Kyoto is not the answer
On Monday, Thomas C. Schelling of the University of Maryland was awarded a halfshare of the Bank of Sweden Prize in Economic Sciences. That’s the honour often (inaccurately) called the Nobel economics prize. Schelling has been a major figure in the progress of game theory from an abstract mathematical plaything to a tool of genuine power, one relied upon routinely by diplomats, generals, and his fellow economists. He has influenced everything from addiction research to the screenplay of Stanley Kubrick’s Dr. Strangelove.
But not everyone will be happy about Schelling’s elevation to the supreme rank of world scholarship. In the early 1990s, Schelling — having long since completed the wide-ranging applied math that made him Nobelizable — became interested in the debate over climate change. He has since made his own controversial contributions that place him in a littleintellectual territory between the prophets of doom and the global-warming skeptics.
Schelling accepts the mainstream theory of global warming: that it is happening, that humans are contributing to it significantly and that the resulting change will probably be unprecedented in size. What makes Schelling unusual is that he is pretty comfortable with the increasing heat. He was among the first to argue that climate catastrophists underrate the adaptability of human beings and their economic arrangements. The net temperature change in any one place, he notes, is unlikely to exceed or even approach the changes people cope with whenever they move between two distant parts of the world. Travelling from Winnipeg to Miami doesn’t kill anybody, and despite very different weather, people in both places live by the same means and enjoy roughly the same quality of life.
Scientists expect that the mean global temperature will rise, say, two or three degrees between now and 2080. In 1992, Schelling asked readers of the American Economic Review to perform a thought experiment: If such a rise in temperature had already happened, would we now look back on it with horror and sadness? Would older people even have been aware of it, amidst the other dizzying changes that characterized the 20th century? It’s most likely, Schelling postulated, that even a farmer would cite other factors — automobiles, electricity, the telephone, modern pesticides and fertilizers — as having altered his life more than a long, slow shift in the growing season.
Schelling acknowledges a chance that small, gradual changes in the world climate could cause fast-developing catastrophes in some places. And we may have other reasons to resist a rise in the global temperature. But on the whole, he contends, the only major human activity seriously threatened by climate change is agriculture. In the advanced industrial democracies, where agriculture has become a trivial fraction of national economic output, dealing with rising temperatures as they arrive will be relatively cheap. But climate change would hit the developing world, and especially subsistence farmers, relatively hard.
So what should the rich nations do to help others prepare? Schelling has been skeptical about the political prospects for a global carbon tax, thinks tradeable emission permits are elegant but impractical, and was an early critic of the Kyoto Protocol. As a young man, he worked on the postwar Marshall Plan that rehabilitated Europe. The Plan worked wonders without any imposed targets, any explicit performance criteria, or any regime of penalties for inefficient use of America’s gigadollars. Schelling thinks it’s the way to go if we want to pay the developing world to help deal with the effects of global warming — such as moving people away from coastal cities, which will increasingly be at risk of flood as water levels rise.
Still, even a Marshall Plan for global warming may take a back seat to other priorities. The ideal policy goal may simply be to reduce the poor countries’ dependence on agricultural output by helping them not be poor. According to Schelling’s view, the spread of liberty and free trade may be the best environmental medicine. Schelling also contributed to the creation of last year’s “Copenhagen consensus,” a much-vilifed exercise in ranking potential worldwide crises by their urgency and solvability. Under the leadership of a Danish political scientist Bjørn Lomborg, Schelling and other senior economists crunched the data and came to an agreement that foreign aid should probably be committed first to fighting AIDS, to improving nutrition and sanitation, and to encouraging smallbusiness formation. Climate projects, like Kyoto, were condemned as poor value for money.
Schelling’s work in this field has been nuanced, insightful, and daring, which is to say that it’s been everything most environmental talk is not. Partisans on both sides of the climate issue could learn much from his analytical speculations — and still more from the lucid, bold way he expresses them.