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11.Global Warming, Uncertainty,

Irreversibility & LongTerm Policymaking (SPRING 2002)

Larry D. Sanders

Dept. of Ag Economics Oklahoma State University

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INTRODUCTION (ch. 10 Hackett)

Purpose: – to become aware of the concept of uncertainty &

irreversibility with respect to environmental & natural resource policies

Learning Objectives. To understand/become aware of:1. To understand uncertainty & irreversibility.2. To become aware of the issue of global warming.3. To consider the policy options with respect to

possibly irreversible actions/events such as globalwarming.

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Background on concepts

Uncertainty--involves the probability that some event/action will or will not occur– precipitation– new technology

Irreversibility--suggests that some action/event will transform a resource to the extent it cannot be returned to its original state, limiting future options– clear-cutting a forest– draining a wetland– damming a river

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Risk Perceptions: may vary w/knowledge, severity of result, whether individual choice . . .

Unknown Risk

Known Risk

Severe

Risk

Minor

Risk x

Smoking

xSkate-

boarding

x Rec.

Boating

x

Nuclear War

xHandguns

x Commercial Flying

xDDT

x Pesticides

x RadioactiveWaste

xNitrogen

Fertilizers

xLead

Paint

x Caffeine

xNitrites

Adapted from Carlson et al. Agricultural & Environmental Resource Economics, 1993; also Sanders

Desire for regulation

X Global warming

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Case Study: Global Warming--background

Greenhouse gases--carbon dioxide, chlorofluorocarbons, methane, nitrous oxide, ozone, hydrofluorocarbons, perfluorinated carbons

Their function--filter solar energy, limiting infrared energy radiated back in to space

Greenhouse effect--as greenhouse gas concentration increases, capturing of infrared energy increases, & temperatures are likely to rise

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The Importance of Greenhouse Gases

Provides a blanket that “insulates the Earth by trapping heat, a lot like panes of glass in a greenhouse. . . ‘part of what makes the planet of work’.

“Without greenhouse gases, the Earth would be much too cold for comfort . . . problem now is that humans are thickening the blanket . . . & . . . nature’s thermostat is nudged up.”

--From cnn.com special section on global warming article “Messing with the thermostat can be devastating”, Miles O’Obrien, November 27, 1997.

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The Claims about Global Warming:“It’s Real” “Skeptical”

Sea level will rise 2-3 feet, covering many islands, changing coast lines & contaminating water supplies

Southern US climate becomes tropical changing ag production

Northern US climate moderates, more like Southern US today

Increase in heat-related deaths/diseases (malaria, dengue fever)

Only 24% of public is concerned

Models under-estimate complex global ecosystem (can’t predict 7 days out, much less years)

Models under-estimate the “technological fix” & market economics

Doubtful that government intervention will do anything but create more immediate problems

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Case Study: Global Warming--Science in Conflict

Scientists continue to debate both1. whether global warming is in fact occurring, &

2. the level of severity of impact Trade-offs:

1. If predictions are true & nothing done to stop it, large-scale changes in global climate that will severely affect the planet & our geo-political-economic system.

2. If predictions are not true but actions are taken to minimize global warming (Kyoto Agreement), wide-scale economic impacts on the US will reduce competitiveness (30-50% increase in fuel & utility bills).

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If Global Warming Perceived as Market Failure

Price

QuantityQ1

D=MBp=MVp=MWTPp=MBs

S=MCpS’=MCs

Q2

P2

P1

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Major Contributors to Greenhouse Gases

Per Capita Energy

Country Emissions (%) Consumption (mil. Btu)

US 19 335

China 10

Japan 5 171

Brazil 4 33

Germany 4

India 4

UK 2 169

Indonesia 2

Italy 2

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Issues & Options with Global Warming

KEY ISSUES:– Time Perspective?– Sources? – Geography (Trans-national?) – Irreversibility?– Science?

FREE MARKET RESEARCH & EXTENSION REGULATION SUBSIDIES

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Other Sources

http://cnn.com/TECH

(see interactive features; see global warming 101)