At 22:15 29/05/2002 -0500, Jim wrote:
[snipped a lot of stuff about discount rates, which I largely agree with]
>Lomborg restates this argument in slightly different terms a few pages later:
>
> " . . . the question really boils down to: Do we want to help
more well-off inhabitants in the Third World a hundred years from now a
little or do we want to help poorer inhabitants in the present Third World
more? To give a feel for the size of the problem--the Kyoto Protocol will
likely cost at least $150 billion a year, and possibly much more . . . .
UNICEF estimates that just $70-80 billion a year could give all Third World
inhabitants access to the basics like health, education, water and
sanitation. More important still is the fact that if we could muster such
a massive investment in the present-day developing countries this would
also give them a much better future position in terms of resources and
infrastructure from which to manage a future global warming" (322).
>
Here's the same problem as I've pointed out before with Lomborg's analysis.
He's assuming that Kyoto will cost at least $150 billion per year. A single
figure. We don't know that. In fact it seems rather unlikely, provided we
go about reducing emissions in the right way, by increasing environmental
taxes and reducing taxes on other goods or labour.
Here's what the IPCC says:
"Mitigation costs to meet a prescribed target will be lower if the tax
revenues are used to reduce existing distortionary taxes. Most European
studies find that cutting payroll taxes is more efficient than other types
of recycling. A significant number of these studies conclude that...the net
costs of mitigation policies can be close to zero and even slightly
negative. Conversely, in the USA, studies suggest that reducing taxes on
capital is more efficient, but few models report negative costs." (IPCC,
WGIII report, ch8 exec summary, p501).
Yes, you did read that right. Most of the European studies find that the
net cost of meeting Kyoto is zero or negative. Most of the American don't
go so far (only a few report negative costs), but they do find that the
cost is low.
Does this mean that the cost of meeting Kyoto is certainly going to be low,
zero or negative? No, it doesn't. There could be something wrong with the
models. Under pressure from lobbyists, Governments might decide to do
things in a more expensive way. For what it's worth, in my own work I use a
range of values with a minimum cost of -$20 per tonne, a most likely cost
of $10 per tonne, and a maximum cost of $40 per tonne for initial cutbacks
of CO2, and higher costs for larger cutbacks.
In my view, to state the costs of Kyoto will be at least $150 billion per
year is either incompetent (if Lomborg doesn't know about these studies) or
dishonest (if he knows about the studies but chooses to ignore them).
Chris
Chris Hope, Judge Institute of Management,
University of Cambridge, Cambridge CB2 1AG, UK.
Voice: +44 1223 338194. Fax: +44 1223 339701
e-mail: [log in to unmask]
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