The Economics of Global Climatic Change

P M Rao

• Publisher: Routledge
• Year: 2016
• Topic: Economics
• eBook ISBN:
  9781315501475
• Subtopic: Business General
• Index: Economics

This study integrates scientific findings about the Global Warming Potential (GWP) - for example, the roles of pollution, population growth, agricultural development and sustainable resources - with advances in economic theory and methods, so as to explain how and why climate and economy are complementary at the local, national and global levels. The primary purpose of this work is to provide analytical bases for the creation of pragmatic, ecology-environment-economy policies, rather than to overwhelm the reader with technical processing that does not offer any comprehensive examination of the effects of the economy upon the environment, and vice versa. Modelling and data processing are treated as secondary requirements and follow, rather than precede, the framework developed in this book.

Chapter 1

Introduction

1.1 Historical Perspectives

The phenomena of climatic variations observed during the past century can be deemed insignificant if we weigh these on the geological time scales of several hundreds of millions of years in relation to the life of planet Earth. This is because periodic (where the time periods involved are on the order of a few million years or several thousands of years, and the periodicity itself is unknown) changes in the climate were indirectly seen as a recurring phenomenon: ice ages, followed by warming, and back to ice ages, and so on. However, climatic changes have been the most important of the phenomena that have led to drastic changes in the evolution of life on Earth. Even if one knows something about the likely periodicity of natural (distinguished from human-induced) climatic changes, what good will that do to those of us currently on this planet to know that after, say, 5,000 years this planet will return to average climatic conditions (whatever those mean, or those mean conditions are)—after systematic global warming and its disastrous consequences? From the evolutionary biological perspective, if we as humans are not biased in favor of the well-being of ourselves and our descendants, we can be most indifferent to climatic changes (including those influences directly attributable to human activities): Some species of life will emerge as a result of complex biogeophysical and climatic factors, will disturb the relative equilibria of biological species and communities, and will lead to a different relative stationary equilibrium of biological configuration. This could imply replacing the human race with another adapted mutant race or new life forms, just as dinosaurs were replaced. If this is an acceptable premise for some readers, perhaps they may not bother to invest time and resources in a book like this. For the rest of us, the issue of global climatic variations is extremely serious and warrants our urgent attention. This book is generally concerned with a set of issues having consequences during and after the twenty-first century.

There exist some well-meaning people who argue that the emerging trends of the past few decades regarding greenhouse gas concentrations and global warming are simply observations of an instant of time, like a second or less, on the geological time scale and thus do not require our concern at all. Yes, one can even bring down the time scale of two centuries or more to an insignificant fraction of a second and simply ignore it—if only the phenomena would let us ignore them. Unfortunately, emerging trends in the changing global climate and the role of human influences in this context are such as to warrant appropriate response—lest human welfare be greatly compromised in a few decades. The adverse effects of climate change are already felt in specific or random locations, and the damages are iniquitous in their incidence across societies, regions, and time.

The geological time sequence dating back millions of years in the life of planet Earth provides different phases of evolution starting with the Precambrian era at about 570 million years ago (MYA). The current era of the Holocene age (the era of human civilization) is said to have started about 10,000 years ago. It was also noted that the planet did go through cycles of global warming and global cooling during various phases. Some of these inferences are based on the characteristics of select rock formations and the use of such methods as “radioactive and radiocarbon dating” for geological structures that were studied (see Schneider 1997 for greater details). Barring the relative extremities of the ice ages and of global warming, a moderate warming was considered a very desirable phenomenon for enhancement of the richness of life and its sustainability; similarly, a relatively moderate cooling would be welcome in the twenty-first century, considering the trend that has seen increases in the global mean surface temperature during the modern industrial era, which began in the 1860s. Let us note that it took over 5,000 years for natural climatic forces to transform the icy landscape of much of present-day Europe and North America to inhabitable current conditions, following an average warming of the temperature by about 5°C per millennium. If such a long-term historical trend and natural causes were behind the contemporary features in climate change, we might not have to bother very much. The postindustrial era phenomena provide evidence of the tangible role of anthropogenic influences in accelerating global warming to an alarming degree and threatening the stability and sustainability of human life itself, unprecedented in the history of the human race.

The early history of climate and human survival abounds with episodes of catastrophes and dislocation, with partial extinction of human civilizations. The coevolution of climate and different life-forms on Earth warrants some understanding if we want to fathom the effect of climate on human survival and vice versa. The roles of biogeochemical cycles remain very critical in this context. These cycles were first described in the early part of the twentieth century and involved an examination of the interaction of human activities and other forms of life with the biochemical elements (based on organic or other) of land, sea, air, and solar radiation. The ingredients of air combined with the phenomena of transpiration (transmittal into the air of water vapor from the leaves of plants), evapotranspiration (transpiration combined with evaporation from the soil and water), infrared (shortwave) radiation, and the concentrations of various (greenhouse) gases in the air are among the factors affecting the effectiveness of the biogeochemical cycles and their renewal capabilities to replenish the planetary resources that support all life.

Historically, the rise and fall of civilizations was inextricably linked to the vagaries of climate changes and variations in the judicious use of natural resources. These disturbances led to the uprooting of populations, eliminating segments of populations when severe hunger and famine afflicted the habitats and affecting the control of territories and countries. To begin with, the location of human settlements was usually influenced by the existence of natural resources, especially water; many settlements were located largely along riverbanks. Most civilizations flourished as “water civilizations,” including those that began in Egypt along the Nile River and in southwestern Asia along the Indus River systems. These were known to have thrived before and around 3000 B.C. Some of these settlements were later abandoned when the territory became a desert over a period of time.

Similarly, the Mayan civilization in the Western Hemisphere began to flourish around the third and fourth centuries A.D. The civilization collapsed rather suddenly during the tenth century when the temperature began to rise and climate changes occurred in the region. Likewise, the collapse of the Mali civilization in Africa in the fourteenth century was attributed to severe changes in climatological factors. Climatic variations and environmental mismanagement contributed to these disasters, separately and jointly. There is no major evidence to suggest that the global climate change was due to human influences in the periods any time prior to the twentieth century. Natural disasters and environmental disregard, especially in respect to natural resources, led partly to local climate changes. These were considered the prime causes leading to major problems in the erstwhile flourishing regions.

The current era is faced with human-induced climatic changes, in addition to environmental problems per se. These combined concerns, which will be discussed in subsequent chapters, tend to lead to much more complex and disastrous consequences than ever experienced before in human history. If inertia and inaction were usually inconsistent with biological survival, somewhat similar reasoning suggests that lack of conscious interventions might pose problems for human survival today.

The following salient characteristics dominate the descriptions of the problems narrated above: (a) irreversibility of losses—whether related to the natural resource, climate, or civilization; (b) relative suddenness of disruptions (which also indicate the phenomena of nonlinear interactions and discontinuities of relationships among environmental features); and (c) severity of the impacts of the environment on global climate change.

Sustainable development, interpreted in various forms (see chapter 3 and also Rao 1999 for a detailed treatment of the concepts and issues), has been an area of concern for hundreds of years. Some of these concerns have been confined to specific components of the ecosystem and have been built into the traditions in some civilizations and into faiths and religions in a few others. One of these has been the worship of nature. Social customs and norms were considered cost-effective methods for implementing socially desirable activities. The notion that other species might be entitled to their own existence on this planet was also recognized in certain beliefs, religious or otherwise. These viewpoints were also supported by individuals like Henry David Thoreau and George Perkins Marsh in the nineteenth century. Marsh’s 1864 contribution, Man and Nature—or Physical Geography as Modified by Human Action, analyzed the decline of past civilizations and found that most possessed a single common feature: the civilization collapsed when its demands on natural resources exceeded the land’s ability to supply the same. There have been experiences of deforestation leading to desertification and collapse of human life in the specific regions.

These relatively recent (on the geological time scale) experiences point to the role of anthropogenic factors in disturbing the ecological and environmental balances of nature. Accompanying these changes have been those of the climate. Some of the climatic variations are attributable to the planet’s own random events, like hurricanes and the eruption of volcanoes. But there are a few important systematic phenomena such as the emissions of greenhouse gases and the resultant greenhouse effect that are largely attributable to the influences of anthropogenic factors: human population, consumption and production patterns, and deployment of alternative technologies in the economic activities, including waste disposal. Interpreted in broader terms, the exploitation of the source and sink capacities of the planet bring about major changes in the planet’s environment and climate. These changes are, at the least, destabilizing for the climate and for sources of sustained life; at their worst, the changes constitute systematic adverse influences with catastrophic and irreversible consequences. The following section notes the history of scientific understanding of relevant issues during the past century.

1.2 Svante Arrhenius and Later

Earth’s temperature is the net result of the planetary radiational balance, and the latter is the outcome of the absorption of incoming solar radiation adjusted by the outgoing terrestrial radiation. The latter is affected by the “albedo factor,” subject to anthropogenic influences like the changing concentrations of greenhouse gases. This is rather widely appreciated toward the last decade of the twentieth century, about one hundred years after the findings and predictions of the Swedish scientist Svante Arrhenius. Among the first published contributions were those of Arrhenius (1896). Arrhenius’s concern was to explain temperature variations during the glacial and interglacial periods over thousands of years. Several years before Arrhenius’s contribution, the French scientist Joseph Fourier (1824) first introduced the notion of the atmosphere as a glass bowl, which lets in sunlight and retains a part of it (the infrared radiation), causing a warming effect—later called the greenhouse effect (GE). Arrhenius used the term “hothouse” to describe this effect, and he assessed that fossil fuel combustion and industrial emissions of carbon dioxide (CO₂) could lead to the GE. It is useful to note at this stage that unless otherwise stated, the GE referred to in this book is the GE contributed by direct and indirect anthropogenic influences. In much of the literature, the nature-induced GE is sometimes called the “natural GE,” and the human-induced GE is called the “enhanced GE”; we refer to the latter simply as the GE.

The contributions of Swedish geologist Arvid Hogbom (for details see Berner 1995) to the understanding of the carbon cycle were found useful in the climatic studies of Arrhenius, who pointed to the key features of the Sun-atmosphere-Earth surface systems in the study of long-term climate changes. The asymmetric roles of carbonic acid and water vapor in their ability to allow incoming solar radiation while affecting the outgoing reflections of these light rays were recognized. These constituted the essential foundation for the GE, whether natural or enhanced. Some of these details and recent understanding of the phenomena will be discussed in chapter 2.

Several improvements to the structural model formulation and the scientific underpinnings of the Arrhenius study were made in the recent past. To illustrate a few of these, let us begin with a study by Moller (1963), who considered the effect of the change in the water vapor content of air that results from the CO₂–induced warming of the troposphere: CO₂–induced increase of surface temperature raises not only the temperature of the troposphere but also its humidity, further enhancing the increase in the downward flux of terrestrial radiation at Earth’s surface. In Moller’s study, the net upward radiation at Earth’s surface did not increase significantly with increasing surface temperature because of the assumption of constant relative humidity. The limitation of such studies brought to light the limitation of the surface radiation balance approach, which does not take into account the CO₂–induced changes in other components of the surface heat balance. The surface temperature in radiative-convective equilibrium with a given distribution of relative humidity is almost twice as sensitive to an increase in the concentration of CO₂ in the air than the equilibrium temperature with a given distribution of absolute humidity (details can be seen in Manabe 1997). Ramanathan and Vogelmann (1997) demonstrated that the water vapor feedback amplified the surface warming in Arrhenius’s model by about 30 percent. This premise is supported in more recent scientific findings (see chapter 2). As these investigators observed, the successes of Arrhenius’s model are many—even when judged by modern-day data and computer simulations.

A number of important studies emerged after the concern of the 1992 Earth Summit in Rio de Janeiro about the environmental problems and the constitution of the United Nations Framework Convention on Climate Change (UNFCCC). The work of the Intergovernmental Panel on Climate Change (IPCC) led to the coordinating forum for the series of the Conference of Parties (COP); the latest one—the fifth in the ongoing series—was held in Bonn in November 1999. The IPCC published its First Assessment Report in 1990, and the Second Assessment in 1995, which concluded that “the balance of evidence suggests that there is a discernible human influence on global climate” (IPCC 1995). The COP is primarily concerned with the problems of global climate change and the role of greenhouse gases (GHGs) in that context. The GHGs and their dynamics are governed by the features of their sources, sinks, and biogeochemical cycles operating in the oceans, on land, and in the atmosphere. The most important sources are combustion of fossil fuels, burning of biomass, nitrification, and industrial emissions. Sources of these gases include ocean absorptions, chemical conversions in the atmosphere, forest sequestration of carbon, and changes in land use. Environmental problems continue to remain the concern of a wide variety of multilateral, governmental, and other institutions. Most problems of global climate change are rooted in the governance of global commons, explained below.

Global commons are defined (see also Rao 1999) as the global environmental resources that cut across national boundaries and that are affected across all regions owing to direct and indirect interventions in any one or more regions. The global commons possess varying features over time because of evolving human interaction with the environment. The main factors of concern in the global commons are the following: atmospheric gases that cause the greenhouse effect and global warming; thinning of the ozone layer leading to increased ultraviolet-B (UV-B) radiation; transboundary pollution in the air and water; and loss of biodiversity.

The roots of anthropogenic contributions in the global commons are largely contained in the open access and free-rider problems of environmental public goods. Thus, the concern in the emerging problems of the global commons tends to focus on the issues of legitimacy of appropriations of sink capacities without any obligations on the part of the users/polluters. These lead to the need to critically examine legitimacy of any exercise of resource appropriations—both of the planet’s sinks and sources. Various resources, like fresh water and the biological pool, constitute examples of common property, whereas atmospheric concentrations of greenhouse gases and ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• Preface
• List of Abbreviations
• List of Chemical Symbols
• Chapter 1: Introduction
• Chapter 2: Scientific Background
• Chapter 3: Economic Approaches
• Chapter 4: Economics of the Greenhouse Effect
• Chapter 5: Greenhouse Gas Regimes and Climate Change
• Chapter 6: International Institutional Mechanisms
• Chapter 7: The Road (or Air) Ahead
• Glossary
• Web Site Addresses
• Index