September 3, 2002

September 3, 2002 | Commentary on Energy and Environment

ed090302: A Needless Tradeoff

The World Summit on Sustainable Development kicked off in Johannesburg, South Africa, on Aug. 26. More than 100 presidents and prime ministers are scheduled to attend the week-long conference, but not President George W. Bush - no doubt to the vast disappointment of the thousands of non-governmental organizations looking forward to using the conference as an opportunity to criticize his policies and advance an international environmental agenda behind a façade of development.

The Bush administration has been unfairly lambasted for questioning this agenda and opposing icons of the international environmental movement. Its policies are consistent with the classic definition, popularized by the Brundtland Commission in 1987, of sustainable development as "Development that meets the needs of the present without compromising the ability of future generations to meet their own needs." This general definition essentially advocates cost-benefit analysis and sound investment of resources.

But this reasonable definition has been perverted to justify unreasonable regulation designed to constrain economic activity based on unproven fears of future environmental consequences. The most imminent, and potentially most costly, example of this is the Kyoto Protocol on global warming.

Kyoto Myopia

The Kyoto Protocol seeks to reduce greenhouse gas emissions of developed countries below their level in 1990 based on projections of models predicting an increase in global temperatures between 1.4 and 5.8 degrees Celsius over the next century.

Sounds scary, but more than 17,000 climatologists, meteorologists, and other experts disagreed with those estimates when they signed an Oregon Institute of Science and Medicine petition stating, "There is no convincing scientific evidence that human release of carbon dioxide, methane, or other greenhouse gasses is causing or will, in the foreseeable future, cause catastrophic heating of the Earth's atmosphere and disruption of the Earth's climate."

This statement clearly supports the Bush administration's policy of
waiting for further evidence prior to adopting irreversible action through the Kyoto Protocol.

Costs Without Benefits

Even if human activity is leading to global warming, which is open to debate, advocates have not proven that the consequences are severe enough to merit constraining economic growth as would occur if carbon emissions are restricted or capped.

The estimated costs for this vary, but reputable economic studies (including those by U.S. Department of Energy, WEFA, ABARE, DRI, CRA, and Manne/Richels) indicate that U.S. economic growth would be reduced by 1 to 4 percent annually - annual losses up to $400 billion - as reported by the American Council for Capital Formation's Center for Policy Research.

Add it up, and the cost for the U.S. economy over the next century is at least $10 trillion in growth forgone before incorporating the compounded losses of that forgone growth. Constrained growth in the United States and in other developed economies under Kyoto would affect developing economies through lower global economic growth and trade.

In return for these severe economic costs, the threat of global warming would merely be delayed a few years, not eliminated. Why? Because the greenhouse gas restrictions would only apply to developed economies, while leaving the developing economies (where greenhouse gas emissions are increasing most rapidly) without restriction.

False Tradeoff

Ineffective, costly treaties like the Kyoto Protocol belie statements about pursuing economic growth within a sustainable framework. The organizers of the Johannesburg summit see economic growth and environmental protection in a zero sum context. A
question in the summit's Online Global Poll on the Environment illustrates this bias:

"Which of these statements comes closer to your own point of view?
• Protection of the environment should be given priority, even at the risk of curbing economic growth.
• Economic growth should be given priority, even if the environment suffers to some extent."

This predisposition helps explain how the summit can justify its radical environmental agenda as necessary for development even though it imposes grave costs on developed nations and developing countries alike. In essence, environmental concerns trump growth.

This is a needless trade off. Increased prosperity and environmental sustainability are not mutually exclusive - on the contrary, economic growth leads to the increased per capita income necessary to protect the environment. The evidence demonstrates that countries with higher per capita incomes have higher environmental standards. As shown in economic analyses by Gene M. Grossman, Alan B. Krueger, and Jagdish Bhagwati among others, wealthier societies are more likely to demand and implement greater environmental protection because they can better afford the costs of those policies.

A Better Course

In the case of Kyoto, developed country governments would be better served in combating global warming by encouraging investment in new technologies that will mitigate future greenhouse gas emissions and facilitating transfer of those technologies to developing countries. This would permit growth while addressing concerns over global warming in a more efficient manner.

The bottom line is that economic growth and development are one and the same. Greater prosperity allows individuals to value green spaces for their aesthetic value rather than their potential as fields for crops or trees for fuel.

All the good will and discussion in Johannesburg cannot overcome the consequences of the poor economic policy choices made by many developing country governments over the years. These choices have kept their people in poverty and consequently undermined their environmental sustainability.

The resolution of environmental problems lies in promoting economic policies that encourage growth, not in burdensome international environmental regulations like those embodied in the Kyoto Protocol.

Brett D. Schaefer is the Jay Kingham Fellow in International Regulatory Affairs in the Center for International Trade and Economics at The Heritage Foundation

About the Author

Brett D. Schaefer Jay Kingham Senior Research Fellow in International Regulatory Affairs
The Margaret Thatcher Center for Freedom

Originally appeared in TechCentralStation