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The Energy Commons—Part 2

by Rudy M. Baum, Editor-in-chief
November 20, 2006 | A version of this story appeared in Volume 84, Issue 47

Anyone who regularly listens to economists debate the impact of tax cuts knows that economists of different political persuasions can use the same set of numbers to reach radically different conclusion or, in fact, almost any conclusion they want to reach. Economics is hardly a rigorous science.

An extensive report issued at the end of October by the U.K. government and prepared by Nicholas Stern, head of the U.K. Government Economic Service and former chief economist at the World Bank, warns that global climate change will have dire economic consequences (C&EN, Nov. 6, page 7). The Stern Review suggests that spending 1% of global gross domestic product annually could reduce greenhouse gas emissions enough to avoid the worst impacts of climate change, damage that could rise to 20% of GDP in the worst-case scenario.

On Nov. 2, the Wall Street Journal published a long op-ed piece by self-proclaimed environmental skeptic Bjørn Lomborg that purported to debunk the numbers in the Stern Review. I haven't read the 700-page Stern Review, so my primary reaction to Lomborg's treatment of the review's numbers is much the same as my reaction to economists discussing the effects of tax cuts. Lomborg's more interesting thesis, put simply, is that there are more cost-effective ways to spend scarce resources than trying to avert climate change.

Lomborg writes: "Faced with such alarmist suggestions, spending just 1% of GDP or $450 billion each year to cut carbon emissions seems on the surface like a sound investment. In fact, it is one of the least attractive options. Spending just a fraction of this figure—$75 billion—the United Nations estimates that we could solve all the world's major basic problems. We could give everyone clean drinking water, sanitation, basic health care, and education right now."

Really? Lomborg's essay is entirely dependent on us accepting his numbers as more accurate than the Stern Review's numbers. Let's give Lomborg the benefit of the doubt and assume he's talking about an annual expenditure of $75 billion. The UN Environment Program (UNEP) estimates that 1.1 billion people lack access to safe drinking water and 2.6 billion have no access to basic sanitation. Assuming that there is significant overlap in those two populations, Lomborg is suggesting that annual expenditures of about $30 per capita will provide safe drinking water and basic sanitation to the people who lack them, with enough left over to provide basic health care and education to everybody lacking those, too.

I'm skeptical. Especially since UNEP reports that the World Bank has estimated that $600 billion is required to repair and improve the world's water delivery systems. And that disconnect makes me skeptical of all of Lomborg's numbers.

More to the point, Lomborg's thesis assumes a static world, one in which climate change has not degraded the environment in ways that decrease the supply of freshwater, increase the spread of disease, cut into agriculture's ability to produce adequate food in many regions of the world, and flood coastal regions with the resultant displacement of hundreds of millions of people.

Even more to the point, Lomborg's thesis posits that it is perfectly all right for today's humans to continue to degrade, possibly irreparably in any reasonable time frame, what I called in last week's editorial the energy commons—Earth's atmosphere, oceans, and fossil fuel resources—and to focus exclusively on current problems. That is to say that the comfort of today's humans will be paid for by future generations who are very likely to inherit a despoiled energy commons if we follow Lomborg's prescriptions.

Neither the Stern Review nor Lomborg addresses any concerns that extend beyond the purely economic. The continued degradation of the energy commons is leading to a different kind of impoverishment, the destruction of a significant portion of Earth's biosphere. It is an impoverishment that is difficult to measure in dollars, so not one that is of much interest to economists. No wonder it is called the dismal science.

Thanks for reading.


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