Global warming and the economy

As public and political opinion gets behind the idea that human activity is warming the planet by putting so-called “greenhouse gases” into the atmosphere, we are, thankfully, starting to talk about what to do about it. This post is an effort to obstruct unrealistic and irresponsible hoping for “something to do that doesn’t require any actual heavy lifting”.

What matters here, overwhelmingly, is burning coal, petroleum, and natural gas (in decreasing order of harm). Nitrous oxide from fertilized fields, methane from landfills and cow farts, and some other gas releases are a problem as well, but the elephant that’s going to tip the ark over is burning fossil fuels.

One angle in the debate has been denial and plain mendacity. Exxon-Mobil is the premier corporate practitioner of this, famous for its ads claiming that CO2 is actually just a really nice thing to do for trees and plants. I think it’s fair to classify this position now as flat-earth obscurantism, even though Al Gore had to bear some of it from the likes of the truly amazing James Inhofe in public this week.

The ideas in good currency, between the lunatic fringes (there is also some supergreen advocacy for shutting down everything right away) are “taking action as long as it doesn’t hurt the economy” and taking more strenuous actions that (presumably) do. The first has a sensible, thoughtful, businesslike aroma, but it is profoundly nuts, unless you think that your family economy would be helped by borrowing lots of money and spending it right away on vacations and entertainment.

The way to think of this issue is that (without realizing it, until recently) we have been running the world by borrowing enormous wealth from the future, and using it up. Global warming on its current path will hurt the economy a lot; loss of south Florida and most of Bangla Desh will not be compensated by growing oranges in Manitoba. If the Gulf Stream stops, putting Europe into it’s latitudinal climate (London is as far north as lower Hudson’s Bay and Lake Baikal), the devastation won’t be compensated by anything imaginable, and that one will happen suddenly, not slowly. (Of course, if you are a tourist on this planet or don’t care about children or grandchildren, borrowing from the future is a great deal for you, and you should give to the campaigns of Inhofe and his pals and fight to burn that coal, oil, and natural gas just as fast as possible.)

There are three generic ways to stem the flow of CO2 into the air. The first is to catch it at the smokestack (for example, of a coal-burning power plant) and put it back in the ground or at the bottom of the sea. This is not impossible but it will never be cheap, almost certainly has no future for vehicles, and at the moment, it’s very expensive except at a few locations well suited to it. The second is a group of blue-sky geoengineering ideas needing (and deserving) many, many years of research and development but not certain to be practical ever. These include schemes to shade the earth with sulfur dioxide in the stratosphere or some sort of parasol in space between the earth and the sun, or to accelerate the growth of algae in the ocean by sprinkling iron about.

The third, and the only one we can start to use now or even soon, is to burn less fossil fuel, something that in turn can be done in only two ways. The first is to conserve energy. The second is to substitute fossil energy sources with something else. Nuclear, wind, and biofuels are good for this, but they are all more expensive and will be for some time, perhaps forever…coal is really abundant and really easy to dig up. [Note: hydrogen is not a fuel and is better thought of as something like a battery that stores energy from a primary source. Electrolysis of water with electricity from a coal plant to make hydrogen to run your car is not a planet-friendly idea, and there is no hydrogen mine.]

That’s about it, and every one of these options, if we use them enough to make a real difference, is going to mean big changes in the way we live, because energy will be more expensive than it is now. You could think of this added cost as paying for it instead of just writing IOUs for our children to settle. All of those changes are going to look like costs to somebody. The simplest way to think about this is to recognize that energy as (short-term) cheap as we’re accustomed to get from fossil fuels is deeply intertwined with the physical stuff that we are accustomed to view as wealth: more expensive energy means more expensive stuff. Big houses that use a lot of gas to heat on big lots, big fillups of gasoline to get us to work in big private cars, square miles of highways and parking lots, furniture to fill up those big houses, big plates of steaks and fries and exercise machines to burn them off: it’s all stuff that we have to learn to have less of. The people who make it and sell it to us (never mind Exxon and your gas station operator) are going to feel some real pain, but insofar as more stuff is economic growth, we are all going to be poorer when we stop looting our descendants.

The Stern report suggests that the cost of a real global warming strategy is going to be equivalent to about a 1% tax on all prices of everything everywhere. This is not so scary, but note that a lot of economic activity will be diverted to technology and new investments to reduce ghg emissions and will not be available to make stuff for consumption. Economists count chemical sales as part of GNP, and they represent useful stuff like insect spray and plastic water bottles, but they also count the cost of cleaning up polluted plant sites. If you live in a rich country, you may want to practice your argument that the Indians and Chinese and almost everyone in the southern world should give up the same 1% of their very modest physical consumption as we do before they even get close to western levels; if they don’t, you give up more. For all these reasons, people in developed countries need to engage with the elephant: we need to have and use a lot less stuff. Politicians who promise to get you a pass with ethanol or windmills or some carpooling are lying to you (or delusional): we’re going to need biofuels, more nuclear power, more windmills, and all that for sure, but we are also going to need to do without a lot of stuff, or our grandchildren are going to do without a lot of beaches, coastal cities, water, and the like.

Fortunately, lots of things that make life worthwhile have a small carbon footprint and we might divert our time from playing with physical stuff into enjoying them instead. Riding a bicycle; having dinner with your friends; listening to (or making) music; reading books; and walking around a city, or a park, or the mountains, are all quite planet-friendly. One of the reasons soccer has never become a commercial success in the US, in my view, is its pathetically modest requirements for equipment. Is it possible that people could have almost as good a life kicking a $10 ball around a field as driving a $4000 motorcycle across the desert, or loading up on gear and being hauled up a mountain so as to ski down it? Going to the big community pool with their neighbors instead of swimming alone in their hundreds of backyard puddles?

I’m not arguing in favor of giving up our favorite stuff-intensive activities for these naive pleasures: advocacy either way is irrelevant, because forgoing stuff is certain. If we count our children for anything, the only question is who will do the giving up and how much. Here’s my plan: let’s telescope the public deliberation about stopping global warming on the cheap, and get to the relevant part of our political work, which is to figure out how we are going to make some serious stuff-withdrawal actually happen. That’s the topic for a future post.

Author: Michael O'Hare

Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, Michael O'Hare was raised in New York City and trained at Harvard as an architect and structural engineer. Diverted from an honest career designing buildings by the offer of a job in which he could think about anything he wanted to and spend his time with very smart and curious young people, he fell among economists and such like, and continues to benefit from their generosity with on-the-job social science training. He has followed the process and principles of design into "nonphysical environments" such as production processes in organizations, regulation, and information management and published a variety of research in environmental policy, government policy towards the arts, and management, with special interests in energy, facility siting, information and perceptions in public choice and work environments, and policy design. His current research is focused on transportation biofuels and their effects on global land use, food security, and international trade; regulatory policy in the face of scientific uncertainty; and, after a three-decade hiatus, on NIMBY conflicts afflicting high speed rail right-of-way and nuclear waste disposal sites. He is also a regular writer on pedagogy, especially teaching in professional education, and co-edited the "Curriculum and Case Notes" section of the Journal of Policy Analysis and Management. Between faculty appointments at the MIT Department of Urban Studies and Planning and the John F. Kennedy School of Government at Harvard, he was director of policy analysis at the Massachusetts Executive Office of Environmental Affairs. He has had visiting appointments at Università Bocconi in Milan and the National University of Singapore and teaches regularly in the Goldman School's executive (mid-career) programs. At GSPP, O'Hare has taught a studio course in Program and Policy Design, Arts and Cultural Policy, Public Management, the pedagogy course for graduate student instructors, Quantitative Methods, Environmental Policy, and the introduction to public policy for its undergraduate minor, which he supervises. Generally, he considers himself the school's resident expert in any subject in which there is no such thing as real expertise (a recent project concerned the governance and design of California county fairs), but is secure in the distinction of being the only faculty member with a metal lathe in his basement and a 4×5 Ebony view camera. At the moment, he would rather be making something with his hands than writing this blurb.