1. 1 11. Global Warming, Uncertainty, Irreversibility & LongTerm Policymaking (SPRING 2002) Larry D. Sanders Dept. of Ag Economics Oklahoma State University

2. 2 INTRODUCTION (ch. 10 Hackett) u Purpose: –to become aware of the concept of uncertainty & irreversibility with respect to environmental & natural resource policies u Learning Objectives. To understand/become aware of: 1.To understand uncertainty & irreversibility. 2.To become aware of the issue of global warming. 3.To consider the policy options with respect to possibly irreversible actions/events such as global warming.

3. 3 Background on concepts u Uncertainty--involves the probability that some event/action will or will not occur –precipitation –new technology u Irreversibility--suggests that some action/event will transform a resource to the extent it cannot be returned to its original state, limiting future options –clear-cutting a forest –draining a wetland –damming a river

4. 4 Risk Perceptions: may vary w/knowledge, severity of result, whether individual choice... Unknown Risk Known Risk Severe Risk Minor Risk x Smoking x Skate- boarding x Rec. Boating x Nuclear War x Handguns x Commercial Flying x DDT x Pesticides x Radioactive Waste x Nitrogen Fertilizers x Lead Paint x Caffeine x Nitrites Adapted from Carlson et al. Agricultural & Environmental Resource Economics, 1993; also Sanders Desire for regulation X Global warming

5. 5 Case Study: Global Warming-- background u Greenhouse gases--carbon dioxide, chlorofluorocarbons, methane, nitrous oxide, ozone, hydrofluorocarbons, perfluorinated carbons u Their function--filter solar energy, limiting infrared energy radiated back in to space u Greenhouse effect--as greenhouse gas concentration increases, capturing of infrared energy increases, & temperatures are likely to rise

6. 6 The Importance of Greenhouse Gases u Provides a blanket that “insulates the Earth by trapping heat, a lot like panes of glass in a greenhouse... ‘part of what makes the planet of work’. u “Without greenhouse gases, the Earth would be much too cold for comfort... problem now is that humans are thickening the blanket... &... nature’s thermostat is nudged up.” --From cnn.com special section on global warming article “Messing with the thermostat can be devastating”, Miles O’Obrien, November 27, 1997.

7. 7 The Claims about Global Warming: “It’s Real”“Skeptical” u Sea level will rise 2-3 feet, covering many islands, changing coast lines & contaminating water supplies u Southern US climate becomes tropical changing ag production u Northern US climate moderates, more like Southern US today u Increase in heat-related deaths/diseases (malaria, dengue fever) u Only 24% of public is concerned u Models under-estimate complex global ecosystem (can’t predict 7 days out, much less years) u Models under-estimate the “technological fix” & market economics u Doubtful that government intervention will do anything but create more immediate problems

8. 8 Case Study: Global Warming --Science in Conflict u Scientists continue to debate both 1. whether global warming is in fact occurring, & 2. the level of severity of impact u Trade-offs: 1. If predictions are true & nothing done to stop it, large- scale changes in global climate that will severely affect the planet & our geo-political-economic system. 2. If predictions are not true but actions are taken to minimize global warming (Kyoto Agreement), wide- scale economic impacts on the US will reduce competitiveness (30-50% increase in fuel & utility bills).

9. 9 If Global Warming Perceived as Market Failure Price Quantity Q1 D=MBp=MVp=MWTPp=MBs S=MCp S’=MCs Q2 P2 P1

10. 10 Major Contributors to Greenhouse Gases Per Capita Energy CountryEmissions (%)Consumption (mil. Btu) US19335 China10 Japan 5171 Brazil 4 33 Germany 4 India 4 UK 2169 Indonesia 2 Italy 2

11. 11 Issues & Options with Global Warming u KEY ISSUES: –Time Perspective? –Sources? –Geography (Trans-national?) –Irreversibility? –Science? u FREE MARKET u RESEARCH & EXTENSION u REGULATION u SUBSIDIES

12. 12 Other Sources http://cnn.com/TECH (see interactive features; see global warming 101)