The Closest yet to my perspective on Climate Change

 Michael S. Bernstam of the Hoover Institution has produced a short post Inconvenient Math. (hattip The GWPF). The opening paragraphs are:-

Climate change faces a neglected actuarial problem. Too many conditions must be met to warrant a policy action on climate change. The following four stipulations must each be highly probable:

1. Global warming will accumulate at 0.12 degrees Celsius or higher per decade.

2. It is anthropogenic, due largely to carbon dioxide emissions.

3. The net effect is harmful to human well-being in the long run.

4. Preventive measures are efficient, that is, feasible at the costs not exceed-ing the benefits.

But even if the probability of each of these stipulations is as high as 85 percent, their compound probability is as low as 50 percent. This makes a decision to act or not to act on climate change equivalent to flipping a coin.

Bernstam later states

In the case of climate change, the conditions are four. They are not random, nor are they arbitrary. To see this, one can run a thought experiment and drop or ignore any of the above foursome. At once, the entire call for action on climate change becomes pointless. If global warming is not ongoing, there is no need to stop it. If it is not anthropogenic, there is no need to curb carbon dioxide emissions. If it is not harmful, there is no need to worry. If preventive measures are inefficient, they would not help and there is no use applying them. It follows that all four conditions are necessary. If just one of them does not hold, action is unnecessary or useless.

That is, for action on climate change to be justified (in terms of having a reasonable expectation that by acting to combat climate change a better future will be created than by not acting) there must be human-caused warming of sufficient magnitude to produce harmful consequences, AND measures that cost less than the expected future costs that they offset.

These sentiments are a simplified version of a series of posts I made in October 2013, where I very crudely deriving two cost curves (costs of climate change and climate mitigation). This aimed to replicate a takeaway quote from the Stern Review.

Using the results from formal economic models, the Review estimates that if we don’t act, the overall costs and risks of climate change will be equivalent to losing at least 5% of global GDP each year, now and forever. If a wider range of risks and impacts is taken into account, the estimates of damage could rise to 20% of GDP or more. In contrast, the costs of action – reducing greenhouse gas emissions to avoid the worst impacts of climate change – can be limited to around 1% of global GDP each year.

I looked at the idea of multiplying the various probabilities together, at least for the costs of climate change.  But instead of the boundary it is a continuous function of an infinite number of possible scenarios. In general I believe the more extreme the costs of warming, the less likely it is to happen. The reason is that we derive the non-visible part of the cost curve can only be objectively derived from the revealed warming from the recent past. Separation of the costs of warming-induced climate change are extremely difficult from the costs of random extreme weather events. Even worse, the costs of extreme natural weather events (especially in terms of death toll) has been falling over time, as Indur Goklany has documented. The fall-back for global-warming theory is to use the late Milton Friedman’s Methodology of Positive Economics. That is to evaluate theory credibility on its predictive ability. If in the short-run climate scientists (or anyone who believes in climate alarmism like Al Gore) are able to make predictions about the signals of impending climate apocalypse, then this should give some credibility for claims of substantially worse to come. The problem is there are a huge number of failed predictions of climate worsening, but not a single one that has come true. This would signify that the true risk (as opposed to the perceived risk from the climate community) of climate change is approximately zero. The divergence of belief from the evidence is likely from the collective navel-gazing of post normal science.

The policy aspect that Bernstam fails to explore is the re-distributional aspects of policy. The theory is that global warming is caused by global greenhouse gas emissions. Therefore climate mitigation must comprise of reducing those global emissions. However, as the COP21 Paris showed most of the worlds population live in countries where there are no GHG emissions reduction policies even proposed. But actually reducing emissions means increasing energy costs, and hampering businesses with onerous regulations. Policy countries are given a comparative disadvantage to non-policy countries, as I tried to show here. The implication is that if developed countries strongly pursue high cost mitigation policies, the marginal cost of non-policy emerging economies switching to emissions reduction policies increases. Thus, whilst Donald Trump’s famous tweet that Global Warming is a Chinese hoax to make US manufacturing non-competitive is false, the impact of climate mitigation policies as currently pursued are the same as if it were true.

There is also a paradox with the costs of climate change. The costs of climate change are largely related to the unexpected nature of the costly events. For instance, ceteris paribus. a category 1 hurricane could be more costly in a non-hurricane area than a stronger hurricane in say Florida. The reason is that in the non-hurricane area buildings will not be as resistant to storms, nor will there be early warning procedures in place as in Florida. The paradox is that more successful climate scientists are in forecasting the risks of climate change, the more people can adapt to climate change, reducing the costs. The current focus on climate consensus, rather than focusing on increasing competency and developing real expertise in the field is actually harmful to future generations if climate change is a actually a serious emerging problem. But the challenge for the climate alarmists is that in developing the real expertise may result in their beliefs about the world are false.

Finally, Bernstam fails to acknowledge an immutable law of public policy. Large complex public policy projects with vague aims; poorly defined plans and lack of measurable costs tend to overshoot on costs and under-perform of benefits. Climate mitigation is an extreme example of complexity, lack of clear objects and lack object measurement of costs per unit of emissions saved.

Kevin Marshall

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