Saturday, September 15, 2007

Lomborg, global warming, and opportunity costs

I've not read Bjorn Lomborg's new book (nor his previous one), but I have read enough of what he has written to suspect that some of those who are ridiculing one of his arguments don't understand it. For example, Bob Park of the American Physical Society's "What's New" writes:
Bjorn Lomborg's "Cool It: The Skeptical Environmentalist's Guide to Global Warming" is out. Well, yes it is getting warmer he finds, but aside from polar bears, it just means more beach weather. We've got bigger problems, he says. Instead of spending all that money trying to prevent warming, let's focus on making everyone rich so they can all buy air conditioners.
P.Z. Myers at Pharyngula writes:
He also has a bad argument about relative spending: he suggests that spending on climate change would reduce spending on other pressing issues, like the fight against malaria. It's a bad choice. Malaria research is already underfunded — it's a third-world disease, don't you know, one that mainly affects those tropical countries, so the wealthy western nations typically don't prioritize it very highly. We don't take our big pots of money and allocate it into aliquots appropriate to the world's needs already, so for an economist to sit there and pretend that climate research is a drain on tropical disease research is comical. Especially since he seems unaware of how one feeds into the other. Hey, if the world warms up, tropical diseases will creep northward into Europe and North America, and then we'll be fighting the economic effects of both direct effects of climate change and new diseases.
But as I understand it, Lomborg is making a simple point about opportunity costs--that money spent on climate change mitigation can't be spent on other things, and that it would be better off spent on things like fighting malaria (which I'm sure he would agree with Myers is underfunded, since it's #4 on the Copenhagen Consensus 2004 list of "very good projects" to spend money on), because the amount of benefit received for each dollar spent is so much greater.

To make the same point--I have looked into putting solar cells on my house, both to reduce my carbon footprint and my long-term energy costs, but I've decided against it because even with the tax incentives and my power company's willingness to subsidize half the cost, it's still not cost-effective. (I'm hoping new solar cell technologies will improve efficiency and lower cost so that I will be able to become less dependent upon the electrical grid). Instead, I've spent much smaller amounts of money that have had far more bang for the buck, replacing my incandescent lights with CFLs (though LEDs and other new promising technologies are on the way as better sources of light), adding insulation, and improving the efficiency of my air conditioning units through regular maintenance. These things I've done not only have an impact on my energy use and climate change, they are things which provide me with direct economic benefit as well--thus these are things that rational people will be doing independently of government regulation and spending.

Lomborg--or at least the Copenhagen Consensus--is not saying that climate change deserves no attention. The premise of the Copenhagen Consensus is that if the world spent an additional $50 billion over the next five years to address ten categories of global challenges (one of which is climate change), how would that money best be spent to provide the greatest net benefit. That seems to me to be an entirely worthy effort, and this kind of cost-benefit calculation should be given greater weight in public policy decisions. Instead, however, most politicians like to make arguments based on the assumption that any law, regulation, or government spending that saves even one life (or prevents one child from seeing something offensive) is worth doing, whether or not that generates enormous opportunity costs.

My personal behavior--and I suspect that of those criticizing Lomborg on this point--demonstrates that I don't consider climate change my number one priority. In my case, I live in a large house that uses a lot of electricity, I travel frequently by plane, I drive a car instead of using public transportation, I eat meat instead of being a vegetarian like my wife. Each of these things causes, directly or indirectly, an increase in carbon dioxide emissions over the alternatives.

UPDATE (December 16, 2008): I just came across this description of Lomborg's overall behavior with respect to the climate change debate, which I think is likely accurate.

10 comments:

Einzige said...

It always saddens me when otherwise very intelligent people seem to lack an understanding of opportunity costs, as well as the concepts of marginal cost/benefit analysis. True, they're counterintuitive concepts, but we're not talking about dumb people, here.

Einzige said...

By the way, I think you're missing a "don't" in there.

Jim Lippard said...

Yes, thanks, I had rewritten that sentence and didn't make all the changes it required.

Alexa said...

Global warming controversy take new picture when a writer say that temperature increase is actually a good thing as in the past sudden cool periods have killed twice as many people as warm spells. He accepted global warming issues is big but he said not our fault.

Jim Lippard said...

Alexa: My understanding is that Lomborg accepts both global warming and that there is a significant anthropogenic contribution to global warming (link is to a Jonathan Adler review of Lomborg's book at the National Review Online, a conservative magazine that I don't consider particularly reliable, that I just found in a Google search for Lomborg and anthropogenic global warming). Your link claiming otherwise cites two completely different people (Dennis Avery and Fred Singer).

There is no question that there are both costs and benefits of temperature increases, and that costs and benefits should be assessed for each possible course of action. It's a huge mistake to look only at the costs of temperature increases, and only the benefits of hugely costly forms of mitigation.

Gardener said...

Interesting perspective. I am appalled at how heated some reactions can be and not too sure it's only a matter of understanding the concept of "opportunity cost". So I replied on my blog at this page .
At the end of my post I also have a link to an intelligent reply to the Copenhagen Consensus.

Jim Lippard said...

Gardener: Thanks for the comment.

I think the reply you link to is correct as far as it goes, but it strikes me as sort of a "Pascal's Wager" of climate change. I think it's right to look at the worst-case scenario that it describes (and its probability), so long as you also look at the worst-case scenarios of costs (which will include lives and dollars), as well.

Ktisophilos said...

"Saving even one life is worth doing" is of course bunk, precisely because of the far greater opportunity costs. E.g. we could save thousands of road deaths by restricting the speed to 10 mph. But the politicians will say, "that's ridiculous". I.e., it is actually not worth saving thousands of lives by this inconvenience (even aside from the lives it would cost by impeding fire engines, ambulances and police).

And you certainly shouldn't beat yourself up about your personal behaviour. Just look at Gore's producer Laurie David: she screams abuse at SUV drivers, but travels on her private jet that probably spews more CO2 on one flight than most SUV drivers emit in a year. Gore himself loves to jet around preaching to the rest of us to live in a cave, but his own home guzzles about 20 times the national average.

Ktisophilos said...

That Ceravision sounds most intriguing. It's more evidence of what free enterprise can do if the government gets out of the way. A hunder years ago, free enterpriser Henry Ford cleaned up the major pollution problem of his day: horse dung.

But Congress is likely to make things worse by its usual blunderbussing interference. How crass to ban incandescent bulbs in favour of mercury-rich fluorescent ones.

Ktisophilos said...

Here's a recent piece by Lomborg, The Climate-Industrial Complex:
Some businesses see nothing but profits in the green movement, 22 May 2009.

He's hardly the first to point out that much government action ostensibly for public good is the result of "do-gooders" inadvertently allied with special interests (Milton Friedman) or a "Baptist–Bootlegger coalition" (Bruce Yandle). I.e. during Prohibition, Baptists wanted to ban alcohol on moral grounds, while the Bootleggers were happy with this ban because it raise prices of their illicit liquor; Joseph Kennedy was one who became extremely rich this way.

With this issue, the Baptist and Bootlegger are one and the same.