Sir Nicholas Stern made some controversial arguments in the United Kingdom report on climate change. He suggested that instead of paying the high price of global warming in the future, were are better off suffering some fairly modest costs today (Arrow, 2011). Although some people found this argument reasonable, others prefer to go along with the claim that because there is no a substantial explanation of the effects of global warming, any measures taken to reduce the release of carbon dioxide (CO2) could never be effective. The discounting of both the futurity and uncertainty is necessary; however, different pieces of evidence such as the fact that the levels of CO2 in the atmosphere has significantly risen to 480 parts per million (ppm) today from the 280 ppm it was at during the industrial revolution have made futurity a priority. Although the consumption discount rate is high, still we must reduce the risks of a possible climate change even with the incurred costs because its consequences might surpass our capabilities.
In the last century, the levels of carbon dioxide in the atmosphere has significantly risen due to the greenhouse gasses emitted by corporations because they have been operating in more or less “laissez faire” markets. “laissez faire” markets have they own advantages but in this case, governments need to get involved and take actions quickly to stop the speed at which the concentration of carbon dioxide in the atmosphere is increasing before we find ourselves in a situation that will rival any catastrophic situation in the past and future including the worst case of a nuclear explosion you can imagine. It is in our best interest to take measures that will reduce the emission of CO2 at this stage instead of ignoring all the warnings, pretending that everything is normal and facing the full consequences of global warming in the future and what is worse is that these consequences do not manifest themselves at once so that we can recoup and with them; they occur gradually and last a long time, living us off balance, not knowing what to do. People are still not alarmed; even after hearing that if the levels of CO2 go from where they are currently at 480 ppm and reach a concentration of 550 ppm, the world’s temperature will see a 2 degrees increase at a minimum and if still our governments and corporations do not take serious measures, then at the turn of the century, things will take a catastrophic turn if the levels of CO2 will tripled which will possibly raise the world’s temperature to more than 5 degrees centigrade; something that should not happen so quickly.
Figure 1: Global Avarage Temperature
When a change of this magnitude occurs too fast, it will bring with it serious consequences. Out of all the greenhouses produced in globally, carbon dioxide has the highest emission, and if this continues to rise, people in agriculture will be the first to suffer great economic lossless as the harvests will considerably reduce. Islands such as the Maldives and the Marshall Islands are also in danger of extinction as the rise in temperature will increase sea levels meaning that the volume of water in oceans will go up (Crugnale, 2016). Further, the rise in sea levels could cost Bangladesh most of its territory; but well since usually developing countries are not usually deemed very important by most leaders, powerful countries such as the United States will also be affected by the increased water volumes in oceans because Manhattan could also sink (New York Magazine, 2016).
Figure 2: Sea Level Rise by Century
(Climate Central, n.d.)
With more than 5 degrees centigrade rise in temperature, the ice sheets Greenland and West Antarctic won’t be able to survive as they will melt quickly and then collapse. Severe storms will also be the norm as high temperatures augment their energy. The marine ecosystems will also be at risk due to the high emissions of carbon dioxide and upon absorption causing the acid level in oceans to rise. This will put the livelihood of many people in peril as the death of coral reefs will mean the death of many industries such the oyster and lobster industries.
The wildlife will also be affected due to the change in weather patterns that will change the vegetation where most animals live; climate change will prove to be too much for them and one by one they will start vanishing. This would be very unfortunate because it is cruel to deprive anyone of the right to learn and see some of the great animals we have today, for example, polar bears who will die because of the melting Arctic ice. If nothing is done, we will be facing some of these consequences as soon as in the next four decades. In the next forty years, our health won’t be thriving either as the fast manner in which climate is changing will increase cases of malnutrition, diarrheal diseases as well as vector-borne diseases like malaria among others. Most of us will still be alive, so we cannot continue to live so irresponsibly.
Figure 3: Impact of Climate Change on Human Health
(Center for Disease Control and Prevention, n.d.)
The rise in temperature has taken air pollution to catastrophic levels due to the rapid rise in ground level ozone which is the result of an interaction between sunlight and heat and the pollution from factories and cars (Denchak, 2016). We have already seen the consequences of this with the Great Smog of London back in 1952 and much recently in Beijing. People with asthma and cardiac and pulmonary diseases won’t be able in these circumstances for long.
Figure 4: Great Smoke of 1952 (London)
(Klein, 2012)
There are many versions of market failures in climate change. Governments have been irresponsible by not regulating the emission of carbon dioxide, and as a result, the society’s welfare has suffered. This has created a negative externality (Greenhouse-gas externality), the first market failure. Third parties, usually innocent poor people have been left to deal with the consequences of too much production of CO2 by big corporations while they were not part of billion dollar deals that resulted in that much production. The emission of CO2 is one of the most harmful negative externality out there, and for years it has not been getting the attention that it deserves and even now some people still think that climate change is a conspiracy theory to slow development and make people pay more tax. Governments need to intervene to resolve the Greenhouse-gas externality and imposes regulations on the overproduction of CO2 because most of these big corporations won’t do anything to solve this issue as what binds to the climate change problem are their ethics and not economic ties which make their commitment weak.
The management of the production of greenhouse gases has not been effective and strict measures need to be taken to avoid harsh consequences in the future. There are various steps that could be taken to slow down climate change. Replacing coal and petroleum with natural gas is one of them; using natural gas could considerably reduce the production of greenhouse gases, specifically CO2, cutting emissions by nearly 50 percent even as more countries develop (Center for Climate and Energy Solutions, 2013). But, the replacement needs to be done carefully and other sources such as the wind, nuclear and solar need to be combined with the usage of natural gas as it also emits greenhouse gas because it is a fossil fuel.
Another thing that could is developing technologies that are more energy efficient in the production of goods and services both on the supply and demand side. Concerning supply, technologies to better recover heat and minimize the production of too much heat could be developed, in addition to technologies that will facilitate clean coal processes including boilers, and steam and air turbines. Regarding demand, companies need to develop efficient technologies especially those that consumers use for a long period such as air conditioners, industrial dryers and other domestic appliances (United Nations Industrial Development Organization, n.d.).
Another solution for climate change involves shifting demand to products that have lower energy intensity. This could be done by counseling and education consumers on the types of products that will allow them to use less energy and manage their energy consumption.
Figure 5: Energy Efficient Home
Planting trees could also contribute considerably to the reduction of the presence of CO2 in the atmosphere in addition to minimizing deforestation. Trees were mean to naturally protect the environment as they absorb carbon dioxide that will be converted into roots, trunks, leaves, and branches using energy from the sun during photosynthesis (Canadell, 2014). More than deforestation, reforestation reduces the levels of CO2 more because, upon growth, which does not take long, we assured that trees would absorb CO2 for twenty to fifty years. Governments should encourage this because it could be something people enjoy doing.
Geologic carbon sequestration is another thing that could be done to solve the problem of global warming; however, it is a very complicated process. Geologic carbon sequestration involves capturing carbon dioxide before it is realized into the atmosphere with other greenhouse gases, then cooling and compressing it into a supercritical state, a state that is not quite liquid or gas but in between. After this step, a network of underground pipelines will carry the CO2 and pump it into a well between a minimum 3,000 and 15,000 feet into the subsurface rocks (Chow, 2013). Although this solution has never been proven, it is backed up by the fact that gas, brine, and oil have been trapped into the subsurface for millions of years and the same could be done with CO2. All of these actions would be made even more effective by serious regulations such as carbon taxes and a cap-and-trade system that would regulate the production of greenhouse gases.
Figure 6: Carbon Sequestration
(Montana Environmental Information Center, n.d.)
In the equation δ = ρ + gη, p symbolizes the social rate of time preference while g is the projected growth rate of average consumption; η, on the other hand, is the elasticity of social weight attributed to a change in consumption (Arrow, 2011). The intuition behind δ = ρ + gη is that there is no better way to determine the rate at which future influences have on the losses of future consumption other than using an equation that calculates consumption discount rate (δ) by adding p to gη.
Although the argument made by the critique that saying any kind of uncertainty associated with the projected growth rate (g) may lower the value of the consumption discount rate (δ) is a common belief, I disagree with it because it is suggesting that it is a certainty that at a specific time in the future the human race will be destroyed and as a result the growth rate of average consumption will come to a standstill but, this is impossible as no one has been able to prove that the when the extinction of the human race is going to occur, how it will happen or if it is something that is even going to become a reality ((Vermeylen, 2013). Governments have used the benefit-cost analysis of climate change the wrong way. Instead of taking it as a necessary value-laden instrument to examine the significances of the different stands people have on global warming, they have used it as a tool to create policies that will pacify various stakeholders especially business owners.
A higher value of consumption discount rate (δ) means that consumers are not willing to incur the costs of avoiding the effects of climate change that may happen more than a century from now today(Moxnes, 2014) as a result, having lower consumption discount rate (δ) puts the economy at an advantage. The willingness to pay the price today damages that may be felt in the century to come causes a significant growth in the economy. The current growth rate will see an increase of 1.3 percent yearly from 1.2 percent by the time we reach 2200 (Arrow, 2011). This increase will occur due to a 13.8 percent upsurge in the gross national product (GNP). While the critique may argue that GNP is not the best tool to use to measure progress, it determines expense, effort and monetary flow. There is no better tool to evaluate consumption without ignoring certain important nonmonetary and monetary factors such as the environmental damages that have to be fixed with money other than the GNP. It is always a good sign when the GNP goes high because it indicates that more people have a job that pays them well; as a result, they can spend money.
The arguments made by Adam Morton would signify that the value of δ for Australia would considerably increase. People usually think that the government runs the country, but corporates are the ones who dictate every policy. With the claims in Adam Morton’s article, the government focus will shift from trying to copy the rest of the world, reduce the emission of carbon dioxide, to keeping businesses like mining and energy companies happy. These companies will put so much pressure on the government, and when coupled with the public’s demand for better electricity supply, it will surely buckle under the pressure and revisit their policies in in order to reintroduce the use of sources that emit carbon dioxide upon combustion. Corporations seem to put their values on the side when faced with a higher cost production, same with consumers when their standard of living increases. Their ethical commitment to keeping the keeping future generations safe from the consequences of climate change by making sacrifices now will considerably decrease hence a higher value of the consumption discount rate (δ). It would have been better their commitment was economic because the promise of becoming richer would keep them believing that reducing the emission of carbon dioxide is in their best interest.
Figure 6 : Changes in Whole Electriciity Prices in Australia
Consumption discount rate (δ) for the world
The United States’ withdrawal from the Paris Climate Accord would increase the consumption discount rate (δ) for the world because although many people would prefer it if it were not the case, the country has a lot of pull, and its exit minimizes the importance of climate change in the eyes of other nations even if they don’t admit it. Although President Trump claimed that the Paris Climate Accord wouldn’t make much difference in the emission of carbon dioxide, the stipulations of the Accord would ensure that the globe’s temperature is kept below 2 degrees which will take the temperature from dangerous to moderate levels in the future (McGrath, 2017). The United States helps a lot developing countries in their efforts of reducing the emission of carbon dioxide; its exit puts those countries at a great disadvantage. This will make them start to rethink their reasons for wanting to decelerate the heating of the globe especially as they do not contribute to it as much as a country like the United States who is responsible for 15% of the world’s emission of CO2. They might start to think that Donald Trump is doing them a favor by disclosing that these efforts to stop climate change are just a way to slow development. There is no way to decrease the value of consumption discount rate (δ) because the propriety of an important social planner like the U.S. President Donald Trump is not to guarantee and uphold human welfare; he has always been upfront regarding his opinions on global warming. Solving the issue of global warming is very challenging. Countries are driven by their moral to slow climate change and unfortunately that is not strong enough to keep them committed especially since a super power like the U.S, who is supposed to be the moral leader, does not see the importance of putting restrictions on the emission of greenhouse gasses and keeping funding organizations who want to do so like the U.N. Green Climate Fund (McGrath, 2017). Under these conditions, it will come to a point where the presence of CO2 in the atmosphere will reach catastrophic levels.
References
Arrow K., J. (2011). Global Climate Change: A Challenge to Policy. Columbia University Press.
Canadell P. (2014). Plants absorb more CO2 than we thought, but … Retrieved from https://theconversation.com/plants-absorb-more-co2-than-we-thought-but-32945
Center for Climate and Energy Solutions. (2013). Leveraging natural gas to reduce greenhouse emissions. Retrieved from https://www.c2es.org/publications/leveraging-natural-gas-reduce-greenhouse-gas-emissions
Climate Central. (n.d.). Nuisance Flooding. Retrieved from https://assets.climatecentral.org/images/made/2_22_16_John_CC_NuisanceFlooding_GlobalSLR_1050_718_s_c1_c_c.jpg
Center for Disease Control and Prevention. (n.d.). Climate Effects on Health. Retrieved from https://www.cdc.gov/climateandhealth/effects/default.htm
Chow D. (2013). Trapping Carbon Dioxide Underground: Can We Do It?. Retrieved from https://www.livescience.com/37906-geologic-carbon-sequestration-climate-change.html
Crugnale J. (2016). The 9 Most Endangered Islands in the World (PHOTOS). Retrieved from https://weather.com/science/environment/news/9-most-endangered-islands-in-the-world
Denchak M. (2016). Are the Effects of Global Warming Really that Bad?. Retrieved from https://www.nrdc.org/stories/are-effects-global-warming-really-bad
Klein. C. (2012). The Great Smog of 1952. Retrieved from https://www.history.com/news/the-killer-fog-that-blanketed-london-60-years-ago
McGrath, M. (2017). Scientists dispute the ‘tiny, tiny’ impact of Paris deal. Retrieved from https://www.bbc.com/news/science-environment-40120770
McGrath, M. (2017). Five effects of US pullout from Paris climate deal. Retrieved from https://www.bbc.com/news/science-environment-40120770
Moxnes E. (2014). Discounting, climate and sustainability. Ecological Economics, 102, 158-166.
Montana Environmental Information Center. (n.d.). Carbon Capture and Sequestration in Montana. Retrieved from https://meic.org/issues/montana-coal-facts/coal-plants-in-montana/carbon-capture-and-sequestration-in-montana/
New York Magazine. (2016). This is New York in the not-so-distant future. Retrieved from https://nymag.com/daily/intelligencer/2016/09/new-york-future-flooding-climate-change.html
United Nations Industrial Development Organization. (n.d.). Energy efficiency technologies and benefits. Retrieved from https://www.unido.org/fileadmin/media/documents/pdf/EEU_Training_Package/Module12.pdf
Vermeylen K. (2013). The Consumption Discount Rate for the Distant Future (If We Do Not Die Out). Amsterdam School of Economics.
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