by Paul J. Georgia
August 2, 2002

Stephen Schneider, the Stanford biologist turned climate scientist, has apparently become an economist too. According to his calculations, saving the planet from global warming will cost virtually nothing. The Bush administration's statements to the contrary are "fallacious" and nothing more than "wild rhetoric."

Schneider, a veteran of the climate-change wars (he predicted in the 1970s that industrial emissions would usher in the next ice age), claims in an analysis that appears in the August issue of Ecological Economics, that in a hundred years the world will be ten times richer than it is now and that people on average will be five times richer. Putting the estimated costs of global warming policies in "proper context," says Schneider, leads to a stunning conclusion: the trillions of dollars that would be spent to stop global warming would only delay such a wonderful state of affairs by a mere two years.

Schneider's argument leaves one gasping at its sheer audacity. Not only does it miss the point entirely, its callousness exceeds even the coldest cost-benefit analysis. It isn't the vastly wealthier generations of people living 100 years from now that opponents of energy suppression policies are concerned about, but those who are living now and especially the poor.

As noted by Oxford Economist Wilfred Beckerman in 1997, just after the Kyoto Protocol was born, "it makes no sense to impose heavy burdens on today's generation in order to raise the welfare of people alive in 100 years" who will be significantly wealthier, and far less likely to be affected by the vicissitudes of climate than we are today. Indeed, it is downright immoral to ask today's poor to distribute wealth to the relatively more well-off people of the future.

Not only is the argument morally bankrupt, but the underlying economic analysis is completely invalid. What distinguishes good economic analysis from junk is the comparison of marginal costs to marginal benefits — the cost of reducing one more unit of greenhouse gas versus the benefits — rather than total costs to benefits. As noted by Ross McKitrick, an economist at the University of Guelph in Ontario, "The problem with Kyoto-type emission reduction plans is that the marginal costs rise exponentially and the benefits, if there even are any, rise linearly. So no matter which angle you look at it carbon dioxide restrictions on even a modest scale use up more social resources than any benefits they generate."

Bjorn Lomborg, author of The Skeptical Environmentalist, makes the same argument in simpler terms. He notes that the worldwide cost of implementing the Kyoto Protocol would be about $350 billion per year beginning in 2010. Beginning in 2050, the cost rises to $900 billion per year. The cost of predicted global warming, if climate models are to be believed, would be about $900 billion in 2100. But even if fully implemented, Kyoto would only delay the predicted amount of warming by a mere six years.

So what does this mean? It means that the world will spend thousands of billions of dollars over the next 100 years to prevent global warming, at the end of which it would have to pay the costs of global warming anyway, if it materializes. Kyoto is like trading dollars for pennies and would have about as much affect on the climate.

An economic analysis by the Department of Energy's Energy Information Administration makes this calculus even starker. It estimates that the cost of Kyoto to the U.S. alone would be about $300 billion per year. The resulting loss of GDP over the next ten years, about 28 percent, would be nearly triple the loss to GDP experienced during the Great Depression, which saw a drop in GDP of about 10 percent. There is little doubt that the Kyoto Protocol, or the domestic equivalents being considered in Congress, would cause deep and broad based economic harm in the U.S. and the world as a whole.