Warming fears do not add up

A FRIENDLY word of advice this Christmas: relax and enjoy it. Don't feel guilty about taking home your Christmas turkey in a plastic shopping bag or turning on the lights on the Christmas tree. They aren't acts of environmental vandalism, or likely to accelerate global warming.
You could, of course, be forgiven for thinking otherwise. Since the publication of the Stern review on the economics of climate change, global warming hysteria has reached fever pitch.
Which is not surprising, as the review was presented in terms carefully calculated to engender alarm. It warns that climate change poses risks "on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century" and requires immediate action.
There has been something of a political and media frenzy ever since. But, surprisingly, little publicity has been given to a paper by a recognised authority on the economics of climate change, William Nordhaus of Yale.
Nordhaus is not a climate change sceptic, and he starts out with academic courtesy for the work of another toiler in the vineyard of climate change economics.
The Stern review, he says, is an impressive document, and although he questions some of its modelling and economic assumptions, he says its results are fundamentally correct "in sign if not in size".
However, that seemingly modest qualification about the size of the economic effects of climate change in fact hides a fundamental disagreement. Before he is done, Nordhaus punches a huge hole below the water line of Nicholas Stern's analysis.
What immediately strikes Nordhaus, who has built his own models of climate change, is how radically different Stern's policy recommendations are from earlier economic models that use the same basic data and analytical structure.
He explains that one of the main findings of climate change economics has been that the efficient or optimal economic policies to slow climate change involve modest rates of reductions in greenhouse gas emissions in the near term, followed by sharp reductions in the medium and long term.
In other words, policies to slow global warming tighten or ramp up over time.
He says that although scientists have sounded many sombre warnings about the long-term peril of unchecked climate change, Stern attempts to justify strong current action in a cost-benefit framework. That is, act now and the cost will be a lot less than acting later.
"Is this radical revision of global warming economics warranted?" Nordhaus asks. His answer is no, it isn't.
Looking into the climate impact boxes of the Stern review, Nordhaus finds some strange things. Basically, the assumptions used and the studies selected all work to give maximum damage estimates.
But his fundamental objection is the use by Stern of a social discount rate of almost zero. Without going into technicalities, this effectively results in a willingness to heavily punish the present generation for the benefit of generations hundreds of years ahead.
To illustrate, Nordhaus feeds into the Stern model a climate impact in 2200 that causes damage equal to 0.01 per cent of output in 2200 and continues at that rate.
He then asks how large an economic impact would be justified today to avoid this damage starting after two centuries. His answer is that a payment of 15 per cent of current world consumption (about $US7 trillion) would pass Stern's cost-benefit test.
"This seems completely absurd," Nordhaus says, as indeed it is. "The bizarre result arises because the value of the future consumption stream is so high, with near-zero discounting, that we would trade off a large fraction of today's income to increase a far-future income stream by a very tiny fraction."
In short, the Stern review is a very shaky foundation on which to base climate change policy.
"The radical revision of the economics of climate change proposed by the review does not arise from any new economics, science, or modelling," Nordhaus concludes. "Rather, it depends decisively on the assumption of a near-zero social discount rate.
"The review's unambiguous conclusions about the need for extreme immediate action will not survive the substitution of discounting assumptions that are consistent with today's marketplace. So the central questions about global warming policy - how much, how fast and how costly - remain open."
So does the science. Despite claims of overwhelming consensus, crystal clarity and so on, there is no shortage of dissenting voices.
The truth is the debate about the science of global warming has been taken over by the politicians and their placemen.
There are too many of examples of the UN's Intergovernmental Panel on Climate Change trying to suppress dissenting voices, and it isn't the only one.
Recently, Britain's Royal Society wrote to Exxon Mobil demanding that it cease funding for groups that "misrepresented" the science of climate change by denying the evidence.
This is appalling behaviour by a supposed premier scientific academy. Since when has science proceeded by enforced consensus, other than when controlled by the church or state? Too often the dissenters have proved right.
Particularly objectionable is the use of the term climate change denier to describe dissenting voices: a deliberate attempt to draw a parallel with Holocaust deniers. Indeed, the parallel has been made explicit by various green extremists.
The truth is neither the science nor the economics of global warming is settled. The increasingly shrill attempts to suppress critics suggests a rising insecurity in the carriages of the global warming gravy train, and the exposure of the dubious economics of the Stern review can only increase it.