CNBC Business | The True  Cost of Kyoto

The True  Cost of Kyoto

Bjørn Lomborg, controversial author of The Sceptical Environmentalist, asserts that  dealing with climate change must arise from a level-headed debate about costs and benefits

This year, nations will send emissaries to Denmark to negotiate the successor to the Kyoto Protocol. These diplomats will attract a travelling circus of lobbyists, activists and the media. Many will campaign for the next world agreement on carbon emission cuts to go much further than the last. This would be a monumental mistake, an immoral waste of resources, and a lousy way to battle the problem of man-made climate change.

The Kyoto Protocol itself was overly ambitious, with the rich industrialised countries promising to cut their emissions some 30% below what they would otherwise have been in 2010. Yet, very few countries have lived up to its requirements. Ninety-five percent of the agreement’s envisioned cuts have not happened. Even if Kyoto were fully implemented across this century, it would have had almost no impact on climate even a hundred years from now – models show that it would have reduced temperatures by an almost unmeasurable 0.3 degrees Fahrenheit. 

Most economic models predict the cost of climate change to add up to about 3% of global GDP by the end of this century. Kyoto’s cost would have been a permanent half-percent of global GDP, yet it would only have ameliorated the economic loss by one-sixth of one percent. 

The United Nations’ panel of climate change scientists, the IPCC, expects temperature increases of 3 to 7 degrees Fahrenheit by the end of this century. Where campaigners like former US vice-president Al Gore have warned of a 10-metre wall of water that will drown low-lying cities, the IPCC’s scientists conclude that sea levels will rise between 15cm and 60cm over this century. This is entirely manageable. How do we know? Because it is not dissimilar to the rise of about one foot that we experienced during the past 150 years. 

The IPCC has told us that global warming will mean more precipitation and the risk of more flooding. No ‘extreme weather event’ passes these days without the question: is this a result of climate change?  

An incredible amount of the damage caused by the weather is actually the result of poor public policy. Take the case of inland flooding – this is a problem not mainly caused by climate but lack of smart policies, excessive levees and a lack of wetlands. We could respond most effectively by managing people and wealth on flood plains. We could improve public planning, inform people better about flood risks, cancel public subsidies to settlements in flood plains, use levees more sparingly and allow flood plains to do their job and flood to provide buffers to other land.  

This would prove incredibly effective at reducing the carnage caused by extreme weather events, and would cost a fraction of the price of the Kyoto Protocol.  

When heatwaves strike during the summer, campaigners for drastic carbon emission cuts point out that more lives will be lost as temperatures rise. Indeed, researchers conclude that climate change will mean about 400,000 more heat-related deaths globally by 2050.  

However, there is another side to this story. Rising temperatures will reduce the number of cold spells. The cold is a much bigger killer than the heat. Climate change will result in 1.8 million fewer cold-related deaths each year, according to the first peer-reviewed global estimate published in Ecological Economics. The number of saved lives will surpass the increase in heat-related deaths for nearly two hundred years.  

It is important to acknowledge that there is one region where deaths from higher temperatures will outweigh the number of lives saved from the cold in 2050. In Africa, nearly 200,000 deaths will be avoided but more than 250,000 deaths will be the result of rising temperatures. 

The added cruelty, of course, is that Africa is home to some of the poorest people on Earth. Understandably, some commentators say that climate change’s effects on developing nations provide a compelling moral reason to dramatically cut carbon emissions. This appears compassionate, but is poor advice if we want to help the planet – or help Africa with its biggest problems. 

Ultimately, we cannot just turn down the thermostat over Africa. Implementing Kyoto-style cuts would mean 88,000 more cold-related deaths to save 4,000 people from heat-related deaths. The financial cost would be $180bn annually for 50 years. Each life saved, in other words, would cost more than $100m.  

That money could be spent much better – a point underscored by the Nobel Laureate economists who gathered in 2008 for the so-called Copenhagen Consensus. The expert panel was convened to prioritise solutions to the world’s biggest problems. It was asked to identify the areas where investments could achieve the most ‘good’. 

The experts found that interventions like improving malnutrition and child health in the Third World deserve much higher priority than carbon cuts to battle climate change. 

They based their decisions on the presentations of specialist researchers from each field. The panel was told that $1bn (half a percent of the cost of the Kyoto Protocol) spent on tuberculosis identification and treatment would save one million lives in the Third World, while $200m (one tenth of one percent of Kyoto) could avert 300,000 heart attacks by getting low-cost drugs to the world’s poorest countries’ health systems. 

The Copenhagen Consensus expert panel concluded that the single best investment that could help the planet today is spending on simple, cheap policies to combat malnutrition and hunger. 

Getting micronutrients – particularly vitamin A and zinc – to 80% of the 140 million or so undernourished children in the world would require a commitment of just $60m annually. The economic gains from improved productivity and a lower burden on health systems would eventually clear $1bn a year, providing impoverished nations with more resources to respond to other problems including climate change.  

Another incredibly effective investment is salt iodisation and iron fortification. Iodization prevents goiter, a disease that has been all but eradicated in the developed world. Iron deficiency leads to stunting, and cognitive and developmental problems. Iodising salt costs just five cents per person, per year, while fortifying staple food items with iron costs as little as twelve cents. For just $286m, we could get iodised salt and fortified basic foodstuffs to 80% of the populations in the worst affected areas, with benefits estimated somewhere around nine times higher than the costs.  

Of course, it is argued that climate change will worsen the problem of malnutrition, so we should respond with carbon cuts. In isolation, models show that global warming will probably cause the number of malnourished people to increase by 28 million by the end of the century. There is a more important point: today, more than 900 million people suffer from malnourishment. By 2100, this will probably drop to about 100 million. 

Spending $180bn annually on Kyoto would have stopped two million people from going hungry by the end of the century. In contrast, $10bn spent annually on food aid and agricultural production could feed the 229 million people who go hungry today. It is perverse to focus resources on helping two million people inefficiently in a hundred years, when we could help 229 million of the world’s most disadvantaged citizens right now at a much lower cost. 

This same is true, whether we look at flooding, heat waves, hurricanes, diseases or water shortages. Carbon cuts are an ineffective response. Direct policies do a lot more. 

When the expert panel of economists made their findings in Copenhagen in 2008, they ranked lowest the proposal of combating climate change policies with carbon cuts alone. They based this decision on research that indicated that – even considering the environmental and economic impacts – the benefits would be lower than the costs. Spending a dollar would get back less than a dollar worth of good. 

This does not mean that we should ignore climate change altogether.  

The core problem is that cutting carbon costs about $20 a tonne, yet the benefits only add up to about $7 a tonne. Cutting emissions has a feel-good factor – the wealthy can  afford to put up solar panels to boost their image – but is not going to solve global warming. 

We need to make cutting emissions much cheaper so that helping the environment wouldn’t be the preserve of the rich, but could be opened up to poor people in developed nations – and also to the main emitters of the 21st century, China and India, who have many other pressing issues to deal with first.  

The rational answer – and what we should agree to in Copenhagen this year – is a dramatic increase in spending on research and development into low-carbon energy. Every nation should ideally commit to spending 0.05% of GDP exploring non-carbon emitting energy technologies. This would cost $25bn per year, which is seven times cheaper than the Kyoto Protocol. All nations would be involved, yet the richer would pay the larger share. The economists showed that the benefits of energy R&D vastly outweigh the costs – for every dollar spent we would do $11 worth of good.  

Finally, we must remember that our overall goal is not simply to reduce carbon emissions, but to achieve the best outcome we  can for the planet, especially its most vulnerable people.  

It is sometimes pointed out that my nation, Denmark, has kept its CO2 emissions flat while enjoying 70% economic growth since 1981. During the same period, US emissions grew 29%, but its GDP grew 39% more than Denmark’s, indicating a simple truth:  CO2 cuts and subsidies don’t necessarily mean no growth, but they probably do mean slower growth. Crippling the world’s poorest nations today in order to achieve a tiny amount of good in the distant future is not a wise strategy. 

Many people are confused by the differing claims made about climate change. When we focus on the facts, the path forward becomes clearer. I hope that in Copenhagen this year, common sense and science will prevail over far-fetched rhetoric.  