Four years ago, academic Bjørn Lomborg put together a panel of economists under the banner of the Copenhagen Consensus Center to come up with a prioritised list of projects to address a selection of the world's great contemporary challenges. Lomborg's assumption was that money allocated to address climate change, communicable diseases, conflicts, education, financial instability, governance and corruption, malnutrition and hunger, migration, sanitation and water, and subsidies and trade barriers could be most effectively spent if priorities were based on rational economic assessment. The resulting list put climate change strategies down at the bottom of the pile.
Lomborg's panel is meeting again this month for a fourth anniversary update, so it's worth considering why climate change fared so badly last time, and what might be different now. SourceWatch has noted that the Copenhagen Consensus "has been strongly criticised by NGOs such as Oxfam for drawing attention away from the existing consensus built up over several years and codified in the United Nations Millennium Development Goals." Given the political will needed to put significant resources towards any of these development challenges, this is a serious charge.
The 2004 Copenhagen Consensus drew from the 2001 Third Assessment Report of the IPCC (the UN Intergovernmental Panel on Climate Change) to establish its economic models for climate change strategies. The November 2007 IPCC Assessment Report is more pessimistic about both the extent and rate of climate change, which means the benefits of addressing climate change should be greater.
The first Copenhagen Consensus chose to use a 300-year timeframe for climate change strategies, on the grounds that "it would take this long for carbon dioxide to be mixed into the deep ocean, so starting to reverse its build-up in the atmosphere". (See the climate change summary paper.) This is too simplistic an approach for determining how atmospheric carbon can be "soaked up", partly because understanding of the role of the ocean as a carbon sink is still evolving, and partly because there are other sinks (such as equatorial forests) to consider. It seems, therefore, to be a weak reason to deviate from the 100-year period used for IPCC projections.
The choice of timeframe is critical to this method of prioritising climate change mitigation strategies, because of the economists' use of discounting to bring the value of future benefits to today's terms. This tends to disadvantage investment opportunities with long-term payback in comparison with those with short-term benefits. The Copenhagen Consensus has used a low discount rate, using "utility-based discounting" to help overcome this, but it is still a consideration, and the basis of much criticism of the Copenhagen Consensus.
What I find more worrying is that the methodology assumes that it is feasible to delay addressing climate change, and still be able to do so at some future date. The Copenhagen Consensus does not overtly question the climate science of the IPCC (as it stood in 2001), but it does ignore the possibility that we may reach a tipping point leading to catastrophic change from which it will be costly to recover. There seems to be no inclusion of a risk assessment to allow for this possibility.
I may be missing the boat on this one, but it seems to me (and I am not alone) to be inappropriate to use cost-benefit analysis to establish political goals. Applications I have seen just look at alternative strategies for reaching a previously agreed goal, but the Copenhagen Consensus is weighing up various ways of spending a fixed sum of money, when the strategies are not related to a common goal. (The stated objective of "advancing global welfare" is far too broad to be considered a common goal for prioritising competing strategies.) As a result, climate change strategies end up with the lowest priority of all, with a beneft:cost ratio of up to 4. (Although, puzzlingly, the official comments issued with the final rankings state that "[t]he expert panel regarded all three [climate change] proposals as having costs that were likely to exceed the benefits.")
What is also misleading is that the various development challenges are treated as if they were completely independent, which they are not. Climate change has the potential to directly affect existing challenges related to disease, drought, flooding and related impacts. Addressing climate change therefore can provide benefits that are attributed to other strategies under the Copenhagen Consensus methodology.
On top of this, the amount of money allocated to the climate change strategies was insufficient to achieve what the IPCC says is needed to avoid serous economic, social and ecological damage. (I have written previously about the two-degree target.) The Copenhagen Consensus panel was given a hypothetical $50 billion to spend over five years. Under this constraint, the model allows warming to reach 3.3 degrees C (above the 1990 level) by 2100, the implication being that the benefits of the strategy will be limited, and the priority lower. (The 2006 Stern report commissioned by the UK government suggested 1% of global GDP as an appropriate target for spending to avoid unacceptable levels of climate change. Stern also did a cost-benefit analysis and concluded climate change mitigation was worth the cost.)
Despite modelling global warming of 3.3 degrees, the need for adaptation to climate change is excluded from the calculations. It is assumed that "feasible adaptations are already undertaken as part of the baseline case," which I take to mean that the cost of adaptation is not considered. Given that adaptation has already started in activities such as agriculture, this seems an unreasonable assumption.
It's tempting to conclude that Bjørn Lomborg's agenda is: if you can't argue the science, argue that it doesn't make economic sense to fight climate change. He is a self-confessed climate sceptic, and his panel in 2004 was made up entirely of free-market economists from developed countries. Given that the aim is to prioritise development goals, it will be interesting to see whether a more balanced panel is on board this time around. How a group of economists, with narry a climate scientist in sight, can have the balls to selectively adopt and reject IPCC assumptions, is beyond me.
As the science has moved on, it will be interesting to see how this month's update to the Copenhagen Consensus is played. If the panel abides by the IPCC framework, they may be obliged to shorten the discount period for assessing benefits of action now, and make a few other adjustments to appease critics.
It is not only the science that has become more robust with an additional six years of investigations. There is now far more widespread political acceptance of the need to address climate change, and developing countries are expected to be subject to emissions targets once the first phase of the Kyoto Protocol expires. The 2004 Copenhagen Consensus was stacked against the Kyoto Protocol by assuming that only industrialised and transition economies would be subject to emissions limits. There are also new strategies that have developed since the 2001 IPCC Assessment Report, which should be considered in the new analysis this month.
Watch for a flurry of media reports at the end of May.
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