Kirschenmann: Can we afford the future?

By FRED KIRSCHENMANN, Leopold Center Distinguished Fellow

“…we actually have the technology today to enable a 75 percent reduction in energy and (some) material consumption (e.g. Weizacker et al. 1997) while improving quality of life in the first world and increasing general well-being in the developing countries. Remember, too, that, on average, people in wealthy countries were actually happier with half and less of today's average per capita income.”

— Ecological footprint developer William E. Rees

In a recently published book, Can We Afford the Future? The Economics of a Warming World, economist Frank Ackerman makes a compelling case for rethinking how we respond to one of the most important challenges in the history of the human species – climate change.

Ackerman argues that using traditional cost-benefit analysis to determine our response to climate change is like using it to determine whether or not we should buy fire insurance for our homes. He points out that the number of residential fires in the United States is about 0.4 percent of the number of housing units. “Why don’t these statistics inspire you to cancel your fire insurance?” It’s because we want to insure ourselves against worst-case scenarios. Ackerman argues that we must take a similar approach to climate change.

As with home fires, there are many uncertainties involved in climate change. Climatologists seem quite certain that we will experience much more unstable climates and eventually a radically changed global climate, which will make life very challenging for humans on the planet. But there is no way to predict exactly what kinds of changes will take place in any particular ecosystem or during a specific time frame – Earth's systems are simply too complex to make such predictions.

Following the fire example, Ackerman says it is in our own best interest to approach the problem from a worst-case scenario and purchase insurance to protect ourselves from climate change. Plus, we need to make changes now to prevent damage from additional global warming.

In the larger scheme of things, this cost would not be prohibitive. Ackerman estimates that we could curb global warming by spending approximately 1 percent of world output per year for “some decades.”

For example, he calculates that if we exempt people throughout the world who live below the $9,000 annual income poverty line from paying any premium, and adjust the premiums for the rest of us based on each country's annual average per capita income, it would cost American citizens about $800 per year, $400 in Europe, $140 in China and $50 in India. He points out that “the total cost to the U.S., just over $200 billion per year, is comparable to the annual U.S. military spending for the wars in Iraq and Afghanistan as of 2007.” Seems like a reasonable insurance policy to avert a worst-case disaster.

The potential cost of more hurricanes each year, and/or the melting of the Greenland ice sheet (which could raise sea levels by as much as 23 feet causing most of the world's coastal cities to be destroyed by flooding), would be much higher than any kind of insurance premium we pay now. That should be reason enough for all of us to buy insurance!

The impact of climate change on agriculture is, of course, complex. Some areas could benefit (at least in the short term) and other impacts are disputed, but climatologists agree that we should expect more unstable climates – more droughts, floods and severe weather events. As every farmer knows, success in agriculture depends on weather more than any other factor. A future with more droughts, floods and severe weather events does not bode well for farmers, especially within our highly specialized monocultural systems that need stable climate conditions. According to the National Academy of Sciences we have enjoyed “abnormally” stable climates for the past century. The Academy argues that those unusually stable climates during the past 60 years played at least as much of a role as our new technologies in achieving increased yields.

We should be skeptical of assurances from seed companies that the development of drought-resistant seeds can solve the problem. As Ohio State University soil scientist Rattan Lal reminds us, drought-resistant seeds cannot extract moisture from soil that has no moisture in it. Consequently, restoring the health of our soils so that they absorb and retain more moisture may well be an important part of the “insurance” we need to take out for our future.

Of course, there are still a few people who assert that climate change is a hoax because we experienced one of the coolest summers on record. Apparently, these people failed to read the weather reports from Oregon, China, Texas and many other parts of the world. In any case as climatologists have consistently reminded us, global warming will not bring us consistently warmer temperatures on the ground. It will increase global atmospheric temperatures while producing more unstable climates throughout the world.

It is encouraging to note that according to a recent survey by the Center for Climate Change at George Mason University, 51 percent of American citizens are either “alarmed” or deeply “concerned” about climate change.

We need to move quickly from alarm and concern to action: take out insurance against worst-case scenarios and make the changes we already know are necessary to “insure” a better world for ourselves, our children and our grandchildren. As Bill Rees reminds us, “Sustainability may yet be within our grasp. Humanity, that wondrous ‘work in progress,’ may yet have an opportunity to pull itself up another rung on the evolutionary ladder.” But time will soon run out for all of us, unless we’re current on our insurance premium.

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Kirschenmann: Can we afford the future?