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The Commons
Property Rights and Climate Change
Posted by Jonathan H. Adler  ·  12 April 2005  ·  Climate

The scientific debate over global warming is not so much over whether anthropogenic emissions will affect the climate. Rather it is over the nature and magnitude of the likely effects. Even the most ardent global warming skeptics within the scientific community believe that the increased accumulation of greenhouse gases in the atmosphere will have some effect. The policy question, then, is what (if any) measures are justified to prevent or mitigate such effects.

Most on the "right" argue that the best response is to do little or nothing. Whlie some advocate various "no regrets" policies to improve the efficiency of energy markets (and perhaps pave the way for alternative fuels) -- as I did here -- few conservatives, libertarians, or other free-market advocates believe the most reliable climate forecasts justify drastic measures to suppress the use of carbon-based fuels. The costs of such measures, many argue, are likely to swamp the costs of climate change, and more direct measures to address global ills that could be exacerbated by climate change (disease, flooding, weather extremes, etc.) would be far more cost-effective than reducing greenhouse gas emissions.

As an analytical matter, these assessments are probably correct -- it is hard to justify one Kyoto on ecoomic grounds, let alone the dozen or so that would be necessary to stabilize greenhouse gas concentrations in the atmosphere -- but that does not mean the proper "free market" climate policy is to "do nothing."

If property rights lie at the heart of free market environmentalism, than FME advocates should think seriously about the normative implications of human-enhanced climate changes that could disproportionately harm those portions of the world that have (at least thus far) contributed least to the problem. Even if a modest warming were, on balance, beneficial, the impacts would not be uniform. It may well be, as some argue, that increases in crop productivity and reduced energy costs in temperate regions will be greater than the costs to tropical regions, but this does not address the property rights concern absent some system whereby industrialized nations would compensate or indemnify less-developed nations. No such system exists -- nor is it likely that existing international institutions could implement such a system -- but that does not mean it would not be the first-best approach to climate change from an FME perspective.

I posed this issue to several of my FME colleagues. PERC Reports published the resulting dialogue here. I welcome additional comments below.

UPDATE: Tyler Cowen and Brad DeLong like this approach. Grist's Dave Roberts is not so sure, and the Sierra Club's Carl Pope comments here.

Comments
  1. Hi Professor. :)

    Free-market principles say that those who are harmed have a right to a redress from those who harm them. Fair enough. The problem comes in trying to figure out what, if any, harm has been caused by actual human effort. That is, someone must measure not only the change in climate but how much of that change is human-caused, then how much the climate change actually affected the injured party. I'm not sure how you get accurate measures in any of this, seeing how political the debate is.

    - Josh

    Posted by: Wild Pegasus at April 18, 2005 01:37 AM
  2. Before anyone gets compensated one has to first figure out who is “responsible” and for what. On that score, while it is possible to assign greenhouse gas (GHG) emissions to nations based on where the act of burning a ton of coal, for instance, physically occurs, we should be cognizant that GHG emissions are the effluvia of civilization and all its activities. It is not only energy consumption that contributes to it, but land clearance, crop production, animal husbandry, trade, tourism, and so forth. Moreover, because of the globalized economy, which sustains today’s civilization, economic activity in one country helps provide livelihoods and incomes for many inhabitants of other countries, and vice versa. In fact, a substantial portion of economic growth in developing countries is attributable to trade (Goklany 1995), and remittances and tourism from developed countries. Without such economic activities, U.S. emissions, for example, might be lower, but so would jobs and incomes elsewhere (e.g., in India or Bangladesh). Thus, the improvements in human well-being that have occurred in many developing countries (particularly since World War II) are partly due to the GHG-fueled economic growth in developed countries. The same economic growth also enabled today’s rich societies to invest in research and development that helped, for instance, raise crop yields worldwide, develop new and more effective medicines (e.g., for HIV/AIDS), provide aid in times of famine or other natural disasters, provide funding for reducing TB, create and support of the Internet, and other items now considered by some to be global public goods (ODS 2003). Also, absent such economic growth, the sum of human capital worldwide would have been much less — consider, for instance, the millions of non-Americans who have been cycled through US universities who, then, have gone back to help in their native countries’ economic and technological development. Clearly, all countries indulge in activities that lead to gloabal warming (GW), and all countries benefit from the activities that cause GHG emissions. So one should try to estimate whether direct and indirect costs of GW will, in fact, exceed direct and indirect benefits.

    Some might argue that if the actions of A produce both benefits and harms to B, A should compensate B for the harms, but she cannot subtract the benefits in estimating the amount of compensation (because, after all, B did not solicit A to undertake the actions in question). I would disagree with this because benefits are nothing but negative harms, and should, therefore, necessarily be subtracted in estimating net harm to B. Also, if B insists on not subtracting benefits from the compensation package, he loses his moral claim for any compensation. In other words, you can’t insist on compensation on one hand, and be a free rider on the other.

    Some might also argue that one should not take indirect effects of GHG producing activities into consideration: only direct effects should be considered. But the claim for compensation is itself based on indirect (and inadvertent) outcomes. After all, developed countries did not emit GHG emissions with express intent to harm anyone. So there has to be symmetry in these matters.

    Let’s assume for the sake of argument that one can indeed estimate the fraction of global warming caused by Americans, the next step is to figure out what is the net harm that has been caused to, say, Bangladesh (ignoring for now issues such as whether today’s generation should be liable for damages incurred by previous generations, etc.). To make such estimates, it is not sufficient to know the direct impacts of climate change on Bangladesh, but also the indirect consequences of all GHG producing activities. This involves developing answers to questions such as: had there been no GHG producing activities in developed countries, what would have been Bangladesh’s level of human well-being? What would be its life expectancy (which is currently 62 years and was about 35 years in 1945) had there been no GHG emissions in the interim? What about its hunger and malnutrition rates? How many Bangladeshis (and Indians, I may add) were saved in the 1960s and 1970s because of food aid from the developed countries? How much of the past increase in Bangladesh's agricultural productivity is due to higher CO2 levels, or indirectly due to efforts that were possible because developed countries were wealthy enough to support/stimulate? Assuming in the future, agrciultural productivity declines due to climate change, how do you subtract out past benefits from future harms? [These questions, which are quite germane since food production and distribution are among civilization's GHG generating activities, are just a small sample of issues that have to be addressed to render a full accounting of the consequences of climate change -- and, if there is any accounting at all, it must necessarily be full.]


    If one could, in fact, answer these questions, I am skeptical that one would be able to show that the effects of GHG emissions has been, on the whole, negative (at least so far).


    And if you don’t believe this, you should give up on economic growth and technological development.

    Indur Goklany

    Posted by: Indur Goklany at April 18, 2005 10:52 AM
  3. I agree with Indur Goklany. Your plan sounds impossible to accomplish. How would you measure such a thing? Though I would be for it if I thought it could be done fairly.

    Also I would like to point out that if the US has to pay Jamaica or whoever for making its climate less suitable for crops, then Russia and Greenland would have to pay the US for making their climate more suitable for crops. Climate change isn't necessarily going to be bad for everyone.

    Posted by: eric at April 18, 2005 04:12 PM