposed bets raises the issue of the human contribution to global warming, as opposed to other hypotheses such as increased solar activity. Brian is willing to bet that the IPCCC report of ~2016 will conclude that anthropogenic global warming “likely intensified tropical storm damage in the 1995-2005 period.” So in other words, this is a bet about what a politically charged committee will conclude about the causes of events that have already occurred. Again, is this really the issue? I thought the point of bets like these was to arbitrate among hypotheses by reference to objectively measurable future facts of the world. Even a sincere global-warming-denier (and I’m not one) could reasonably reject this bet because he strongly suspects the IPCCC will continue to espouse the conventional wisdom, whether that wisdom is correct or not.
And, as far as I can tell, none of Brian’s proposed bets raises the issue of the extent of global warming, which is the main issue that separates alarmists like Al Gore from the scientific consensus. None of them relate to the extent of resulting harms. None of them relate to the existence or extent of benefits from global warming. None of them relate to the effectiveness of policies aimed at limiting global warming. In short, none of the proposed bets really addresses the main points being raised by those who admit that some global warming is taking place but doubt the desirability of enacting major policy initiatives to deal with it.
Tuesday, March 20, 2007
Still Some Room for Pure Denial
As I've said before, I'm inclined to bow to the conventional wisdom on global warming (at least with regard to its existence, causes, and magnitude) simply because I'm not an atmospheric scientist. But it's articles like this that give me pause. Groupthink is a real phenomenon, and the scientific community is not immune.
Thursday, March 15, 2007
Debating Global Warming
David Friedman has several excellent posts on global warming -- see here, here, and here. He also ably defends his position in the comments section on this post at Backseat Driving. Here's a quick summary of his position, which is very much like mine (no wonder I like his posts so much!):
[G]lobal warming is probably real, is probably but not certainly anthropogenic, is probably not going to have large effects on size and frequency of hurricanes and is probably not going to have large effects on sea level. It is a real problem but not, on current evidence, an impending catastrophe.
Monday, March 12, 2007
Global Warming: A Taxonomy of Questions
Café Hayek has a couple of good posts on global warming, one by Don Boudreaux, the other by Russ Roberts. I especially liked this sentence from Boudreaux: “I am not so much a skeptic of global warming. But I am indeed a skeptic of combating global warming.” A crucial distinction. The global warming debate is too often cast as a simple dichotomy: either you believe global warming is real, human-caused, hugely destructive, and cause for massive political action… or you don’t, in which case you’re a skeptic. But the debate has many more facets than that.
I’ve been trying to create a taxonomy of all the questions that ought to affect our choices about dealing with global warming. The first three questions are all best directed toward atmospheric scientists. Since I’m not one, I’m inclined to defer to the experts on these, provided I don’t think they have institutional incentives to reach certain preconceived conclusions. My perception is that the debate has revolved almost entirely around the first two questions, with some (but insufficient) emphasis on the third. But the other questions are just as relevant and will become more important as we ponder policy responses.
Existence of global warming. Is there in fact a trend of rising global temperatures? My impression is there’s a great deal of agreement on this. Call it 95%+ confidence.
Human contribution to global warming. Has human activity contributed to that trend? My impression is that support for this proposition is somewhat lower; call it 90% confidence. But I’m still not sure how much of the effect scientists think is attributable to human activity, though it’s pretty clearly less than 100%. In any case, this question may not be terribly relevant; as David Friedman points out, even if warming were entirely caused by non-human factors, we might still want to try abating it if the harms were large enough and our responses efficacious enough.
Magnitude of the warming effect. How much warming will actually occur? According to the IPCCC report, the consensus seems to be that global average temperature will rise by a couple of degrees Centigrade, with a rise in sea levels of maybe 1.5 feet (with a confidence interval around both estimates, of course).
Net harms or benefits due to warming. The key word here is net. There will assuredly be some benefits from global warming, including longer growing seasons in some areas, lower heating bills, perhaps fewer deaths from cold winters, etc. It makes absolutely no sense to focus on harms only while ignoring benefits, yet I almost never hear anyone make this point in mainstream forums. Even if the harms are larger than the benefits – as they may well be – we still have to subtract out the benefits to determine the desirability of any proposed policy responses. After all, any policy that reduces global warming will reduce its benefits as well as its harms (though not necessarily to the same extent).
Extent of decentralized response. Given that the changes wrought by global warming will occur over the course of many decades, there is every reason to believe that individuals and markets will have time to respond to changing land values and resource uses. They won’t just wake up one morning to find that Florida’s coast line has disappeared and still be looking at the same old maps. Real estate prices will adjust, people will move, land uses will change. (Unless, of course, ill-advised government insurance programs give people an incentive to stay put in flood-prone areas.) Decentralized responses mean that harms of global warming are likely to be smaller than predicted by non-economists (or lousy economists). It also means that benefits will probably be larger, as entrepreneurial efforts lead to the exploitation of new opportunities created by global warming.
Marginal impact of collective abatement efforts. Supposing we could get all the nations of the world to cooperate, how much could we expect to reduce global warming? Humans have been burning fossil fuels at a high rate for at least a century, and climate change responds to the stock of greenhouse gases in the atmosphere, not just the current flow. So to a great extent, the damage has essentially already been done. If concerted global efforts could only reduce the expected rise in sea level by a couple of inches (a number I’m pulling out of thin air, since I have no idea what the real marginal effect would be), that should reduce the perceived desirability of policy responses.
Marginal impact of unilateral abatement efforts. Realistically, we cannot get all the nations of the world to cooperate. Some rapidly developing nations like China and India will at least be reticent to adopt growth-restricting policies. Given the political reality, how much effect will unilateral efforts – or efforts adopted by only some nations – have on global warming? Although this consideration would probably reduce the perceived desirability of policy responses, it could point the other way if additional response by some nations could make up for the inaction of others.
There are many more questions than these, particularly with regard to the range of policy responses, their differing marginal efficacy, and their differing costs. So my taxonomy is incomplete, but this list is at least a start. Contributions welcome.
Friday, March 02, 2007
Al Gore: Don't Pay Attention to Me
Al Gore complains that the media, in the name of journalistic “balance,” give too much attention to viewpoints with little support:
“I believe that is one of the principal reasons why political leaders around the world have not yet taken action,” Gore said. “There are many reasons, but one of the principal reasons in my view is more than half of the mainstream media have rejected the scientific consensus implicitly – and I say ‘rejected,’ perhaps it’s the wrong word. They have failed to report that it is the consensus and instead have chosen … balance as bias.” [emphasis added]Gore’s not totally off-base here. It’s true that journalists often try to create balance – and the appearance of conflict – by finding someone, anyone to take an opposing point of view. As a result, it can appear that a crackpot opposition has much greater support from the relevant experts than it really has. Consider, for instance, articles that make creationist critiques of evolutionary theory sound like serious arguments when most of them are regarded by scientists as pure hokum.
No, the problem with Gore’s statement is its hypocrisy, given that Gore’s position on global warming is inconsistent with the scientific consensus. If the media took Gore’s admonition seriously, they would pay much less attention to Al Gore.
Wednesday, February 28, 2007
Global Warming: Consensus vs. the Minority Reports
Patrick Michaels on global warming predictions:
The new estimate for maximum rise in sea level, assuming a middle-of-the-road estimate for carbon dioxide changes, is going to be lower than in previous IPCC reports. The last figure I saw was around 17 inches by 2100, down 40 percent from their previously estimated maximum.It seems to me that global warming alarmists like Al Gore are playing both sides of the fence. On global warming’s existence, they emphasize the importance of scientific consensus and characterize the skeptical minority as equivalent to Holocaust deniers. But when it comes to global warming’s severity, they suddenly reject the scientific consensus and embrace a minority opinion. But they can’t have it both ways. If we are obliged to bow to the scientific consensus, then the minorities at both extremes should be treated with equal disdain.
A small, but very vocal, band of extremists have been hawking a doomsday scenario, in which Greenland suddenly melts, raising sea levels 12 feet or more by 2100. While this forecast enjoys no real support in the traditionally refereed scientific literature, it is repeated everywhere, and its supporters are already claiming that the IPCC -- the self-proclaimed "consensus of scientists" -- is now wrong because it has toned down its projections of doom and gloom.
For my part, I don’t think scientific consensus deserves unquestioning reverence; even smart and knowledgeable people are sometimes subject to groupthink and confirmation bias. So I’m willing to give a modicum of consideration to both the skeptics and the catastrophists, though in this case I think the consensus is probably about right (at least with respect to climatic as opposed to economic impacts). What really irks me is the inconsistency.