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Greenhouse or Poorhouse?

OXFORD: The environment, as the recent global focus on the health of the world’s oceans demonstrates, has become a focus of political struggle, both domestically and internationally. An increasingly powerful movement argues that the world is threatened with great harm from future climate changes - say, the notorious "greenhouse effect" - and that we must enact tough measures to limit carbon emissions today in order to save the world for tomorrow. A striking feature of this drive is its moralizing tone. Appeals are made to justice between generations, and accusations are commonly heard of a "betrayal" of those who come after us.

Yet calculations of present sacrifice and future harm are rarely accurate and much of what we hear is nonsense. The irony - indeed, the tragedy - is that few policies are so inequitable and morally iniquitous as those that propose huge burdens on today’s generation, particularly its poorer members, in order to prevent what will be at worst an insignificant reduction in the incomes of future generations - who will, in any case, be far richer than we are today.

Not long ago, I criticized the British government's stance, first announced at last year’s Kyoto conference on climate change, and was chided for being wrong about the limited amount of economic damage that climate change would inflict. A committee of the Intergovernmental Panel on Climate Change (IPCC), I was reminded, had concluded that, if the global temperature was to rise by 3°C, world income levels would be reduced by between 1.5% and 2.0%. Fancy that! By the time the global temperature rises by 3°C (assuming it ever does) the world will be incomparably richer than it is today.

According to the latest so-called international scientific 'consensus' this "temperature shock" will happen towards the end of the next century if no special actions are taken to prevent climate change. On conservative assumptions about future economic growth, however, in a century’s time world per capita income levels are likely to be over four times as high as they are now.

Technological progress over the last 40 years made world per capita income rise in real terms by 2.1% per annum. Far more people today receive scientific and technical education than at any time in human history; the numbers will continue to increase in the future. So one should expect that the long-run rate of technological progress will be at least as fast, if not faster, than in the past.

But let us be conservative, and assume a long-run rate of productivity growth of only, say, 1.5% per annum. This would make per capita income a hundred years from now 4.4 times greater than it is today. So if the income level in the year 2,100 were to be reduced by 1.5% to 2.0% due to global warming, it would be only about 4.3 times higher than now. Well, I'm sure the generation alive in the year 2,100 will be able to adjust to this disappointment. They will merely have to wait another year before they are 4.4 times as rich as we are now.

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Against this trivial sacrifice one has to weigh the burden imposed by measures to reduce carbon emissions now and in the near future. Per capita energy consumption in countries such as China and India, the combined population of which is over 2 billion (and rising), is about one tenth of that of the USA, and will no doubt rise substantially in the future. So the sort of emission reductions in the advanced countries that are being talked about - including all the cost-free reductions and greater use of windmills and so on - will have no measurable impact on global emissions unless Third World countries greatly reduce their emissions. But this would hit their economies and reduce their growth rates.

For example, the latest IPCC estimates are that Chinese GNP could be reduced by between 4% and 13% by about the year 2,020. What is so equitable about substantially reducing the income of very poor people in the Third World today in order to spare the people alive in the year 2,100 a reduction of about 1% to 2% of a much higher GNP?

What advocates of greater efforts to reduce carbon emissions - or of increasing expenditures on environmental preservation - overlook is that at any point in time there is a constraint on total world output. To maintain that not enough is being spent for some environmental purposes - say, reducing carbon emissions - implies that too much is being spent on others. This suggests, in turn, that the value attached (at the margin) to these other expenditures is less than that attached to environmental preservation. This might not be seen as particularly 'equitable' by the poor in Third World countries, or even by those in advanced countries who do not enjoy adequate health and education facilities, or housing, or other amenities associated with a civilized society.

Our objective should be to bequeath future generations that decent society. This means, above all, greater respect for basic human rights and dignity. In the first place, this would greatly add to the welfare of today’s generation, instead of reducing it. Secondly, the urgent need for such rights and dignity throughout much of the world is glaringly obvious and does not depend on speculative calculations about the effects of future climate change.

Even if the environment is what one worries about most, greater respect for democratic liberties would produce the best results. It is no accident that some of the worst pollution in the world occurred in the ex-Soviet bloc countries where protests were forbidden. Similar destruction of the environment still takes place in some Third World countries where local rights - property rights or the right to demonstrate or organize protests - are trampled on. It is here that environmentalists should concentrate their energies.