The Failure of Climate Change Economics

[XemaSab]

In 1896, the Swedish chemist Svante Arrhenius developed a theory to explain the likely impact of burning coal on the climate. Arrhenius claimed that, due to human activity, the concentration of CO2 in the atmosphere would increase, creating an "enhanced" greenhouse effect. His theory did not enjoy consensus in his time, but the scientific community today agrees that human beings are responsible for the present global warming trend. Why, then, has the United States not signed on to the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC), the international document that established legally binding reductions in greenhouse gas emissions, with targets determined on a country-by-country basis?

Cost-benefit analysis has been the main tool used by American policymakers to argue that even a moderate reduction in greenhouse gas emissions, as proposed in the Kyoto Protocol, is at odds with the global capitalist economy. The Stern Review on the economics of climate change "estimates that if we don't act, the overall costs and risks of climate change will be equivalent to losing at least 5% of global GDP each year, now and forever." Thus far, the Stern Review is the only cost-benefit analysis in which the benefits of reducing emissions outweigh the costs. Many pro-business analysts, moreover, have challenged some of the assumptions in the Stern Review, like the use of a low discount rate, which, according to environmental skeptic Bjorn Lomborg, "makes the cost look much more ominous now."

http://mrzine.monthlyreview.org/clement150108.html