Hot Stuff, Cold Logic: Climate Change and Economic Thinking

EarthBy Richard Tol

The American Interest

Climate change is sometimes called humanity’s biggest problem. Ban Ki-moon, Christine Lagarde, and John Kerry have all said as much recently. The mainstream Western media often discuss climate change in catastrophic, or even apocalyptic, terms. Indeed, if you take newspaper headlines seriously, the Fifth Assessment Report of Working Group II of the Intergovernmental Panel on Climate Change came accompanied by the Four Horsemen of the Apocalypse; predictions of famine, pestilence, war, and death proliferated hither and yon. Conversely, when, on November 11, 2014, the United States and China inked an agreement on climate whose actual consequences are at best liable to be indistinct, banner headlines broke out, as though messianic times were nigh.

Assuming it falls somewhat short of the Four Horsemen of the Apocalypse, how serious will the impact of climate change be really? How much do we know about these impacts? What are the implications for policy?

It’s helpful to recall here that climate change means a lot more than just different temperatures. It means more or less rain, snow, wind, and clouds in various places. It means different outcomes for plants, whether direct or, since plants compete for resources, indirect. It means changes for the animals that eat those plants. And this includes changes for everything that hitches a ride on those plants and animals, and hence changes for all sorts of pathogens. Nature, agriculture, forestry, and health will all be different in the future. The seas will rise as water expands and glacial ice melts, affecting coastlines and everyone and everything that resides there. Water supplies will be affected by changing rainfall patterns, but water demand will also be altered by changing temperatures. Energy demands will change, too; there may be less need to heat houses in winter and perhaps greater need to cool them in summer. Traffic, transport, building, recreation, and tourism, too, will all feel the impact of a changing climate.

For some, the mere fact of these impacts is reason enough for governments, businesses, and individuals to exert themselves to reduce greenhouse gases to minimize the change. That is strange logic, however. Change, after all, can be for the better or the worse, and at any rate it is inevitable; there has never been a lengthy period of climate stasis.

Just as there is no logical or scientific basis for thinking that climate change is new, there is no self-evident reason to assume that the climate of the past is “better” than the climate of the future. With just as little logic, we might assume that women’s rights, health care, or education were necessarily better in the past. Any such judgment also contradicts Hume’s Law and, perhaps worse, is grounded in a fallacious appeal to nature understood in a very slanted way.  There is no prima facie reason to assume that any given past climate was better than the prospective one. The climate of the 21st century may well be unprecedented in the history of human civilization; the number of people living in countries with free and fair elections is unprecedented, too. So what? “Unprecedented” is not a synonym for “bad.”

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