Bad news sells — that is why we hear so much of it. But it can leave us with a panicked sense that the world is full of problems that urgently need to be fixed. And panic is rarely a good basis for smart policy. MPs on the House of Commons’ Environmental Audit Committee released a report on Tuesday arguing that the UK needs strong climate policies, otherwise it will face “dangerous destabilisation of the global climate”.
Yet, such scary statements simply underpin expensive policies that offer little benefit. Remember the Millennium Bug? The world was likely to crash, since computers couldn’t handle the switch from 1999 to 2000. It was a great story, but we ended up spending billions to tackle an almost non-existent problem. Similiarly, in 1997-98, the weather pattern known as El Nino made itself felt in the US and elsewhere. On TV and in the newspapers, it was blamed for everything — wrecking tourism, causing more allergies, melting ski slopes, creating snowstorms, even causing a dip in Disney’s share price. But economic research provides a fuller picture.
A peer-reviewed article tallied, in financial terms, all the problems and all the benefits from El Nino in the US. Yes, the weather pattern caused storm damage, but it raised winter temperatures, which lowered heating bills and cut the number of people who died from the cold. It also reduced flood damage in the spring, created fewer transportation delays and diminished the number of hurricanes in the Atlantic.
While the total damage in the US was estimated at $4 billion (Dh14.71 billion), the total benefits were estimated at $19 billion. We need the same kind of analysis today, particularly about fracking. Drilling for shale gas, we are told, could pollute drinking water. But the US has drilled more than 40,000 wells and the regulator there has not found “any proven case where the fracking process itself has affected water”. So, while there is reason to be cautious, we should focus on better regulation.
Also, by highlighting the bad news, shale’s opponents play down the potential benefits. Natural gas is much more environmentally friendly than coal, which still powers a huge chunk of electricity production. Gas emits less than half the CO2 to generate the same amount of energy and much lower quantities of nitrogen oxides, sodium dioxide, black carbon, carbon monoxide, mercury and particulates. If the UK engaged in large-scale fracking of the Bowland Shale, it could reduce air pollution and eliminate around a third of its carbon emissions. This feeds into climate policy. Despite the moderate predictions of the United Nations Climate Panel, many people, not least the MPs on the Environmental Audit Committee, have tried to spin the issue as threatening Armageddon.
The reality is that, by 2020, the cost of promised climate policies to the UK economy will be £21 billion (Dh123.27 billion) annually. The net effect over the century — after spending more than £1.5 trillion — will be to reduce temperature rises by a pitiful 0.005 degrees Celsius. Compare this to increased shale gas production, which will generate more than £6 billion annually in tax revenues and reduce carbon emissions by about 10 times more than the current plan. We deserve better than to have bad news drive bad decisions. That is why I asked 21 of the world’s top economists to look at some of our biggest problems — hunger, health, global warming and pollution — and tell us the bad and the good news.
The results are contained in a new book that I have edited, How Much have Global Problems Cost the World? A Scorecard from 1900 to 2050. When you look at these issues properly, the results are surprising. Climate change, for example, has had a net benefit for the world. From 1900 to 2025, it has increased global welfare by up to 1.5 per cent of gross domestic product (GDP) per year. Why? Because it has mixed effects — and when warming is moderate, the benefits prevail (even if they are unevenly distributed between nations).
Increased levels of atmospheric CO2 have improved agriculture, because the gas works as a fertiliser; we have avoided more deaths from cold than have been caused by extra heat; and we have saved more from lower heating bills than we have lost to an increased need for air conditioning. Does that mean global warming is “good”? Not in the long run. As temperatures rise, the costs will rise and the benefits decline — and the balance will tip sooner in some places than others. From 2070, global warming will become a net cost to the world, justifying cost-effective climate action now and in the decades to come.
If we truly want to make a difference, the world’s biggest environmental problem is air pollution, caused by using dirty fuels in indoor cooking and heating. In the 20th Century, 260 million people in the Third World died from this. The good news is that things are getting better. As poverty has receded and clean fuels have become cheaper, the risk has fallen eightfold. It is set to decline further.
But indoor air pollution still kills more than three million people a year and costs around 3 per cent of global GDP. Only if we dare to step away from the torrent of bad news can we see where the future needs us to focus our attention — on boring indoor air pollution rather than scary global warming. Such clear analysis will also help us realise that, on most accounts, the world is getting to be a better place.
— The Telegraph Group Limited, London, 2013
Dr Bjorn Lomborg is an adjunct professor at the Copenhagen Business School and director of the Copenhagen Consensus Centre.
