Summing Up: Should a 'Montreal Protocol' for Administering Global Warming Be Pursued?
Climate change and how to manage it is a daunting subject. Nevertheless, several readers of this month’s column were willing to venture a model or two for administering a system intended to encourage the global cooperation needed to make any set of mechanisms or actions work.
Carbon taxes or incentives of some type appeared to be one mechanism of choice for achieving a lower average global temperature. As Sensible Centrist put it, “While there is a role for governments to fund R and D in energy as we do now, especially in carbon removal technologies, the beauty of a global, uniform, significant tax or price on carbon emissions is that no administrative entity is needed. We already have what we need to administer and collect such a tax, and the price incentive will transform our economy and that of trading partners. A border tax adjustment will ensure global compliance.”
David Goodnow took issue with the notion of a border tax adjustment as a means of ensuring global compliance. He somewhat dramatically labeled it as “a few words for an intellectual ideal that strangles any meaningful productivity in an orgy of back-scratching, baksheesh, rake-off, and cronyism—and that’s just during negotiation.”
Whatever mechanisms might be employed would require an administrative model in order to achieve what Goodnow termed a “globally uniform push for environmental reform.”
The example of the Kubuqi Desert project which has already restored one-third of the desert to arable land was suggested by Just a Guest. Although confined to a limited geographic area in Mongolia, it required coordination between the Chinese government and local residents, with administration delegated to a Chinese company, Elion Resources, with incentives to make the project work. The relatively local nature of the effort carried out under a single powerful governmental entity have been important contributors to the project’s success.
Alka asked whether the Montreal Protocol, which was created to eliminate the production of chlorofluorocarbons (CFCs) that were found to contribute to a hole in the earth’s ozone layer, might be a good model. The Protocol, eventually subscribed to by all members of the United Nations, created an executive committee comprising representatives of seven industrialized countries and seven less-industrialized countries. The committee administers a fund (supplied by member contributions) through contractual agreements with several UN agencies and the World Bank to provide economic incentives designed to phase out production of CFCs. Created in 1987, 14 years after definitive scientific evidence was put forth that CFCs were causing the anomaly, by 2017 the hole appeared to be closing.
Global warming may be a more complex challenge than closing the ozone gap, for which cause and effect relationships were established. But the experiences of the Montreal Protocol lead one to ask the question: Should a Montreal Protocol for administering global warming be pursued? What do you think?
Original Column
iPhotoWhen facing big decisions with long-term consequences, business organizations devise ways of thinking about them, using data in creative ways. For example, Royal Dutch Shell, a company forced to make investments with very long time horizons, adapted scenario planning from the military in the 1970s to develop alternative “stories” about the future and how we got to each from the present. Several scenarios are created to reflect optimistic, pessimistic, and other views of the long-term future in order to arrive at projections on which current decisions can be made and then track events leading to each projection. Steven Johnson discusses it in his book, Farsighted.
The National Climate Assessment, released by the White House last week on the heels of the report of the Intergovernmental Panel on Climate Change, contained information organized in a way that any long-term planner readily recognizes. It contains revenue (GDP) and cost information on which decisions can be based. For example, it estimates that climate change will gradually reduce United States GDP, reaching a 10 percent annual reduction by the year 2100. Assuming that US GDP increases from about $20 trillion in 2018 to $70 trillion in 2100, this amounts to a $7 trillion hit to GDP in 2100 alone and a cumulative reduction of as much as $300 trillion over 82 years. Global GDP by 2100 should be at least five times that of the US, suggesting that globally, the annual cost could reach $35 trillion or more. China and India, whose economies are expected to exceed that of the US in size before 2100, should have an even more intensive interest in the problem than America. In short, money should be no object in attempts to halt trends in climate change.
This kind of exercise is similar to one we use constantly in business, a lifetime value projection. It assesses the value of a customer over their lifetime in order to sensitize management to the amount that can be invested in customer retention as part of a business strategy. The lifetime value number typically is astronomical. Even if it is off by a factor of two (because of errors in estimates or an assumed high probability that it will actually happen), the number is usually dramatic. Highly successful businesses such as Intuit were founded on the concept of lifetime value, offering its personal financial software product, Quicken, for $30 with a money-back guarantee and free lifetime customer support. These were based on the notion that the Company would thrive on the lifetime value of a stream of annual sales of software and supplies to a customer.
Let’s assume the climate report is directionally correct. But let’s also accept the accompanying White House statement that the report was “largely based on the most extreme scenario” of global warming. Say that the report overstates the effects of global warming in 2100 by 100 percent (or double, depending on how you calculate percentages). The annual damage to the US economy by 2100 would still be $3.5 trillion.
Putting these kinds of numbers to the problem is the easy part. The more difficult challenge requires creating an administrative structure to carry out research and execute decisions designed to reduce climate change and its effects. The first decision for any country is to decide whether to take primarily a defensive or offensive approach to the problem. It involves an individual country defending itself against the effects of climate change—building sea walls, relocating citizens, changing farming methods, etc. It can be implemented on a national basis, without loss of sovereignty.
"The more difficult challenge requires creating an administrative structure to carry out research and execute decisions designed to reduce climate change and its effects."
The second decision involves teaming with other countries to attack the problem via such things as carbon emission controls or incentives, global forest management, or the support of alternative, non-carbon sources of energy. This decision involves whether or not to create an agency independent of, and with authority over, individual governments—i.e., loss of sovereignty. The United Nations Framework Convention on Climate Change, otherwise known as The Paris Agreement, avoided the issue of loss of sovereignty by leaving implementation to individual governments with little consequences for non-compliance. The result has been that most of the signatories have fallen behind the goals to which they agreed.
NASA on a national basis and the European Space Agency globally appear to have worked reasonably well in achieving their objectives through multinational cooperation. Do these agencies, particularly the latter, offer a model from which an administrative agreement and structure could be developed to address climate change globally? Or is the nature of the problem such that it involves little loss of sovereignty to participants no matter what approach is taken?
Is NATO a better example, one in which members implicitly give up control over some part of the decision to come to the military aid of other members while agreeing to spend specified amounts for national defense?
Private industry would benefit in any event. NASA has succeeded in part by funneling funds to US private industry to carry out necessary research and development. Governments could well afford to provide incentives for private solutions to climate change that would dwarf those of NASA’s.
Barring perhaps a collision with a large asteroid (for which we are already seriously studying defenses), this is probably the biggest threat we face as a global society. It dwarfs current preoccupations such as trade agreements, migrant resettlement, and even space exploration. We are told that we may have reached a “tipping point” beyond which climate change will get worse on a geometric, not a linear, trajectory.
But is this “chicken little” thinking? Is the sky really falling? How much independence is any nation, let alone the US, likely to give up in a global effort to address even a problem of this magnitude? To what degree can we instead rely on incentives for private enterprise to develop ways of dealing with the problem?
What’s the best administrative approach to climate change? What do you think?
References:
Steven Johnson, Farsighted: How We Make the Decisions That Matter the Most (New York: Riverhead Books, 2018)