Climate Change & International Development

Meeting chaired by Geoffrey Catchpole

Dr Timothy Taylor

University of Bath

21 February 2005

The speaker began by declaring that although there is a broad consensus on the consequences of human activity on climate change, there is as yet little action. He referred through his talk to the Third Assessment Report of the Intergovernmental Panel on Climate Change (to which he was a contributor), which related temperature, precipitation and storms to concentrations of ‘greenhouse gases’ over the past fifty years, which clearly indicated positive correlations. While the projected increase in global temperature is up to 4.5ºC (or 11ºC in one recent estimate), the Kyoto Protocol (now enacted) proposes at most a 0.2º change by the 2080s.

Thus, the range of the predictions is wide, but the consensus of authoritative views gives an increase of global mean temperature of between 1 and 4.5ºC increase by 2100 and a global mean rise in sea level of between 14 and 94 centimetres. Regional predictions are somewhat wider, since the incidence and degree of rainfall and extreme weather events are likely to vary considerably from place to place. Since effects on agriculture and fisheries would vary significantly, some would benefit, others would not, although serious effects are most likely in developing countries. For example, a sea-level rise, which would cause a 1-metre rise in the Netherlands, which would affect 6% of its land, would in Bangladesh affect 17.5% of its land. Generally there would be significant increases in malaria and other water-borne diseases, more and more frequent natural disasters, impacts on tourism and conflicts over land and water resources. There would be considerable losses of wildlife, natural habitats and species, forests and coral reefs would suffer, coastal areas would be eroded and inundated and their protection costs would rise steeply.

Whether the damage could be costed in financial accounts is arguable, but estimates are being made. Economists are using ‘discount rates’, based on the recognition that over time our evaluations of costings vary, now relating to the crucial period 2030 to 2100. Their models show that the discount rate (around 3.5% for governments and around 8% for industry) affect outcomes considerably - a 5% discount rate reduces estimated damage by a factor of 20. Although regional variations are considerable, major impacts are likely in Asia, Africa and Latin America and the effects felt in agriculture, water and health, while the main indirect effects would be natural disasters. As well as discounting, transfers of values would affect calculations – as, for example, when health benefits would be transferred from one site to another.

The overall conclusions are that while the principal pollutants arise in developed countries, severe impacts are likely to be felt mainly in developing countries, where adaptation possibilities (particularly by the poor) are very low. However, security issues would arise globally. Rapid climate change would cause countries to develop nuclear weapons (reports an American study), since they will wish to defend or secure supplies of food, water and energy. A Gulf Stream diversion would have major global effects. If change were relatively slow, there would still be serious effects on Middle Eastern water supplies and African food supplies, with implications for increasing poverty and conflicts.

Conventional analysis suggests that we wait to act, despite the views of some that damages could be much greater than even those estimated. At a 3% discount rate, over 100 years the estimated damages would amount to a cost of between 43 and 74 trillion dollars. Since the annual global GNP in 1998 was around 30 trillion dollars, an annual damages cost would amount to a figure of between 1% and 2% of global GNP – significant, but not insurmountable. Moreover, some future mitigation of costs might be attained – e.g. through technological improvements.

Various factors affect the possibility of agreement on decisive action. These include estimates of impacts on the relatively poor, possibilities of mitigation in industrialised countries, the length of periods relating to specific effects, the dependence of impacts on particular measures undertaken, etc. There are many uncertainties, but some now argue that if we wait until information is more accurate the cost of preventative measures could rise considerably or become impossible to sustain. If ‘worst-case’ scenarios prove reliable through actual developments, our survival may be threatened.

Whatever the measures which may be taken on greenhouse gases, there is a present need for adaptation policies. Options include infrastructure investments - e.g. for sea defences and incentives to discourage land uses in vulnerable areas, investment in R&D for malaria control and for other diseases, better early warning systems, and investment in the development of crops suited to particular climates. The need for adaptation is greatest in those countries least able to afford it and in the Kyoto agreement provision was made for non-compliance penalties to be placed in adaptation funds. Whatever the policies, incentives for cost-effective actions should remain – e.g. while sea walls may be less cost effective than relocation, external donors may only pay for the former.

Measures to reduce emissions include energy efficiency (likely over the next decade), clean energy production and carbon sequestration (some time in the future). Under the Kyoto agreement, industrialised countries agreed to reduce emissions by 5.2% of 1990 levels by 2008/12

I.e. by about 150 million tons of carbon per year in 39 ‘Annex 1’ countries. Non- Annex 1 countries were not required to make commitments. Flexibility arrangements allow Annex 1 countries to trade, transfer and acquire emissions from non Annex 1 countries. Although Russian ratification brought the agreement into effect, the U.S. did not ratify and prefers alternatives- these include voluntary programmes, which 25 states have adopted (Wyoming has carbon sequestration, California greenhouse gas registration and limits on mobile sources, Massachusetts and New Hampshire limit four pollutant gases).

The speaker reviewed statistics relating to mitigation and flexibility measures and considered some problems. Costs of implementation and technological factors will differ, as do marginal abatement costs. Trade and investment barriers cause poorer countries to gain little, whilst they may be targeted in order to fulfil reduction pledges. While a 5% discount rate may be acceptable to present generations, since underlying growth over 100 years amounts only to around 1% or 2% future generations may not accept such a burden. Technical improvements (such as cheaper renewable energy use) may change scenarios. He conceded again that our predictive capacity is limited and that climate changes may reduce incomes sufficient to make measures unaffordable, but he re-asserted that if recent predictions of abrupt change prove true we face global catastrophe. He concluded that at least the Kyoto agreement might be made ‘workable’ if the U.S. is compelled to join (e.g. through trade sanctions), if developing countries are given real incentives to develop sustainable industries and if adaptation measures are given sufficient funding. Further, we need to invest in renewables and technology transfer.

Comments made by Dr Taylor in response to questions are here summarised under headings.

Alternative energy supplies

As the prices of fossil fuels go up new sources are found and exploited. Bodies such as the European Union subsidise renewable energy schemes. So, in his view fossil fuel depletion is not likely to be a major issue. While he thinks the nuclear alternative is very impressive, there are politically sensitive waste and security issues. Although it is not easy to see where sufficient alternatives could be made available. Despite a suggestion that the UK could use hydroelectric power tapped from Iceland and the promise of African use of solar power he thought renewables could offer only marginal benefits and he commented that people would not give up their cars. Imaginative local schemes promoting education and reformed lifestyles may help, but the energy problem is enormous and arises principally from industrial rather than consumer activity.

Role of multinationals

International pressures on multinationals are relatively ineffective, since they operate across boundaries and can move their businesses if they encounter barriers or imposed limitations, with consequent losses for local peoples. Large multinationals usually seek technology transfer anyway, in their own interests.

Planning and risk

So far as it is possible to see into the future, evaluated risks (such as the frequency of floods in Lewes or Bangladesh, for instance) are factored into calculations. However, both industry and governments tend to plan for the short term, since they are wary of public reaction to increased costs, despite any social considerations. Yet differing discount rates are adopted. While governments use a 3.5% rate for all investments except for climate change impacts, industry (reflecting their shorter term interests) use for their cost-benefit analyses an 8% rate. For climate change purposes the U.K. government has adopted a variable decreasing rate – 3.5% for the next 20 years, 3% up to 50 years, then 2.5%, 2%, etc. – in order to allow for inter-generational considerations.

Politics

The UK Government favours climate change action to be derived from international pressures- e.g. via the E.U. and G8 agencies. (The speaker commented ‘If action is not international free riding will occur…opportunists will continue to pollute.’) Sceptics tend to set rhetoric against actual policies, reflecting for example on politically sensitive issues such as taxation on aircraft air pollution. American interests tend to favour Middle Eastern policies aimed at securing supplies and policies avoiding Kyoto accession. Overall, only clear self-interest (through trade and security hazards, for example) is likely to affect such policies. The speaker concluded that ‘statesmanship is in short supply’ and that we ‘may not be intelligent enough’ to avoid self-destruction.

Geoffrey Catchpole