Common Wealth

So, How Do We Save the Planet for 3 Percent of Global Income?
New books dissected over email.
March 13 2008 7:15 AM

Common Wealth

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Dear Jeff:

I agree with you that economists' tendency to ask whether what works in practice also works in theory is incredibly irritating. So, let us focus on the practicalities. My big question is whether the contrast between the scale of the challenges you address and the low cost of the suggested solutions is credible.

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In the case of mass poverty and population control, I am, as you know, inclined to agree with you: Either the problems can be fixed with the sums you suggest or they cannot be fixed, at least by external assistance. I am not sure the approach you favor will succeed in all cases, but there is nothing else plausible on the table.

So, we have to try. I would have liked, though, to have seen more on the security dimension of poverty elimination, which is a theme of Paul Collier's recent book The Bottom Billion. Collier favors military intervention, as in the apparently successful example of British intervention in Sierra Leone, to prevent or halt hugely damaging civil conflicts. This makes sense to me, in extreme circumstances. What do you think?

On climate change, estimates by informed analysts of the possible extreme outcomes are so frightening that we must try to reduce the risks, even if it turns out to cost much more than you suggest. But I do suspect you are understating both the costs and the political difficulties ahead.

On the cost of mitigating climate change, the Stern Review, published by the British government last year, comes out with the same central estimate as you do, but with a large range (negative 1 percent to plus 3.5 percent of annual gross global income). Some observers think costs will be far higher. A ready supply of commercial energy is, after all, the foundation of the modern world economy.

If we are to decarbonize that economy almost completely, while sustaining economic growth, we will need, at the least, to make "carbon-capture-and-storage" work on a vast scale, with much retrofitting of existing generating capacity. Moreover, as you remark, "the bulk of the large-scale non-fossil fuel alternatives are likely to come from nuclear power and solar energy."

Yet, as of today, carbon capture and storage is essentially an unproven technology, certainly on the needed scale, as is such vast use of solar energy, while large-scale reliance on nuclear power confronts huge political and security challenges. Mass reforestation looks simpler, but there must also be a limit to that, given the growing world demand for food.

The world economy would increase at least fivefold between now and 2050, on your forecasts. Is it possible, under any plausible view of future technology, to achieve such an expansion while massively reducing, if not eliminating, anthropogenic carbon dioxide emissions altogether?

In addition, how is the world to achieve an effective global agreement on climate change and biodiversity? This is a gigantic collective-action problem.

It is not just the United States that is an obstacle here. The Europeans have mostly failed to meet their commitments under the Kyoto treaty. Despite having an economy that is less than half that of the United States in size, even at purchasing power parity, China already emits as much greenhouse gas as the United States. Moreover, it is increasing its power-generating capacity every year by the amount of the United Kingdom's current power generation, while relying overwhelmingly on dirty coal. China is also just beginning to create what will surely end up as a fleet of hundreds of millions of vehicles. India is following behind. Yet you say little about how an effective global agreement to decarbonize production is to be reached.

Finally, are there not important conflicts among the goals you set out? Should you not at least consider the possibility that maintaining biodiversity will be much more difficult, if not impossible, in a world in which everybody enjoys the standard of living of the contemporary rich countries? Is it not an implication of your increasingly Malthusian point of view that global economic growth may need to stop altogether, starting in the rich countries, and perhaps rather soon?

Let me be clear. I agree these are the biggest challenges that loom before us. I agree we should try to tackle them. But I am not convinced that we can do so as easily and cheaply as you suggest. Would it not be honest to confront your readers, most of whom will be among the richest people in the world, with the possibility that they may be unable to solve some of the problems you want them to solve while also enjoying rising living standards for the indefinite future?

Important books raise important questions. You have achieved that fully. I congratulate you.

Martin

Martin Wolf, associate editor and chief economics commentator at the Financial Times, is the author most recently of Why Globalization Works.

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