MR. FRED SMITH: Let me welcome you all here this morning. I am Fred Smith and I direct the Competitive Enterprise Institute. Some of you know, we have been labeled by the Wall Street Journal as the best environmental Think Tank in the nation. And in that capacity, we thought it critical to sponsor this conference, “The Cost of Kyoto.” Because this is certainly the most significant environmental issue of the century. And there has been far too little debate on the global warming issue. In less than five months, the world will meet in Kyoto, to decide what, if anything, to do about global warming policy.
Now some of you read recently, the column by columnist Bob Samuelson. He said the risks of global warming are too uncertain. The reasons for haste are far too weak. The cost of implementing the policies being proposed are too high. And the ability of even such high cost approaches to actually achieve anything useful are far too low. And after all, the option of adapting to climatic change rather than attempting to resist it is far too attractive. He argued that an all pain no gain policy is illogical and therefore unlikely.
I'm not so sure. Having spent years in Washington, I find that often in politics, logic is for losers. Moreover, we have recently witnessed the ability of this Administration to certainly endorse, quite enthusiastically, high pain, little gain strategies in their PM 2.5 Ozone Control Policies. I see very little reason for anyone to be complacent at this point in the policy debates. Former EPA Administrator under a republican administration, William Reilly, once quipped that EPA's action doctrine was very, very clear: Ready, fire, aim. He would feel very much at home in this Administration. This act first, think later tendency is made more likely that while the possible costs of global warming have been very much highlighted in the news and television, movies, there has been very, very little debate about the cost of Kyoto, the risk of global warming policies. And our goal today is to bring some balance to that debate.
Let me suggest a framework — how do you think about something as complicated as global warming? Well, the primary question that faces society in this case is how to act in the face of uncertainty. The world's use of energy might be warming the earth. That warming might create risk, catastrophic risks considerably. And we might be able to curtail energy use through some form of highly imaginative, globally-coordinated, energy control policies. And the cost of that action might be less than the cost of becoming smarter and becoming richer, being more able to ride out the risks of global warming.
But how do we know? Well, statistical data – decision theory, I was at one time a mathematician, as some of you know — suggest that what do you do in the situation where you have a hypothesis, the globe might be warming, it might not be, the risks might be high, they might not be? You collect data. As the data comes in, you get more and more sure about the two hypothesis, to accept the hypothesis of catastrophic global warming or to reject that hypothesis. At each stage in the process you have three choices: You can accept the global warming catastrophe theory and act accordingly, you can reject it, or you can collect more data.
There are always risks associated with any of these courses. The risks of delay are obvious. But the risk of type one and type two errors are also important. The type one error is the world is facing catastrophic risk and we don't act on this policy. And the risk of that are being made very, very clear. Those of you who have read our Vice President's Earth In the Balance book have been at least terrified by the prospects that the earth might be burning to death. Water World, the wonderful movie that some of you saw, has the whole world awash in water caused by man's destruction of the planet. And of course, we have the recent Nobel Prize economists warning us that the science of global warming requires that we act now.
But there is also a type two error, the risk that we accept the catastrophic theories of global warming and they are not true and we act as if they were and we impose on the world a form of energy starvation policy. How do we assure that we consider the risks of type two, the risks of over restricting use of energy, versus the type one of not doing something to restrict energy use? That risk/risk perspective is the key way to think about policy actions in the face of uncertainty. Should we encourage the risk of energy starvation or should we encourage the risk of energy use with the potential threat that that might impose as given by the global warming theory?
The schedule for today is to address that issue and many of its ramifications. This is a big issue, and we won't cover all the topics today. But I think we will cover topics that have received far too little attention. Senator Craig soon will be introducing our conference. Then we move to the science elements of the day. Roy Spencer will first provide an overview of the current status of the science of what we know and don't know, what the uncertainties are in the global warming area. And then after lunch, we will return to that topic and a discussion between Alan Robock and Patrick Michaels about whether the science at this stage is adequate to move now. The first two panels this morning will address the impact of global warming policies, the domestic impacts of those policies, how would they affect the US economy, the US consumers, and then in the second panel, how they will affect the international situation, what would be the impact on the poor of the world? We have all heard about the risks to the — Maldive islanders of being awash in a world of higher oceanic levels. But what about the risks to the world of reducing energy use in a world that is all too poor already? Our lunch time address will provide a further global perspective when the Deputy Chief of Missions, Paul O'Sullivan from Australia, provides a down under perspective on this issue. And then after lunch, we move to the science discussion we noted earlier. And then our final panel, which is dealing with I think a very, very interesting topic, the political economy of global warming. How does the politics of all this fit together? And how do we move this debate into an area where we understand that science and science policy are all entangled in the politics of Washington and there are many agendas which can distort that process. And some of them are offered to you today. The final talk or the summary will be by Senator Hagel who will join us at our reception to provide concluding remarks.
The framework throughout this convention, of this conference I urge you to adopt is: Should we be considering a prevention strategy or should we be considering an adaptation strategy? In the face of change, should we try freeze the world and make nothing change? Or should we be trying to adapt to a world where there will be risks in the future but we are not exactly sure what those risks are likely to be? Should we try to prevent the one possible risk of global warming? Or should we try to become smarter and wealthier so that we can adapt ourselves to whatever risks occur, whether it be warming or cooling, or drier or hotter, or maybe an asteroid or a disease, or many other risks that the world will certainly face in the 21st Century? As we learn more, we can gradually reduce the uncertainties associated with those. And we'll be able to know more. And do we have to act today or do we have to act in December in Kyoto? There are risks in both directions.
Think carefully, though, about the fact that hurricanes occur in the United States, and hurricanes occur in Asia. When a hurricane occurs in Florida, people are alerted early, they move out of the way, they have the mobility, the automobiles, the wealth, to relocate. We have the capacity in our society to make it feasible for people to relocate and spend weeks away from home while we avoid the course of the storm. The storms in Bangladesh are very much similar types of storms. But in Bangladesh they lack the wealth. They lack the technology to allow them to be alerted early and the wealth to move out of the way and relocate for the period of time necessary to shield those populations from the risks associated with climate. In the United States very few people die from climatic disturbances. In Bangladesh and the poorer areas of the world, many people die. Is the solution to the world's problems to prevent storms or to try to ensure that the people of the world have the wealth and knowledge to ride them out? That's the question I think we ought to be asked as we go through the debate today.
Our first speaker will be Senator Craig. Senator Craig and I were talking a little earlier. And I think both of us are aware that the party now in power, the Republican party has a tremendous opportunity and responsibility to gain control over the environmental debate. The environmental issue is one of the last areas when a large number of people still believe that Washington knows better than the people, where politicians should run our lives rather than the individuals in our society.
The argument is that markets are wonderful forces for free people, for the people who can handle freedom, that markets are wonderful ways of producing wealth. There's just one problem with markets in a free economy, it destroys the planet on which we live. Believing that we are led to a very large role for government. To address the issue of why we should maybe think that issue through and maybe there are alternatives and how we can begin to think about them in the context of global warming let me introduce to you Senator Craig from Idaho, a state that actually understands the value of raw materials and the value they can add to the lives of the human beings on the planet.