What do Pat Robertson, Gregg Easterbrook, and Michael Shermer have in common? They've all moved from climate-change skepticism to the "global warming consensus." These leading lights may help guide others toward this consensus too. And given the possibility that believers in global warming are right, I'd like to be charitable and suppose that, first, this consensus is built on the best available science and not just an academic herd mentality, and second, that anthropogenic climate change will yield predictable ill effects.
The itching question becomes: What do we do? If your answer is "Get the government to do something," eight world-class economists will give you a failing grade. The economists are Jagdish Bhagwati, Bruno Frey, Justin Yifu Lin, Nancy Stokey, and Nobel laureates Vernon Smith, Douglass North, Robert Fogel, and Thomas Schelling. They comprise the panel assembled by the Copenhagen Consensus Center, headed by Bjorn Lomborg, author of The Skeptical Environmentalist. In 2004 the panel, which operates under the auspices the Copenhagen Business School, inquired into which of the world's major problems would be most soluble (measured by bang for the buck) if $50 billion were available for the task. On a list that included diseases, malnutrition, and economic problems, the group ranked global warming dead last. In the language of cost-benefit analysis, government fixes for climate change promise big costs with little to no benefits. (The top-ranked proposal was control of AIDS/HIV. A complete analysis of the rankings is found in Global Crises, Global Solutions, edited by Lomborg. The panel will meet again in 2008.)
But you don't need Nobel laureates to explain why government solutions to climate change are wrongheaded. Let's linger on the main solutions offered: cap-and-trade and carbon taxation.
A Kyoto-style cap-and-trade system is one in -which a government committee establishes an "acceptable" level of greenhouse-gas emissions for relevant industries. If a plant releases greenhouse gases in excess of the standard, it may go into the "carbon market" and purchase units from other companies that have emitted less than the standards call for and so can sell credits. Thus the process uses quasi-market mechanisms to cut emissions - purportedly minimizing costs to the plants.
Capping might work well to clean up, say, the Chesapeake Bay. But if applied globally the problems are manifold. First, no cap-and-trade system yet conceived has been able to promise a significant reversal in warming trends. (Even a number of Kyoto signatories have admitted this fact.) To bring about an abatement of warming (based on current climate science), cap-and-trade standards would have to be set so high that many industries would be crippled, with unforeseeable ripple effects, potentially leaving millions without work in the developed world. If there are fewer economic resources as a result of the standards, it will be harder to adapt to local global-warming problems.
Second, a truly effective cap-and-trade system would require virtually unanimous agreement from the developing world as well. If developing countries were to opt out, their industries would produce more while industries in the developed world produced less. So emission-levels would remain unchanged at best. On the other hand, even if the emerging giants - for example, China, India, Russia - were somehow convinced to agree to a cap-and-trade scheme, their development would be severely retarded, leaving millions destitute.
Third, unanimous international agreement, even if it wouldn't sound the death knell for the developed economies, would kill the hopes of the poorest nations.
But unanimity is not feasible, given the incentives to defect. And temptations to do so by high-growth industrial newcomers like China would be especially great. Cap-and-trade would thus provide an indirect subsidy to the developing world - with all its dirty, less-sophisticated carbon-emitting industries. …