On Climate Change, Economics Trumps Science

The latest report from the Intergovernmental Panel on Climate Change (IPCC) has again prompted questions about how climate science should relate to climate policy. The IPCC's findings have changed little since its 2007 report, but Rajendra Pachauri, the organization's chairman, seems to be upset with the relative calm with which the world has greeted the new report. He plans a public-relations campaign in hopes that it will stoke more alarm.

Is it true, though, that global greenhouse-gas control has failed because governments are not familiar with the IPCC's scientific claims? There really are no grounds for reaching that conclusion. Look, for instance, at the cases of China and India.

These two countries have resolutely rejected all demands that they adopt binding limits on their emissions. Yet Beijing is fully aware of the threat posed by climate change; in fact, it has plans for massive public-works projects to adapt to it. New Delhi, even if it has less capacity for large-scale public works, is also fully aware of the threat posed by climate change.

These countries' assessments of climate science do not conflict with those of the IPCC. But Beijing and New Delhi apparently prefer to adapt to climate change instead of investing in high-cost efforts to prevent it. Moreover, in making this choice, the politicians may have a better grasp of the big picture than the scientists do.

First, emission controls tough enough to really affect the world's climate would also slow economic growth. The penalty would be higher for countries -- including China and India -- that depend heavily on coal. And both of those countries need rapid economic growth in order to meet urgent social needs and perhaps even to maintain internal law and order.

True, at present, both regimes seem stable. But China's Communist Party, despite its huge security apparatus, remains concerned about domestic unrest. Meanwhile, after decades of effort, India has still not stamped out the Naxalite rebels. Economic growth is a way for both of these regimes to promote the most vital of public goods, domestic peace. Hence, a policy that slows GDP growth poses risks of its own.

Second, even putting aside larger domestic-security issues, tough emissions-control measures are very bad politics in the Asian states. In China, such controls would harm many of the big state-owned enterprises; in the past, these firms' tight links to the Communist Party elite have allowed them to thwart reform efforts. In India, the corrupt campaign-finance system gives industry a large degree of veto power over policy. In neither country does a sizeable power bloc favor adopting costly emissions controls. Climate scientists may tut-tut that such sordid factors affect policy, but politicians cannot save the world by being thrown out of office. As a result, the odds are that, if basic patterns of governance remain unchanged in the Asian states, so will their climate policies.

Third, growth and adaptation also make sense as climate policy. Growth will allow countries to build the capital stocks that will, in turn, enable them to adapt to climate change. Thanks to past economic growth, China now has some of the resources that it will need to build large-scale public works with which to adapt to climate change. Beijing does not seem to be inclined to change course. As a result, New Delhi must assume that global emission controls are not going to be very effective anyway.

In light of these factors, Americans should not expect the large Asian powers to adopt effective emission controls. And in that case, even very stringent U.S. controls can have little effect on the global climate. The Obama greenhouse-gas policies may assuage some Americans' liberal guilt, but they will not have much of an impact on global temperature.

This same political logic has prevailed throughout the last 20 years. Round after round of climate talks have failed to produce significant progress on greenhouse-gas control. Climate scientists may be frustrated. But unless something alters the deep political and economic factors that are causing this long-running impasse, the results will also stay the same. And nothing in the new IPCC report will change the basic facts of world political economy.

Lee Lane is a visiting scholar at the Hudson Institute and a consultant to NERA Economic Consulting.

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