Saturday, January 22, 2011

Does Helping the Planet Hurt the Poor?

Yes, if We Listen to Green Extremists
By Bjørn Lomborg 1/22/11

Peter Singer poses an interesting and important question: Can we afford to both reduce poverty and clean up the environment? From an empirical standpoint, the answer is definitely yes. The developed world is sufficiently rich that doing both should be well within our means.

The key, of course, is being smart about how we tackle these big problems. Right now, the only legally binding climate policy, the European Union's 20-20 policy, will cost its members $250 billion in lost economic growth every year over the next century (according to research by the noted climate economist Richard Tol). Yet the net effect will be an almost immeasurable reduction in global temperatures of just 0.1 degrees Fahrenheit by 2100. If spent smartly, the same resources really could fix both global warming and poverty.

In a curious way, Mr. Singer's essay is an example of one of the stumbling blocks to making smarter policy decisions. He starts out saying we want to do a variety of good things, but almost reflexively he ends up focusing on green issues—and doing so in a very predictable way: The developed world has sinned and needs to atone.

Mr. Singer correctly points out that concerns over the environment and poverty are often linked. But he thinks about this only in terms of how poverty is bad for the environment, since poorer, less educated people tend to have more children, which puts more pressure on such things as forests and biodiversity.

But his argument can—and should—be taken further. As we get richer and such immediate concerns as water, food and health become less of an issue, we become more open to environmental concerns. Among other things, we become more willing to pay extra for technology that pollutes less and to accept more costly regulations to limit pollution.

We've already seen the results of this "greening" of society in the developed world, where for a number of decades air and water pollution has been dropping steadily. In London, which keeps the best statistics, air pollution maxed out in 1890 and has been declining ever since—to the point where the air is now cleaner than it has been at any time since 1585. In similar fashion, in some of the better-off developing countries, the focus has shifted from creating to cleaning up pollution. Today the air in both Mexico City and Santiago, Chile, is getting healthier.

.Mr. Singer also evades the awkward point that an excessively green approach can actually make the environment more imperiled. Consider the fate of the world's forests. As we get richer and more environmentally conscious, our growing passion for organic farming and antipathy to genetically modified crops inevitably leads us to accept decreased agricultural yields. An obvious consequence is that we end up converting more wilderness to agricultural use.

We've seen similar unintended consequences from the use of inefficient first-generation biofuels such as ethanol. As a result of pressure from environmentalists and lobbying by agricultural interests, use of these fuels was made mandatory by many governments in the industrialized world. Diverting farm products into our gas tanks has driven up food prices, resulting in more starvation and wasted resources and causing still more forests to be razed.

Mr. Singer criticizes the use of cost-benefit analysis because it doesn't value human lives at the same rate in developed and developing countries. As uncomfortable as it may be, the reality is that we don't actually think of all people as equal. If we did, we would be building all of our new hospitals in developing countries. Mr. Singer may regard this fact as shameful, but ignoring the ethical judgment of nearly everyone makes his analysis less helpful.

Similarly, Mr. Singer criticizes the way that discounting is used by economists to make future costs comparable to values in the present. He argues that we should give "equal weight to the interests of future generations." Once again, this may sound admirable. But think about the consequences of heeding Mr. Singer's advice. By choosing a discount rate close to zero, we effectively say that the desires of infinite numbers of future generations are vastly more important than our own, meaning that we should save the great bulk of our resources for the future and consume just enough to survive. Essentially, our generation should eat porridge, while we leave virtually all benefits to the future.

This was what the economist Nicholas Stern concluded in the controversial 2006 review of climate change that he conducted for the British government. Mr. Stern said, in effect, that we should be saving 97.5% of all our wealth for future generations. The silliness of this view becomes apparent when we realize that, by this logic, our children and grandchildren also would be expected to continue the cycle of bowing to future generations, leaving almost everything to their progeny and pushing forward an ever larger mountain of resources that are never to be consumed.

We don't behave this way. Partly because we are selfish and partly because we expect that future generations are likely to be much better off than we are. Compared with the future, we are the poor generation, and it is hardly moral to have the poor generation pay the most. Rather, it makes sense to leave generalized assets, such as knowledge and technology, to future generations. This gives them a much greater capacity to tackle problems that come their way. Our actual financial savings for the future tend to be about 15% of income. We could debate whether the number should be 10% or 20%, but it is far-fetched to suggest that it should be 97.5%. We all recognize that we should care for the future, but at the same time we should care for ourselves.

Mr. Singer falls into the trap of saying that global warming is so terrible that dealing with it should take priority over all other concerns. This is simply wrong. Global warming is a problem that we must confront, but according to economic modeling by Carlo Carraro of the University of Venice, its damage is likely to cost something on the order of 2% to 5% of GDP by the end of the century.

At the same time, it is helpful to recall that our fossil-fuel economy has created amazing opportunities for almost everyone in the world, lifting hundreds of millions of people out of poverty. The United Nations climate panel estimates that economic growth will enable an increase per capita GDP in developing countries by some 2,400% over the course of the century.

Global Warming saves 200,000 lives per year
Mr. Singer claims that problems related to climate change (such as an increased incidence of malaria) cause 140,000 deaths a year. Let's put aside for the moment the fact that rising temperatures are likely do more good than harm on this score, preventing so many cold-related fatalities that the net effect of global warming is likely to be a total of about 200,000 fewer people dying each year.

Even if we accept Mr. Singer's concerns, is fighting global warming through drastic carbon cuts really the best way to help people with malaria? By implementing the Kyoto protocol (at a cost of $180 billion a year), we could reduce the number of annual malaria deaths by 1,400. But we could prevent 850,000 malaria deaths a year at a cost of just $3 billion simply by providing adequate supplies of mosquito nets and medicine. For every potential malaria victim saved through climate policy, we could save 36,000 people through smarter, cheaper remedies for malaria.

From Mr. Singer's initial question of whether we can afford to both reduce poverty and clean up the environment, he ends up focusing on global warming and arguing that we simply need to "use less air-conditioning and less heat, fly and drive less, and eat less meat." This is a poor prescription, not only for those of us in developed nations but for developing countries and for future generations as well. It is an incredibly expensive way to achieve very little—and it won't happen.

Fortunately, there is a more sensible way forward that could use the same $250 billion that the European Union is expecting to waste annually on ineffective global warming policies. First, we should spend about $100 billion a year on research and development to make green energy cheaper and more widely available. Mr. Singer argues that it is not ethically defensible just to hope for a "technological miracle" that will allow us to end our reliance on fossil fuels. He is right. We must invest much more in green energy research and development, and it is the most politically realistic and economically efficient way to combat global warming.

This would leave $50 billion a year to develop adaptations for dealing with the impact of global warming and $100 billion a year for the world's poor, a sum that, according to the U.N., would go a long way toward providing them with clean drinking water, sanitation, food, health and education.

We are perfectly capable today of tackling the problems of both poverty and environmental pollution. But to do so, we must think clearly and rationally, and we must carefully weigh the costs and benefits of the approaches available to us.

Mr. Lomborg is the author of "The Skeptical Environmentalist" and "Cool It." He directs the Copenhagen Consensus Center and is an adjunct professor at Copenhagen Business School.

Cost-Benefit Analysis
In 2008, Mr. Lomborg's Copenhagen Consensus Center convened some of the world's top economists to evaluate how $75 billion could be best used to solve global problems.
At the top:
Micronutrient supplements for children (vitamin A and zinc)
For an annual cost of $60.4 million, the economists projected a yield of more than $1 billion in benefits.
Tuberculosis management
In 22 countries with a high incidence of TB, diagnosis and treatment would yield $1.7 trillion in benefits for a cost of $18.3 billion.
At the bottom:
Global-warming mitigation
Spending $800 billion on carbon taxes was found to generate only $685 billion worth of benefit.


  1. Doing nothing would be better.

  2. Anonymous,
    I assume by "nothing" you are referring to CO2 - and I agree. Cleaning up particulates, nitrous oxide, sulfur dioxide, etc. is certainly worthwhile, but CO2 is a harmless, trace, essential gas for which legislative controls are an absurd waste of resources, economically damaging, and have nothing to do with "climate change."